Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
¨
No
x
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes
¨
No
x
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
x
No
¨
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes
x
No
¨
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
x
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
¨
No
x
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant
(without admitting that any person whose shares are not included in such calculation is an affiliate) computed by reference to
the price at which the common stock was last sold on December 31, 2012, the last business day of the registrant’s most
recently completed second fiscal quarter, was $74,958,272. As of July 12, 2013 the registrant had 34,479,051 shares of common
stock outstanding.
The following documents (or parts
thereof) are incorporated by reference into the following parts of this Form 10-K: Certain information required in Part
III of this Annual Report on Form 10-K which will be incorporated from the registrant’s Proxy Statement for the 2013
Annual Meeting of Stockholders.
This Annual Report on Form 10-K contains
“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities and Exchange Act of 1934, as amended. All statements other than statements of historical facts
are “forward-looking statements” for purposes of these provisions, including any statements relating to our plans and
objectives of management regarding strategic alternatives, our intention to acquire one or more commercial-stage biopharmaceutical
assets, the pursuit of business development activities for our programs, future economic conditions or performance, and any statement
of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology
such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,”
“potential,” or “continue” or the negative thereof or other comparable terminology. Although we believe
that the expectations reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that
such expectations or any of the forward-looking statements will prove to be correct, and actual results could differ materially
from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as
well as any forward-looking statements, are subject to inherent risks and uncertainties, including but not limited to the risk
factors set forth in Item 1A “Risk Factors” below, and for the reasons described elsewhere in this Annual Report.
All forward-looking statements and reasons why results may differ included in this Annual Report are made as of the date hereof,
and we assume no obligation to update these forward-looking statements or reasons why actual results might differ.
As used in this Annual Report on Form 10-K,
the terms “we,” “us,” “our,” the “Company,” and “Myrexis” mean Myrexis,
Inc. (unless the context indicates a different meaning). In addition, these terms refer to the former research and drug development
businesses that were integrated with and operated by Myriad Genetics, Inc., which are now operated by Myrexis, Inc.
PART I
Overview
Prior to February 2012, Myrexis was a biopharmaceutical
company that generated a pipeline of differentiated drug candidates in oncology and autoimmune diseases. In February 2012, we announced
that we had suspended development activity on all of our preclinical and clinical programs and retained Stifel Nicolaus Weisel,
an investment banking firm, to assist in reviewing and evaluating a full range of strategic alternatives to enhance shareholder
value. Thereafter, in March 2012, we initiated an alignment of our resources involving a phased reduction in our workforce from
approximately 59 employees to 1 current employee as of June 30, 2013.
Based on an evaluation of strategic alternatives,
we determined to pursue the acquisition of one or more commercial-stage biopharmaceutical assets, with the goal of building a commercial-stage
biopharmaceutical company by optimizing their performance and profitability. Integral to these efforts, on May 11, 2012, we
announced a change in management, including the appointment of Richard B. Brewer as President and Chief Executive Officer and David
W. Gryska as Chief Operating Officer. In addition, both Mr. Brewer and Mr. Gryska were appointed as members of the Board
of Directors.
On August 15, 2012, we announced the
death of Richard B. Brewer, the Company’s President and Chief Executive Officer. The Board of Directors appointed David W.
Gryska as the Acting President and Chief Executive Officer while considering succession plans and proceeded to further evaluate
the Company’s strategic direction in light of this development and our progress to date in identifying attractive biopharmaceutical
assets.
On November 9, 2012, the Board of
Directors concluded that it appeared unlikely that a strategic transaction at a valuation materially in excess of our estimated
liquidation value would be achieved in the near term. Based on these and other factors, the Board of Directors concluded that a
statutory dissolution and liquidation was in the best interests of the Company and its stockholders and therefore unanimously adopted
a Plan of Complete Liquidation and Dissolution (the “Plan of Dissolution”), subject to stockholder approval.
On December 14, 2012, we filed proxy
materials with the Securities and Exchange Commission for a Special Meeting of stockholders on January 23, 2013, to consider
and vote on the Plan of Dissolution (the “Special Meeting”).
On December 21, 2012, we announced
that we entered into a settlement agreement (the “Settlement Agreement”) that settled fully and finally a lawsuit (the
“Litigation”) brought by the Alzheimer’s Institute of America, Inc. (“AIA”) against Myriad Genetics,
Inc. (“Myriad Genetics” or “MGI”) and its wholly owned subsidiary, Myriad Therapeutics, Inc. (formerly
known as Myriad Pharmaceuticals, Inc.) (referred to hereinafter together with Myriad Genetics as “Myriad”), and the
Mayo Clinic Jacksonville and Mayo Foundation for Medical Education and Research (referred to hereinafter together as “Mayo”).
Specifically, AIA asserted that Myriad and Mayo infringed certain patents allegedly owned by AIA in connection with Myriad’s
research and development of its failed Alzheimer’s drug candidate Flurizan (hereinafter referred to as the “Litigation”).
Myrexis, Myriad, Mayo and AIA are hereinafter referred to collectively as the “Parties”. As previously disclosed, pursuant
to our Separation and Distribution Agreement with Myriad Genetics, dated June 30, 2009, at the time of Myrexis’ separation
from Myriad Genetics, Myrexis assumed liability for certain pending or threatened legal matters related to its business, and is
obligated to indemnify Myriad Genetics for any liability arising out of such matters, including any costs and expenses of litigating
such matters, including payment of attorneys’ fees incurred to defend against claims. Accordingly, pursuant to the terms
of the Settlement Agreement, in consideration of AIA’s release of claims against and covenant not to sue the other Parties
for matters related to the Litigation, Myrexis agreed to (1) pay AIA approximately $1,525,000, and (2) transfer to AIA
all program rights and assets associated with Myrexis’ Hsp90 inhibitor program, cancer metabolism inhibitor program, and
small molecule anti-interferon (IKK€/TBK1) inhibitor program (the “Program Assets Transfer”). AIA assumed Myrexis’
liabilities under the program contracts being transferred to AIA and all liabilities for the further conduct of the programs, subject,
in each case, to certain exclusions, including liabilities accruing or arising from events occurring prior to the Program Assets
Transfer. The Settlement Agreement also includes a release of claims against AIA by each of Myrexis, Myriad and Mayo. Simultaneously
with the delivery of the settlement payment to AIA by Myrexis on December 21, 2012, the Parties filed a stipulation of dismissal
of the Litigation.
On December 21, 2012, David W. Gryska
informed Myrexis of his resignation as Acting President and Chief Executive Officer, Chief Operating Officer and member of the
Board of Directors, effective December 24, 2012.
On January 22, 2013, the Board unanimously
determined to cancel the Special Meeting. The Board of Directors decided, after extensive and careful consideration of strategic
alternatives, to abandon the proposed Plan of Dissolution and instead, the Board of Directors declared a special cash distribution
to shareholders of record at the close of business on February 4, 2013 in the amount of $2.86 per share. The cash distribution
was paid on February 15, 2013, and the Company’s common stock began trading ex-dividend on Tuesday, February 19,
2013.
On January 22, 2013, the Board of Directors
also appointed Jonathan M. Couchman as a Class II director of the Company and as its President and Chief Executive Officer. Subsequent
to Mr. Couchman’s appointment to the Board of Directors, the remaining members of the Board of Directors, Gerald P.
Belle, Jason M. Aryeh, Robert Forrester, Timothy R. Franson, M.D., John T. Henderson, M.D., and Dennis H. Langer,
M.D., J.D., resigned.
On February 13, 2013, Steven Scheiwe and
Michael Pearce were appointed to the Board of Directors.
On February 28, 2013, Andrea Kendell’s
employment as CFO terminated voluntarily and on March 1, 2013, Mr. Couchman was appointed CFO of Myrexis.
On April 26, 2013, the Company held its
2012 Annual Meeting of shareholders (the “2012 Annual Meeting”). At the 2012 Annual Meeting, stockholders of the Company
elected Steven D. Scheiwe as a Class I director for a term ending at the 2013 annual meeting of stockholders, Jonathan M. Couchman
as a Class II director for a term ending at the 2014 annual meeting of stockholders and Michael C. Pearce (“Disinterested
Director”) as a Class III director for a term ending at the 2015 annual meeting of stockholders.
After giving effect to the payment of the
cash distribution on February 15, 2013, as of June 30, 2013, we had approximately $1.1 million in cash and cash equivalents. The
Company is in the early stages of reviewing the scope of strategic alternatives that may be available for consideration. Due to
limited cash resources available to the Company, the delisting by Nasdaq of the Company’s shares and the potential impact
on the Company’s NOLs of any significant share issuance under Section 382 of the Internal Revenue Code, among other things,
the Company may conclude to liquidate if available strategic alternatives cannot be identified in a reasonable period of time.
To the extent any strategic alternatives or transactions are identified, it will most likely be necessary to raise additional funds
to consummate any such alternative or transaction, although there is no assurance we will be able to do so. We do not know if we
will be successful in pursuing any strategic alternative or that any transaction will occur; however, we are committed to pursuing
a strategic direction that our Board of Directors believes is in the best interests of our shareholders. We currently do not have
any drugs that are commercially available.
In light of the Company’s limited
activities at the present time, the Company has determined that it is advisable to terminate the registration of its common stock
under the Securities Exchange Act of 1934, as amended. The Company anticipates filing a Form 15 with the Securities and Exchange
Commission (the “SEC”) to effect this deregistration in the near future.
After careful
consideration, the Board of Directors decided to deregister based on its belief that the savings the Company will achieve as a
result of deregistration, particularly on costs related to the preparation and filing of SEC reports and compliance with Sarbanes-Oxley
obligations, will benefit shareholders, and such benefits will outweigh any advantages of continuing as an SEC reporting company.
The obligation of filing SEC reports and complying with Sarbanes-Oxley has become too burdensome and expensive for a company of
Myrexis’ size. Upon the filing of the Form 15, the Company’s obligation to file periodic and current reports with the
SEC, including Forms 10-K, 10-Q, and 8-K, will be suspended.
Oncology Programs
As indicated in our February 2012 announcement,
we have suspended development activities for the remaining oncology programs. Despite significant efforts, however, we have been
unsuccessful to date in identifying and attracting third parties to whom we could out-license or sell these assets for further
development. Thus, under the Settlement Agreement with AIA, we transferred to AIA all program rights and assets associated with
Myrexis’s hsp90 inhibitor program, cancer metabolism inhibitor program, and small molecule anti-interferon (IKK€/TBK1)
inhibitor program.
Intellectual Property
As a result of the Settlement Agreement,
we own or have licensed rights to at least two issued patents and at least one patent application in the United States. Issued
patents expire between 2026 and 2027. Any patent applications which we have filed or will file or to which we have licensed or
will license rights may not issue, and patents that do issue may not contain commercially valuable claims. In addition, any patents
issued to us or our licensors may not afford meaningful protection for our products or technology, or may be subsequently circumvented,
invalidated or narrowed, or found unenforceable. Our processes and potential products may also conflict with patents which have
been or may be granted to competitors, academic institutions or others. As the pharmaceutical industry expands and more patents
are issued, the risk increases that our processes and potential products may give rise to claims of patent infringement by other
companies, institutions or individuals. These entities or persons could bring legal actions against us claiming damages and seeking
to enjoin clinical testing, manufacturing and marketing of the related product or process. If any of these actions are successful,
in addition to any potential liability for damages, we could be required to cease the infringing activity or obtain a license in
order to continue to manufacture or market the relevant product or process. We may not prevail in any such action and any license
required under any such patent may not be made available on acceptable terms, if at all.
License and Collaboration Agreement
with EpiCept Corporation
Myriad Genetics had entered into a license
agreement (the “License Agreement”) for exclusive rights to utilize certain intellectual property rights related to
the drug candidate Azixa with Maxim Pharmaceuticals, Inc. and Cytovia, Inc. All licensed rights of Maxim and Cytovia were subsequently
acquired by EpiCept Corporation, and Maxim, Cytovia and EpiCept are collectively referred to herein as EpiCept. Pursuant to the
separation agreement with MGI, Myrexis assumed all rights and obligations under the License Agreement.
In September 2011, Myrexis announced that
it had suspended any further development of Azixa. On August 28, 2012, Myrexis provided EpiCept notice of termination of the
License Agreement following its election to terminate all of its efforts to develop and commercialize Azixa in any major market
as such products and markets are defined in the agreement. On January 4, 2013, Myrexis and EpiCept entered into an Asset Purchase
Agreement (the “APA”) which expressly terminated the License Agreement and assigned to EpiCept rights in intellectual
property, regulatory filings and certain other assets of Myrexis related to its Azixa development program for $1.00. The APA expressly
terminates the License Agreement without further liability of either Myrexis or EpiCept. Myrexis has no further obligation for
royalty or milestone payments to EpiCept. The APA provides for certain royalty and milestone payments to be made to Myrexis should
EpiCept or its licensee develop and commercialize a product using intellectual property rights transferred to EpiCept under the
APA.
Employees
As of June 30, 2013, we had one employee,
Jonathan M. Couchman, our Chief Executive Officer and Chief Financial Officer.
Corporate History and Available Information
We were incorporated as Myriad Pharmaceuticals,
Inc. in Delaware in January 2009 as a new, wholly owned subsidiary of Myriad Genetics, Inc. in order to effect the separation and
spin-off of Myriad Genetics’ research and drug development businesses as a stand-alone, independent, publicly traded company.
In connection with the formation of this new subsidiary, Myriad Genetics’ existing subsidiary, Myriad Pharmaceuticals, Inc.,
changed its corporate name to Myriad Therapeutics, Inc. On June 30, 2009, Myriad Genetics contributed substantially all of
the assets and certain liabilities of its research and drug development businesses as well as $188 million in cash and marketable
securities to us and effected the spin-off of our company through the pro rata dividend distribution to its stockholders of all
outstanding shares of our common stock. Effective July 1, 2010, we changed our name from Myriad Pharmaceuticals, Inc. to Myrexis,
Inc. Our principal executive offices are located c/o Xstelos Holdings, Inc. at 630 Fifth Avenue, Suite 2260, New York, New York
10020. Our telephone number is 801-214-7800 and our web site address is
www.myrexis.com
. We include our web site address
in this Annual Report on Form 10-K only as an inactive textual reference and do not intend it to be an active link to our web site.
We make available free of charge through the “Investors” section of our web site our Corporate Code of Conduct and
Ethics, our Audit Committee and other committee charters and our other corporate governance policies, as well as our Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably
practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.
The risks and uncertainties described
below are those that we currently believe may materially affect our company. If any of the following risks actually occur, they
may materially harm our business, our financial condition and our results of operations.
Risks Relating to
Our Evaluation of Strategic Alternatives and Our Business
We cannot assure you that the Company’s new management
team will identify a strategic alternative or direction that will yield additional value for our shareholders.
As announced in connection with the former
Board of Directors’ declaration of the special cash distribution to our shareholders and their resignation and appointment
of Jonathan M. Couchman as our initial sole director and chief executive officer, Mr. Couchman will be further evaluating
strategic alternatives with a view to generating additional value for our shareholders. However, we cannot assure you that Mr. Couchman
and any other members of the management team he appoints will succeed in identifying a strategic direction that will result in
additional value for the shareholders at any particular time, or at all. Moreover, even if the new management team identifies and
pursues a promising strategic course, there can be no assurance that their efforts to execute such plans will result in any initiatives,
agreements, transactions or plans that will enhance shareholder value.
We anticipate that we will incur losses for the foreseeable
future and we may never achieve or sustain profitability.
We incurred losses of $11.6 million, $31.2 million and $38.7 million for the years ended June 30,
2013, 2012 and 2011, respectively. Although our expenses have been reduced dramatically through multiple reductions in our personnel,
and although our research and development efforts no longer continue, we expect to continue to incur operating expenses and anticipate
that we will continue to have losses in the foreseeable future as we pursue a new strategic direction. Moreover, even if our Board
of Directors determines to pursue a different strategic alternative, we expect that significant expenses will be involved in implementing
any such strategic path, which will further reduce our limited existing capital. We may never achieve or sustain profitability
as a business. In addition, after giving effect to the special cash distribution to our shareholders of record on February 4,
2013, we have $1.1 million in cash and cash equivalents remaining in the Company as of June 30, 2013.
We may require additional capital to fund our pursuit
and consummation of whatever strategic course our new Board of Directors and management determine.
We have $1.1 million in cash and cash equivalents
remaining in the Company as of June 30, 2013. We anticipate this to be sufficient to fund ongoing public company and other related
operational costs for at least 12 months. Accordingly, we may require additional capital to pursue whatever strategic direction
the new Board of Directors and management determine to undertake. There can be no assurance that such additional funding will be
available on terms that are acceptable to us, or at all. If adequate funds are not available on a timely basis, we may not be able
to effectively implement any new strategic plan and may have to liquidate. We may seek to raise any necessary funds through public
or private equity offerings, debt financings or strategic alliances and licensing arrangements. We may elect to raise additional
funds even before we need them if the conditions for raising capital are favorable. We may not be able to obtain additional financing
on terms favorable to us, if at all. General market conditions may make it very difficult for us to seek financing from the capital
markets. We may be required to relinquish rights to our remaining intellectual property assets, or grant licenses on terms that
are not favorable to us, and we may be required in connection with entering into new strategic arrangements to accept terms less
favorable than would be the case if we had greater financial assets. In addition, our shareholders may suffer substantial dilution
of their economic interests in Myrexis as a result of any future financial or other strategic transaction.
Our Chief Executive Officer and Chief Financial Officer
serves as the Chief Executive Officer and Chief Financial of another company, and he may not be able to devote the requisite time
to evaluate, develop and pursue a strategic plan that will enhance shareholder value. Moreover, he may not be able to attract other
executives to the management team on a timely basis.
Jonathan M. Couchman, our new Chief Executive
Officer, is employed by us under an agreement that provides him $1.00 per year in salary, and he currently serves as the Chief
Executive Officer of Xstelos Holdings, Inc. (“Xstelos”), another public company. Given his other employment commitments,
there can be no assurance that Mr. Couchman will be able to devote the time necessary, or at the necessary times, to conduct
the planned further evaluation of strategic alternatives, or to pursue and execute whatever strategic path may ultimately be determined.
Moreover, Andrea Kendell, our former Chief Financial Officer, ended her full-time employment position with Myrexis on February 28,
2013. Mr. Couchman was retained as Chief Financial Officer on March 1, 2013. During this leadership transition, Mr. Couchman
will bear substantial additional leadership responsibilities, which may present challenges in identifying business opportunities
and making significant business decisions with a very small executive team. Any failure to manage this leadership transition successfully
could have a material adverse effect on the prospects for a successful new strategic course. It is possible in the future that
we may determine it to be advisable to enter into a financing or other transaction with Xstelos. In such event we would anticipate
that any such transaction would be evaluated and approved by our Disinterested Director.
We may be unable to realize the benefits of our net operating
losses (“NOLs”).
NOLs may be carried forward to offset federal
and state taxable income in future years and eliminate income taxes otherwise payable on such taxable income, subject to certain
limits and adjustments. Based on current income tax rates, if fully utilized, our NOLs and other carry-forwards could provide a
benefit to us of significant future tax savings. However, our ability to use these tax benefits in future years will depend upon
our ability to comply with the rules relating to the preservation and use of NOLs and the amount of our otherwise taxable income.
If we do not have sufficient taxable income in future years to use the tax benefits before they expire, we will lose the benefit
of these NOLs permanently. Consequently, our ability to use the tax benefits associated with our NOLs will depend significantly
on our success in identifying suitable new business opportunities and acquisition candidates that maximize our NOLs, and once identified,
successfully becoming established in this new business line or consummating such an acquisition.
Additionally, if we underwent an ownership
change, the NOLs would be subject to an annual limit on the amount of the taxable income that may be offset by our NOLs generated
prior to the ownership change and we may be unable to use a significant portion or all of our NOLs to offset taxable income. We
have adopted a tax benefits preservation plan and filed an amendment to our Certificate of Incorporation that restricts certain
transfers of our common stock with the intention of reducing the likelihood of an ownership change. However, we cannot assure you
that these measures will be effective in deterring or preventing all transfers of our common stock that could result in such an
ownership change.
The amount of NOLs that we have claimed
has not been audited or otherwise validated by the U.S. Internal Revenue Service (the “IRS”). The IRS could challenge
our calculation of the amount of our NOLs and our determinations as to when a prior change in ownership occurred, and other provisions
of the Internal Revenue Code may limit our ability to carry forward our NOLs to offset taxable income in future years. If the IRS
was successful with respect to any such challenge, the potential tax benefit that the NOLs would provide us could be substantially
reduced.
Our common stock has been delisted from The NASDAQ Global
Market resulting in a more limited market for our common stock.
On January 28, 2013, we received a
letter (the “Letter”) from the Listing Qualifications Department of The NASDAQ Stock Market LLC informing us that the
NASDAQ Staff had determined to utilize its discretionary authority and initiate proceedings to delist our securities from The NASDAQ
Stock Market. The Letter stated that the Staff based their determination on their belief that Myrexis is a “public shell,”
and the resignation of all our independent directors. Further, as a result of the resignation of our independent directors,
we no longer complied with the following: the majority independent board requirement set forth in Listing Rule 5605(b)(1); the
audit committee composition requirement set forth in Listing Rule 5605(c)(2); the compensation committee requirements set forth
in Listing Rule 5605(d); and the nominating committee requirements set forth in Listing Rule 5605(e). We did not request an
appeal of this determination, and trading in our stock on the NASDAQ Global Market was suspended on February 1, 2013. As of
February 1, 2013, we began trading in the over-the-counter, or OTC Markets under the symbol MYRX. The delisting by NASDAQ
could hurt our investors by reducing the liquidity and market price of our common stock. Additionally, the delisting could negatively
affect us by reducing the number of investors willing to hold or acquire our common stock, which could negatively affect our ability
to raise capital.
In light of the Company’s limited
activities at the present time, the Company has determined that it is advisable to terminate the registration of its common stock
under the Securities Exchange Act of 1934, as amended. The Company anticipates filing a Form 15 with the Securities and Exchange
Commission (the “SEC”) to effect this deregistration in the near future.
After careful
consideration, the Board of Directors decided to deregister based on its belief that the savings the Company will achieve as a
result of deregistration, particularly on costs related to the preparation and filing of SEC reports and compliance with Sarbanes-Oxley
obligations, will benefit shareholders, and such benefits will outweigh any advantages of continuing as an SEC reporting company.
The obligation of filing SEC reports and complying with Sarbanes-Oxley has become too burdensome and expensive for a company of
Myrexis’ size. Upon the filing of the Form 15, the Company’s obligation to file periodic and current reports with the
SEC, including Forms 10-K, 10-Q, and 8-K, will be suspended.
Our future success depends on our ability to retain our
key executive.
The competition for qualified personnel
is intense and we must retain our key executive. There can be no assurance that we will be able to retain Mr. Couchman due
in part to the fact that the agreements we have entered into with him provide for $1.00 per year in salary. Although we do not
have any reason to believe that we may lose the services of Mr. Couchman in the foreseeable future, the loss of his services
may impede our efforts to pursue a new strategic direction.
If a successful product liability claim or series of claims
is brought against us for uninsured liabilities or in excess of insured liabilities, we could incur substantial liability.
The use of our drug candidates in clinical
trials and the sale of any products for which marketing approval has been obtained expose us to the risk of product liability claims.
Product liability claims might be brought against us by consumers, health care providers or others selling or otherwise coming
into contact with our products. If we cannot successfully defend ourselves against product liability claims, we could incur substantial
liabilities.
We have obtained product liability insurance
coverage for our previously conducted clinical trials with a $5.0 million annual aggregate coverage limit. However, our insurance
coverage may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming
increasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient
amounts to protect us against losses due to liability. If and when we acquire any approved drug candidates, we intend to expand
our insurance coverage to include the sale of commercial products; however, we may be unable to obtain this product liability insurance
on commercially reasonable terms. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had
unanticipated side effects. A successful product liability claim or series of claims brought against us could decrease our cash
and adversely affect our business.
Provisions of our charter and bylaws and Delaware law
and our tax benefits preservation rights plan may make an acquisition of us or a change in our management more difficult.
Certain provisions of our restated certificate
of incorporation and restated bylaws could discourage, delay, or prevent a merger, acquisition, or other change in control that
stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. Stockholders
who wish to participate in these transactions may not have the opportunity to do so. These provisions also could limit the price
that investors might be willing to pay for shares of our common stock, thereby depressing the market price of our common stock.
Furthermore, these provisions could prevent or frustrate attempts by our stockholders to replace or remove our management. These
provisions:
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allow the authorized number of directors to be changed only by resolution of our Board of Directors;
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establish a classified board of directors, providing that not all members of our board be elected at one time;
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authorize our board of directors to issue without stockholder approval blank check preferred stock;
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require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written
consent;
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establish advance notice requirements for stockholder nominations to our board of directors or for stockholder proposals that
can be acted on at stockholder meetings;
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limit who may call stockholder meetings;
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require the approval of the holders of 80% of the outstanding shares of our capital stock entitled to vote in order to amend
certain provisions of our restated certificate of incorporation and restated bylaws.
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limit the direct or indirect transfers of common stock that could affect the percentage of stock that is treated as being owned
by a holder of 4.75% of the outstanding common stock.
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We have also adopted a Tax Benefits Preservation
Rights Plan in the form of a rights agreement designed to help protect and preserve our substantial tax attributes primarily associated
with our NOLs and research tax credits, under Sections 382 and 383 of the Internal Revenue Code (the NOL Plan). Although this is
not the purpose of the NOL Plan, it could have the effect of making it uneconomical for a third party to acquire us on a hostile
basis. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware
General Corporation Law, which may, unless certain criteria are met, prohibit large stockholders, in particular those owning 15%
or more of our outstanding voting stock, from merging or combining with us for a prescribed period of time.
We have identified a material weakness in our financial
reporting process.
We have identified a material weakness
in our financial reporting process as of June 30, 2013 with respect to lack of segregation of duties over a variety of financial
and disclosure controls. Our failure to successfully implement our plans to remediate this material weakness could cause us to
fail to meet our reporting obligations, to produce timely and reliable financial information, and to effectively prevent fraud.
Additionally, such failure could cause investors to lose confidence in our reported financial information, which could have a negative
impact on our financial condition and stock price
In the future, we may identify additional
material weaknesses and deficiencies which we may not be able to remediate in a timely manner. If we fail to maintain effective
internal control over financial reporting in accordance with Section 404, we will not be able to conclude that we have and
maintain effective internal control over financial reporting or our independent registered accounting firm may not be able to issue
an unqualified report on the effectiveness of our internal control over financial reporting. As a result, our ability to report
our financial results on a timely and accurate basis may be adversely affected, we may be subject to sanctions or investigation
by regulatory authorities, including the SEC and investors may lose confidence in our financial information, which in turn could
cause the market price of our common stock to decrease. We may also be required to restate our financial statements from prior
periods. In addition, testing and maintaining internal control in accordance with Section 404 requires increased management
time and resources. Any failure to maintain effective internal control over financial reporting could impair the success of our
business and harm our financial results.
|
Item 1B.
|
UNRESOLVED STAFF COMMENTS
|
Not applicable.
Our headquarters are located in New York,
New York. Under our Intercompany Services Agreement entered into on February 27, 2013 between Xstelos and Myrexis, Xstelos agreed
to provide Myrexis with certain administrative, management, accounting and information services for one year in exchange for a
fee of $25,000. Under this Agreement, we currently share space with Xstelos in a 1,233 square foot office.
|
Item 3.
|
LEGAL PROCEEDINGS
|
In the ordinary course of business, various
legal claims have been asserted, and in the future may be asserted, against Myrexis. In addition, as previously disclosed, under
the terms of our Separation and Distribution Agreement with our former parent Myriad Genetics, Inc. we had the obligation to indemnify
Myriad Genetics with respect to certain legal claims against Myriad Genetics which we assumed in connection with our spin-out from
Myriad Genetics.
That obligation was satisfied in relation to the litigation brought by AIA against Myriad and Mayo, as
described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” upon the
completion of the settlement agreement with AIA entered into on December 21, 2012.
|
Item 4.
|
MINE SAFETY DISCLOSURES
|
None.
PART II
|
Item 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Market Information
Our common
stock is currently traded in the over the counter market under the symbol MYRX. Our common stock was traded on The NASDAQ Global
Market under the symbol “MYRX” until February 1, 2013 when our stock was delisted. The Board of Directors declared
a special cash distribution to shareholders of record at the close of business on February 4, 2013 in the amount of $2.86
per share. The cash distribution was paid on February 15, 2013, and the Company’s common stock began trading ex-dividend
on Tuesday, February 19, 2013.
The following table
sets forth the high and low sales prices for our common stock as reported by The NASDAQ Global Market and the OTC Markets for the
periods indicated. For an additional information, see “Item 1A: Risk Factors” of this Annual Report on Form 10-K.
|
|
High
|
|
|
Low
|
|
Fiscal Year Ended June 30, 2013:
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
0.11
|
|
|
$
|
0.06
|
|
Third Quarter
|
|
$
|
2.99
|
|
|
$
|
0.09
|
|
Second Quarter
|
|
$
|
2.83
|
|
|
$
|
2.34
|
|
First Quarter
|
|
$
|
2.67
|
|
|
$
|
2.35
|
|
|
|
High
|
|
|
Low
|
|
Fiscal Year Ended June 30, 2012:
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
3.20
|
|
|
$
|
2.26
|
|
Third Quarter
|
|
$
|
3.32
|
|
|
$
|
2.58
|
|
Second Quarter
|
|
$
|
2.88
|
|
|
$
|
2.41
|
|
First Quarter
|
|
$
|
3.70
|
|
|
$
|
2.64
|
|
Stockholders
As of July 17, 2013, there were approximately
97 stockholders of record of our common stock and, according to our estimates, approximately 8,435 beneficial owners of our common
stock.
Cash Distribution
On January 22, 2013, the Board unanimously
determined to cancel the Special Meeting. The Board of Directors decided, after extensive and careful consideration of strategic
alternatives, to abandon the proposed Plan of Dissolution and instead, the Board of Directors declared a special cash distribution
to shareholders of record at the close of business on February 4, 2013 in the amount of $2.86 per share. The cash distribution
was paid on February 15, 2013, and the Company’s common stock began trading ex-dividend on Tuesday, February 19,
2013.
Unregistered Sales of Securities
On February 27, 2013, Xstelos and Myrexis
entered into a stock purchase agreement (the “Stock Purchase Agreement”). Pursuant to the terms of the Stock Purchase
Agreement, Myrexis agreed to issue and sell to Xstelos 7,000,000 shares of our common stock, representing approximately 20% of
all outstanding common stock after giving effect to such sale. The shares were sold for an aggregate purchase price of approximately
$250,000. The consideration paid by Xstelos was based, in part, on the Company’s available cash of approximately $870,000
after giving effect to liabilities due prior to March 31, 2013, services to be provided by Xstelos as well as consent provided
by Xstelos to allow Jonathan M. Couchman to serve as the Company’s Chief Financial Officer.
Issuer Purchases of Equity Securities
None.
Stock Performance Graph
The graph set forth below compares the
annual percentage change in our cumulative total stockholder return on our common stock, during a period commencing on June 12,
2009 (the first day of trading of our common stock on The NASDAQ Global Market) and ending on June 28, 2013 (as measured by
dividing (A) the difference between our share price at the end and the beginning of the measurement period; by (B) our
share price at the beginning of the measurement period) with the cumulative total return of The NASDAQ Stock Market, Inc. and the
NASDAQ Biotech Index during such period. We do not include cash dividends in the representation of our performance. The price of
a share of common stock is based upon the closing price per share as quoted on The NASDAQ Global Market on the last trading day
of the year shown. The graph lines merely connect year-end values and do not reflect fluctuations between those dates. The
comparison assumes $100 was invested on June 12, 2009 in our common stock and in each of the foregoing indices. The comparisons
shown in the graph below are based upon historical data. We caution that the stock price performance shown in the graph below is
not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock.
|
|
June 12, 2009
|
|
|
June 30, 2009
|
|
|
June 30, 2010
|
|
|
June 30, 2011
|
|
|
June 29, 2012
|
|
|
June 28, 2013
|
|
Myrexis,
Inc.
|
|
|
100.00
|
|
|
|
66.43
|
|
|
|
53.71
|
|
|
|
51.14
|
|
|
|
37.29
|
|
|
|
42.00
|
|
NASDAQ
Biotechnology Index
|
|
|
100.00
|
|
|
|
103.19
|
|
|
|
110.13
|
|
|
|
152.59
|
|
|
|
186.08
|
|
|
|
249.61
|
|
NASDAQ
Composite Index
|
|
|
100.00
|
|
|
|
98.72
|
|
|
|
113.47
|
|
|
|
149.21
|
|
|
|
157.90
|
|
|
|
183.09
|
|
The performance graph shall not be deemed
to be incorporated by reference by means of any general statement incorporating by reference this Form 10-K into any filing under
the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically
incorporate such information by reference, and shall not otherwise be deemed filed or soliciting material under such acts.
|
Item 6.
|
SELECTED FINANCIAL DATA
|
The following table sets forth selected
financial information as of and for each of the years in the five-year period ended June 30, 2013, which has been derived
from our (1) audited financial statements as of June 30, 2013, and 2012 and for the years ended June 30, 2013, 2012
and 2011, which are included elsewhere in this Form 10-K; and (2) audited financial statements as of June 30, 2010
and 2009 and for the years ended June 30, 2010 and 2009, which are not included elsewhere in this Form 10-K. Because our historical
financial information for the period ending June 30, 2009 reflects allocations for services historically provided to us by
Myriad Genetics, the selected financial information presented below for such period may not be indicative of our results of operations
and financial position as an independent company. The selected financial information presented for the years ended June 30,
2013, 2012, 2011 and 2010, reflects our performance as an independent company.
The selected financial data below should
be read in conjunction with our audited financial statements (and notes thereon) and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” included elsewhere in this Form 10-K.
|
|
Years ended June 30,
|
|
In thousands (except per share data)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
185
|
|
|
$
|
90
|
|
|
$
|
5,456
|
|
Pharmaceutical revenue
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Other revenue
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total revenues
|
|
|
—
|
|
|
|
—
|
|
|
|
185
|
|
|
|
90
|
|
|
|
5,456
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
|
465
|
|
|
|
14,230
|
|
|
|
22,296
|
|
|
|
28,222
|
|
|
|
54,611
|
(2)
|
General and administrative expense
|
|
|
11,526
|
|
|
|
17,571
|
|
|
|
18,339
|
(3)
|
|
|
19,984
|
|
|
|
8,981
|
|
Total costs and expenses
|
|
|
11,991
|
|
|
|
31,801
|
|
|
|
40,635
|
|
|
|
48,206
|
|
|
|
63,592
|
|
Operating loss
|
|
|
(11,991
|
)
|
|
|
(31,801
|
)
|
|
|
(40,450
|
)
|
|
|
(48,116
|
)
|
|
|
(58,136
|
)
|
Other income (expense), net
|
|
|
370
|
|
|
|
592
|
|
|
|
1,742
|
|
|
|
1,165
|
|
|
|
—
|
|
Net loss
|
|
$
|
(11,621
|
)
|
|
$
|
(31,209
|
)
|
|
$
|
(38,708
|
)
|
|
$
|
(46,951
|
)
|
|
$
|
(58,136
|
)
|
Net loss per basic and diluted share (1)
|
|
$
|
(0.39
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
(1.52
|
)
|
|
$
|
(1.91
|
)
|
|
$
|
(2.43
|
)
|
|
|
As of June 30,
|
|
In thousands
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and marketable securities
|
|
$
|
1,210
|
|
|
$
|
89,626
|
|
|
$
|
115,878
|
|
|
$
|
147,453
|
|
|
$
|
188,005
|
|
Current liabilities
|
|
|
74
|
|
|
|
2,279
|
|
|
|
3,310
|
|
|
|
4,250
|
|
|
|
4,576
|
|
Total assets
|
|
|
1,237
|
|
|
|
91,651
|
|
|
|
121,260
|
|
|
|
154,108
|
|
|
|
193,677
|
|
Total stockholders’ equity
|
|
|
1,163
|
|
|
|
89,372
|
|
|
|
117,950
|
|
|
|
149,858
|
|
|
|
189,101
|
|
|
(1)
|
For year ended June 30, 2009, pro forma net loss per share calculated based on the 23,974,211 shares issued in connection
with the spin-off.
|
|
(2)
|
Amount includes a $9.0 million credit recorded in fiscal 2009, resulting from the difference in an estimated sub-license fee
accrual recorded in fiscal 2008 and amounts actually paid in 2009.
|
|
(3)
|
Includes a $1.1 million impairment loss on certain fixed assets. For the year ended June 30, 2011, the Company reclassified
the $1.1 million in impairment charges from other income (expense) to general and administrative expense.
|
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
|
The following discussion and analysis
should be read together with “Selected Financial Data,” and the financial statements and the related notes appearing
elsewhere in this Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. Information regarding these forward-looking statements can be found in the preface to Part I, Item 1 “Business”
of this Form 10-K. Our actual results may differ materially from those anticipated in these forward-looking statements as a result
of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this Form 10-K.
Overview
Prior to February 2012, Myrexis was a biopharmaceutical
company that generated a pipeline of differentiated drug candidates in oncology and autoimmune diseases. In February 2012, we announced
that we had suspended development activity on all of our preclinical and clinical programs and retained Stifel Nicolaus Weisel,
an investment banking firm, to assist in reviewing and evaluating a full range of strategic alternatives to enhance shareholder
value. Thereafter, in March 2012, we initiated an alignment of our resources involving a phased reduction in our workforce from
approximately 59 employees to 1 current employee as of June 30, 2013.
Based on an evaluation of strategic alternatives,
we determined to pursue the acquisition of one or more commercial-stage biopharmaceutical assets, with the goal of building a commercial-stage
biopharmaceutical company by optimizing their performance and profitability. Integral to these efforts, on May 11, 2012, we
announced a change in management, including the appointment of Richard B. Brewer as President and Chief Executive Officer and David
W. Gryska as Chief Operating Officer. In addition, both Mr. Brewer and Mr. Gryska were appointed as members of the Board
of Directors.
On August 15, 2012, we announced the
death of Richard B. Brewer, the Company’s President and Chief Executive Officer. The Board of Directors appointed David W.
Gryska as the Acting President and Chief Executive Officer while considering succession plans and proceeded to further evaluate
the Company’s strategic direction in light of this development and our progress to date in identifying attractive biopharmaceutical
assets.
On November 9, 2012, the Board of
Directors concluded that it appeared unlikely that a strategic transaction at a valuation materially in excess of our estimated
liquidation value would be achieved in the near term. Based on these and other factors, the Board of Directors concluded that a
statutory dissolution and liquidation was in the best interests of the Company and its stockholders and therefore unanimously adopted
a Plan of Complete Liquidation and Dissolution (the “Plan of Dissolution”), subject to stockholder approval.
On December 14, 2012, we filed proxy
materials with the Securities and Exchange Commission for a Special Meeting of stockholders on January 23, 2013, to consider
and vote on the Plan of Dissolution (the “Special Meeting”).
On December 21, 2012, we announced
that we entered into a settlement agreement (the “Settlement Agreement”) that settled fully and finally a lawsuit (the
“Litigation”) brought by the Alzheimer’s Institute of America, Inc. (“AIA”) against Myriad Genetics,
Inc. (“Myriad Genetics”) and its wholly owned subsidiary, Myriad Therapeutics, Inc. (formerly known as Myriad Pharmaceuticals,
Inc.) (referred to hereinafter together with Myriad Genetics as “Myriad”), and the Mayo Clinic Jacksonville and Mayo
Foundation for Medical Education and Research (referred to hereinafter together as “Mayo”). Specifically, AIA asserted
that Myriad and Mayo infringed certain patents allegedly owned by AIA in connection with Myriad’s research and development
of its failed Alzheimer’s drug candidate Flurizan (hereinafter referred to as the “Litigation”). Myrexis, Myriad,
Mayo and AIA are hereinafter referred to collectively as the “Parties”. As previously disclosed, pursuant to our Separation
and Distribution Agreement with Myriad Genetics, dated June 30, 2009, at the time of Myrexis’ separation from Myriad
Genetics, Myrexis assumed liability for certain pending or threatened legal matters related to its business, and is obligated to
indemnify Myriad Genetics for any liability arising out of such matters, including any costs and expenses of litigating such matters,
including payment of attorneys’ fees incurred to defend against claims. Accordingly, pursuant to the terms of the Settlement
Agreement, in consideration of AIA’s release of claims against and covenant not to sue the other Parties for matters related
to the Litigation, Myrexis agreed to (1) pay AIA approximately $1,525,000, and (2) transfer to AIA all program rights
and assets associated with Myrexis’ Hsp90 inhibitor program, cancer metabolism inhibitor program, and small molecule anti-interferon
(IKK€/TBK1) inhibitor program (the “Program Assets Transfer”). AIA assumed Myrexis’ liabilities under the
program contracts being transferred to AIA and all liabilities for the further conduct of the programs, subject, in each case,
to certain exclusions, including liabilities accruing or arising from events occurring prior to the Program Assets Transfer. The
Settlement Agreement also includes a release of claims against AIA by each of Myrexis, Myriad and Mayo. Simultaneously with the
delivery of the settlement payment to AIA by Myrexis on December 21, 2012, the Parties filed a stipulation of dismissal of
the Litigation.
On December 21, 2012, David W. Gryska
informed Myrexis of his resignation as Acting President and Chief Executive Officer, Chief Operating Officer and member of the
Board of Directors, effective December 24, 2012.
On January 22, 2013, the Board unanimously
determined to cancel the Special Meeting. The Board of Directors decided, after extensive and careful consideration of strategic
alternatives, to abandon the proposed Plan of Dissolution and instead, the Board of Directors declared a special cash distribution
to shareholders of record at the close of business on February 4, 2013 in the amount of $2.86 per share. The cash distribution
was paid on February 15, 2013, and the Company’s common stock began trading ex-dividend on Tuesday, February 19,
2013.
On January 22, 2013, The Board of Directors
also appointed Jonathan M. Couchman as a Class II director of the Company and as its President and Chief Executive Officer. Subsequent
to Mr. Couchman’s appointment to the Board of Directors, the remaining members of the Board of Directors, Gerald P.
Belle, Jason M. Aryeh, Robert Forrester, Timothy R. Franson, M.D., John T. Henderson, M.D., and Dennis H. Langer,
M.D., J.D., resigned.
On February 13, 2013, Steven Scheiwe and
Michael Pearce were appointed to the Board of Directors.
On February 28, 2013, Andrea Kendell’s
employment as CFO terminated voluntarily and on March 1, 2013, Mr. Couchman was appointed CFO of Myrexis.
On April 26, 2013, the Company held its 2012 Annual Meeting of shareholders (the “2012 Annual Meeting”).
At the 2012 Annual Meeting, stockholders of the Company elected Steven D. Scheiwe as a Class I director for a term ending at the
2013 annual meeting of stockholders, Jonathan M. Couchman as a Class II director for a term ending at the 2014 annual meeting of
stockholders and Michael C. Pearce (“Disinterested Director”) as a Class III director for a term ending at the 2015
annual meeting of stockholders.
After giving effect to the payment of the
cash distribution on February 15, 2013, as of June 30, 2013, we had approximately $1.1 million in cash and cash equivalents. The
Company is in the early stages of reviewing the scope of strategic alternatives that may be available for consideration. Due to
limited cash resources available to the Company, the delisting by Nasdaq of the Company’s shares and the potential impact
on the Company’s NOLs of any significant share issuance under Section 382 of the Internal Revenue Code, among other things,
the Company may conclude to liquidate if available strategic alternatives cannot be identified in a reasonable period of time.
To the extent any strategic alternatives or transactions are identified, it will most likely be necessary to raise additional funds
to consummate any such alternative or transaction, although there is no assurance we will be able to do so. We do not know if we
will be successful in pursuing any strategic alternative or that any transaction will occur; however, we are committed to pursuing
a strategic direction that our Board of Directors believes is in the best interests of our shareholders. We currently do not have
any drugs that are commercially available.
In light of the Company’s limited
activities at the present time, the Company has determined that it is advisable to terminate the registration of its common stock
under the Securities Exchange Act of 1934, as amended. The Company anticipates filing a Form 15 with the Securities and Exchange
Commission (the “SEC”) to effect this deregistration in the near future.
After careful
consideration, the Board of Directors decided to deregister based on its belief that the savings the Company will achieve as a
result of deregistration, particularly on costs related to the preparation and filing of SEC reports and compliance with Sarbanes-Oxley
obligations, will benefit shareholders, and such benefits will outweigh any advantages of continuing as an SEC reporting company.
The obligation of filing SEC reports and complying with Sarbanes-Oxley has become too burdensome and expensive for a company of
Myrexis’ size. Upon the filing of the Form 15, the Company’s obligation to file periodic and current reports with the
SEC, including Forms 10-K, 10-Q, and 8-K, will be suspended.
During the years ended June 30, 2013,
2012 and 2011, we reported $0, $0 and $185,000, respectively in revenues associated with research services related to short-term
research agreements and a net loss of $11.6 million, $31.2 million and $38.7 million, respectively.
We expect to incur net losses for the foreseeable
future and that such losses will fluctuate from quarter to quarter.
Our drug research and development expenses
include costs incurred for our drug candidates. The only costs we track by each drug candidate are external costs such as services
provided to us by clinical research organizations, manufacturing of drug supply, and other outsourced research. We do not assign
or allocate internal costs such as salaries and benefits, facilities costs, lab supplies and the costs of preclinical research
and studies to individual development programs. We also incurred costs related to external research collaborations from our research
services business. We track all underlying principal costs associated with our research collaborations. All development costs for
our drug candidates and external research collaborations are expensed as incurred. Our research and development expense for Azixa
(for which development was suspended in September 2011), our clinical-stage drug candidate, MPC-3100, our preclinical-stage drug
candidates, MPC-9528, MPC-8640, IKKe and MPC-0767 (for which development was suspended in February 2012), and our discontinued
drug candidate MPC-4326 during the fiscal years ended June 30, 2013, 2012 and 2011 are as follows:
|
|
Years Ended June 30,
|
|
(In thousands)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
External costs, drug candidates:
|
|
|
|
|
|
|
|
|
|
|
|
|
Azixa
|
|
$
|
25
|
|
|
$
|
1,367
|
|
|
$
|
1,388
|
|
MPC-4326
|
|
|
3
|
|
|
|
40
|
|
|
|
(144
|
)(1)
|
MPC-3100
|
|
|
14
|
|
|
|
214
|
|
|
|
1,202
|
|
MPC-0767
|
|
|
7
|
|
|
|
980
|
|
|
|
278
|
|
MPC-9528
|
|
|
—
|
|
|
|
—
|
|
|
|
264
|
|
MPC-8640
|
|
|
146
|
|
|
|
1,124
|
|
|
|
121
|
|
IKKe
|
|
|
68
|
|
|
|
269
|
|
|
|
—
|
|
Sub-total direct costs
|
|
|
263
|
|
|
|
3,994
|
|
|
|
3,109
|
|
Internal costs, drug candidates
|
|
|
65
|
|
|
|
4,645
|
|
|
|
5,318
|
|
Preclinical development costs
|
|
|
137
|
|
|
|
5,591
|
|
|
|
13,157
|
|
External research collaborations
|
|
|
—
|
|
|
|
—
|
|
|
|
712
|
|
Total research and development
|
|
$
|
465
|
|
|
$
|
14,230
|
|
|
$
|
22,296
|
|
|
(1)
|
Amount includes a $0.2 million credit recorded in fiscal 2011 resulting from a favorable change in estimate for outside clinical
services which were later terminated due to the discontinuation of the program.
|
We do not expect any future research and
development costs as a result of the decision to suspend further development activities for all preclinical and clinical programs
and as a result of the transfer of all preclinical and clinical programs to third parties.
Critical Accounting Policies and Use of Estimates
Critical accounting policies are those
policies which are both important to the portrayal of a company’s financial condition and results and require management’s
most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that
are inherently uncertain. Our critical accounting policies are as follows:
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•
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clinical trial expenses;
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•
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share-based payment expense; and
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•
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impairment of long-lived assets.
|
Income Taxes
Our income tax provision is based on income
before taxes and is computed using the liability method in accordance with Accounting Standards Codification, or ASC, 740—
Income
Taxes
. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis
of assets and liabilities using tax rates projected to be in effect for the year in which the differences are expected to reverse.
Significant estimates are required in determining our provision for income taxes. Some of these estimates are based on interpretations
of existing tax laws or regulations, or the expected results from any future tax examinations. Various internal and external factors
may have favorable or unfavorable effects on our future provision for income taxes. Those factors include, but are not limited
to, changes in tax laws, regulations and/or rates, the results of any future tax examinations, changing interpretations of existing
tax laws or regulations, changes in estimates of prior years’ items, past levels of R&D spending, acquisitions, changes
in our corporate structure, and changes in overall levels of income before taxes all of which may result in periodic revisions
to our provision for income taxes.
Developing our provision for income taxes,
including our effective tax rate and analysis of potential uncertain tax positions, if any, requires significant judgment and expertise
in federal and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities
and any estimated valuation allowance we deem necessary to offset deferred tax assets. We have established a valuation allowance
to fully offset our deferred tax assets. We have also established a liability for unrecognized tax benefits from uncertain tax
positions. Due to the fact that we currently have net operating loss and research credit carryforwards, the liability for unrecognized
tax benefits is presented as a reduction of the deferred tax asset (prior to any consideration of the need for a valuation allowance)
which has been established for the net operating loss and research credit carryforwards.
Our
judgment and tax strategies are subject to audit by various taxing authorities. While we believe we have provided adequately for
our uncertain income tax positions in our consolidated financial statements, an adverse determination by these taxing authorities
could have a material adverse effect on our consolidated financial condition, results of operations or cash flows. Interest and
penalties on income tax items are included as a component of overall income tax expense.
Clinical Trial Expenses
Prior to our suspension of drug development
activities, the cost of our clinical trials was based, in part, on estimates of the services received and efforts expended pursuant
to contracts with numerous clinical trial centers and clinical research organizations, or the CROs. We contracted with third parties
to perform various clinical trial activities in the development of our drug candidates. The financial terms of the agreements varied
from contract to contract, were subject to negotiation and resulted in uneven payment flows. Payments under the contracts depended
on factors such as the achievement of certain events, the successful enrollment of patients or the completion of portions of the
clinical trial or similar conditions. The objective of our accrual policy was to match the recording of expenses in our financial
statements to the actual services received and efforts expended. As such, we recognized direct expenses related to each patient
enrolled in a clinical trial on an estimated cost-per-patient basis as services were performed. In addition, we considered information
from our clinical operations group regarding the status of our clinical trials, we relied on information from CROs, such as estimated
costs per patient, to calculate our accrual for direct clinical expenses at the end of each reporting period. For indirect expenses,
which related to site and other administrative costs to manage our clinical trials, we relied on information provided by the CRO,
including costs incurred by the CRO as of a particular reporting date, to calculate our indirect clinical expenses. In connection
with the early termination of a clinical trial, we recognized expenses in an amount based on our estimate of the remaining non-cancelable
obligations associated with the winding down of the clinical trial, which we confirmed directly with the CRO.
If our CROs were to have either under or
over reported the costs that they had incurred or if there was a change in the estimated per patient costs, it could have had an
impact on our clinical trial expenses during the period in which they reported a change in estimated costs to us. Adjustments to
our clinical trial accruals primarily relate to indirect costs, for which we placed significant reliance on our CROs for accurate
information at the end of each reporting period.
Share-Based Payment Expense
Share-based compensation expense standards
set accounting requirements for “share-based” compensation to employees, including employee stock purchase plans, and
require us to recognize, as expense, in our statements of operations, the grant date fair value of our stock options and other
equity-based compensation. The determination of grant date fair value is estimated using an option-pricing model, which includes
variables such as the terms of each grant, the expected volatility of our share price, the exercise behavior of our employees,
interest rates, and dividend yields. These variables are projected based on our historical data, experience, and other factors.
Changes in any of these variables could result in material adjustments to the expense recognized for share-based payments.
In connection with the separation and spin-off
from Myriad Genetics and related transactions, each outstanding Myriad Genetics stock option was converted into an adjusted Myriad
Genetics common stock option, exercisable for the same number of shares of common stock as the original Myriad Genetics option,
and a new Myrexis common stock option, exercisable for one-fourth of the number of shares of common stock as the original Myriad
Genetics option. An adjusted exercise price of each converted option was determined in accordance with Section 409A and Section 422
of the Internal Revenue Code of 1986, as amended. All other terms of the converted options remain the same however; the vesting
and expiration of the converted options will be based on the optionholder’s continuing employment with Myriad Genetics or
Myrexis, as applicable, following the separation.
As a result of the option modifications
that occurred in connection with the separation from Myriad Genetics, Myriad Genetics measured the potential accounting impact
of these option modifications. Based upon the analysis, which included a comparison of the fair value of the modified options granted
to our employees and directors immediately after the modification with the fair value of the original option immediately prior
to the modification, it was determined that there was no incremental compensation expense. All unrecognized compensation expense
at June 30, 2009 that is related to Myriad Genetics options and Myrexis options that are held by current Myrexis employees
and directors was recognized by us over the remaining vesting term of the option. All such expense relating to Myrexis options
held by current and former Myriad Genetics employees, directors or consultants will not be recognized by us.
Impairment of Long-Lived Assets
We assess the impairment of long-lived
assets when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be
recoverable. Factors that we consider in deciding when to perform an impairment review include significant negative industry or
economic trends, and significant changes or planned changes in our use of the assets. We measure the recoverability of assets that
will continue to be used in our operations by comparing the carrying value of the asset grouping to our estimate of the related
total future undiscounted net cash flows. If an asset grouping’s carrying value is not recoverable through the related undiscounted
cash flows, the asset grouping is considered to be impaired. The impairment is measured by comparing the difference between the
asset grouping’s carrying value and its fair value. Fair value is the price that would be received from selling an asset
in an orderly transaction between market participants at the measurement date. Long-lived assets such as intangible assets and
property, plant and equipment are considered non-financial assets, and are recorded at fair value only when an impairment charge
is recognized. We recorded impairment charges for the years ended June 30, 2013, 2012 and 2011 of $20,000, $0.3 million and
$1.1 million, respectively. These charges are reflected in the statement of operations and comprehensive loss in general and administrative
expenses.
We evaluated our equipment as of June 30,
2012 and management had committed to a plan to sell our laboratory equipment. Equipment categorized as equipment held for sale
on the balance sheet at June 30, 2012 totaled $1.0 million. Equipment held for sale is no longer subject to depreciation,
and is recorded at the lower of depreciated carrying value or fair market value less costs to sell. All such equipment had been
sold as of June 30, 2013.
Results of Operations
Years ended June 30, 2013 and 2012
Research and development expenses are comprised
primarily of salaries and related personnel costs, laboratory supplies, equipment costs, and costs associated with our clinical
trials. Research and development expenses for the fiscal year ended June 30, 2013 were $0.5 million compared to $14.2 million
in 2012. This 97% decrease was primarily due to:
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decreased internal preclinical developments costs of approximately $5.5 million resulting from a reduction in headcount and
the decision to suspend all further activities for all preclinical and clinical activities; and
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•
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decreased external and internal drug candidate costs of $8.3 million as a result of the decision to suspend all further activities
for all preclinical and clinical activities,
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We do not expect any future research and
development costs as a result of the decision to suspend further development activities for all preclinical and clinical programs
and as a result of the transfer of all preclinical and clinical programs to third parties.
General and administrative expenses consist
primarily of salaries and related personnel costs for business development, executive, legal, finance and accounting, information
technology, human resources, and allocated facilities expenses. General and administrative expenses for the fiscal year ended June 30,
2013 were $11.5 million, compared to $17.6 million in 2012. The decrease in general and administrative expenses of 35% was due
primarily to a decrease in the lease expense, share-based compensation, depreciation expense and reduced severance costs during
the year ended June 30, 2013 in comparison for the year ended June 30, 2012. We recognized $2.2 million in lease expense for
the year ended June 30, 2013. We recognized $3.8 million in lease expense for the year ended June 30, 2012. We expect
to see reduced general and administrative expenses in future years as a result of the decision to suspend further development activities
for all preclinical and clinical programs and other related wind down activities.
Other income (expense) for the fiscal year
ended June 30, 2013 was $0.4 million compared to $0.6 million for the fiscal year ended June 30, 2012. Other income for
the year ended June 30, 2013, reflects interest income and gains on sale of assets of $0.3 million. Other income for the year
ended June 30, 2012, reflects interest income and realized gains on our marketable securities and a gain on sale of assets
of $0.3 million.
Years ended June 30, 2012 and 2011
Research revenue is comprised of research
services related to short-term research agreements. Research revenue for the fiscal year ended June 30, 2012 was $0 compared
to $185,000 in the prior year. The decrease in research revenue was primarily attributable to stopping all contract research services
activity in March 2011 as a result of a corporate reorganization.
Research and development expenses are comprised
primarily of salaries and related personnel costs, laboratory supplies, equipment costs, and costs associated with our clinical
trials. Research and development expenses for the fiscal year ended June 30, 2012 were $14.2 million compared to $22.3 million
in 2011. This 36% decrease was primarily due to:
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•
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decreased internal preclinical developments costs of approximately $7.6 million resulting from a reduction in headcount;
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•
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increased external drug candidate costs associated with our Nampt and Hsp90 drug candidates of $1.9 million, partially offset
by decreased costs of $1.1 million associated with the development of other drug candidates and the timing of the trial initiations
and completions; and
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•
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decreased external research collaboration costs of $0.7 million associated with a reduction in headcount.
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General and administrative expenses consist
primarily of salaries and related personnel costs for business development, executive, legal, finance and accounting, information
technology, human resources, and allocated facilities expenses. General and administrative expenses for the fiscal year ended June 30,
2012 were $17.6 million, compared to $18.3 million in 2011. The decrease in general and administrative expenses of 4% was due primarily
to a decrease in the loss on impairment of assets from $1.1 million to $0.3 million, share-based compensation and depreciation
expense, partially offset by increased severance and professional fees during the year ended June 30, 2012. We recognized
$2.5 million in severance expenses recorded in general and administrative for the year ended June 30, 2012 in connection with
executive management changes, the November 2011 corporate reorganization and the March 2012 resource alignment. We recognized $0.5
million in severance expenses recorded in general and administrative for the year ended June 30, 2011.
Other income (expense) for the fiscal year
ended June 30, 2012 was $0.6 million compared to $1.7 million for the fiscal year ended June 30, 2011. Other income for
the year ended June 30, 2012, reflects interest income and realized gains on our marketable securities and a gain on sale
of assets of $0.3 million. Other income for the year ended June 30, 2011 reflects interest income and realized gains on our
marketable securities. Other income for the year ended June 30, 2011, includes a $1.2 million one-time grant received in November
2010 as a part of the qualifying therapeutic discovery project under section 48D of the Internal Revenue Code.
Liquidity and Capital Resources
Net cash used in operating activities was
$13.0 million during the fiscal year ended June 30, 2013 compared to $27.8 million used by operating activities during the
prior fiscal year. The change in cash flow from operating activity can be attributed primarily to the higher net loss in fiscal
2012.
Our investing activities provided $71.4
million in cash during the fiscal year ended June 30, 2013 compared to $27.1 million during the prior fiscal year. The change
is primarily due to the maturities and sales of our marketable investment securities. In addition, we received $1.5 million in
proceeds from the sale of assets during the year ended June 30, 2013. We do not anticipate investments in additional equipment
and leasehold improvements in the future.
Approximately $76.9 million in cash was
used in financing activities during the year ended June 30, 2013, as a result the payment of the special cash distribution
made February 15, 2013, partially offset by proceeds from stock options exercised and proceeds from the issuance of common stock
during the period, compared to $1.2 million provided by financing activities compared to 2012.
As of June 30, 2013, we had $1.1 million
in cash and cash equivalents a decrease of $18.6 million from $19.7 million as of June 30, 2012.
As discussed above, on January 22, 2013, our Board of Directors unanimously determined to cancel
the special meeting of our shareholders scheduled for January 23, 2013, and instead, the Board of Directors declared a special
cash distribution to shareholders of record as of the close of business on February 4, 2013 in the amount of $2.86 per share.
The $1.1 million remaining cash and cash equivalents in the Company is anticipated to be sufficient to fund ongoing public company
and other related operational costs for at least 12 months. Our future capital requirements, cash flows, and results of operations
will be affected by and depend on many factors that are currently unknown to us, including:
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the outcome of our new management’s further review and evaluation of strategic alternatives;
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changes in our business strategy;
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•
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regulatory developments or enforcement in the United States and foreign countries;
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•
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the ability to partner, sell or out-license rights to our remaining intellectual property assets on favorable terms;
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•
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failure to secure adequate capital to fund our operations if and when needed;
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•
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future sales of our common stock;
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•
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general market conditions;
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•
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economic and other external factors or other disasters or crises;
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•
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period-to-period fluctuations in our financial results; and
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•
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overall fluctuations in U.S. equity markets.
|
To the extent our capital resources are
insufficient to meet our future capital requirements, we will need to finance our future cash needs through public or private equity
offerings, collaboration agreements, debt financings or licensing arrangements. Additional funding may not be available to us on
acceptable terms or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders.
For example, if we raise additional funds by issuing equity securities or by selling convertible debt securities, further dilution
to our existing stockholders may result. If we raise funds through licensing arrangements, we may be required to relinquish rights
to our technologies, or grant licenses on terms that are not favorable to us.
Off-Balance Sheet Arrangements
None.
Contractual Obligations
None.
Effects of Inflation
We do not believe that inflation has had
a material impact on our business, revenues, or operating results during the periods presented.
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
As of June 30, 2013, we hold a Certificate
of Deposit in the amount of $75,000 which matured on July 10, 2013 and was not renewed. The balance of our portfolio consists of
only cash and cash equivalents.
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
The information required by this Item 8
is included at the end of this Annual Report on Form 10-K beginning on page F-1.
MYREXIS, INC.
Index to Financial Statements
|
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Number
|
Reports of Independent Registered Public Accounting Firms
|
|
F-2 – F-3
|
Balance Sheets as of June 30, 2013 and 2012
|
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F-4
|
Statements of Operations and Comprehensive Loss for the Years Ended June 30, 2013, 2012 and 2011
|
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F-5
|
Statements of Stockholders’ Equity for the Years Ended June 30, 2013, 2012 and 2011
|
|
F-6
|
Statements of Cash Flows for the Years Ended June 30, 2013, 2012 and 2011
|
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F-7
|
Notes to Financial Statements
|
|
F-8
|
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
|
On February 4, 2013, we were notified by
our independent registered public accounting firm, Ernst & Young LLP (“Ernst & Young”), that upon completion
of Ernst & Young’s review of the Company’s unaudited interim condensed consolidated financial statements as of
December 31, 2012 and for the three and six month periods ended December 31, 2012 and 2011, Ernst & Young would resign as the
Company’s independent registered public accounting firm. Such review was completed on February 8, 2013.
The reports of Ernst & Young on the Company’s
consolidated financial statements for the past two fiscal years ended June 30, 2012 and 2011 did not contain an adverse opinion
or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
In connection with the audits of the Company’s
consolidated financial statements for each of the two fiscal years ended June 30, 2012 and 2011, and in the subsequent interim
period through February 8, 2013, there were no disagreements with Ernst & Young on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope and procedures which, if not resolved to the satisfaction of Ernst
& Young would have caused Ernst & Young to make reference to the matter in their report.
There were no “reportable events”
as that term is described in Item 304(a)(1)(v) of Regulation S-K that occurred during the Company's fiscal years ended June 30,
2012 and 2011 or during the subsequent interim period through February 8, 2013.
On February 8, 2013, the Company engaged
EisnerAmper LLP (“EisnerAmper”) as the Company’s new independent registered public accounting firm to audit the
Company’s consolidated financial statements for the fiscal year ending June 30, 2013. The appointment of EisnerAmper was
approved by the sole director of the Company.
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
1. Disclosure Controls and Procedures
We maintain disclosure controls and procedures
(Disclosure Controls) within the meaning of Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or
the Exchange Act. Our Disclosure Controls are designed to ensure that information required to be disclosed by us in the reports
we file or submit under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our Disclosure Controls are
also designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our Chief Executive Officer, who is also
the Chief Financial Officer, after evaluating the effectiveness of our Disclosure Controls as of the end of the period covered
by this Annual Report on Form 10-K, has concluded that, based on such evaluation, our Disclosure Controls were not effective based
on the material weakness noted below to ensure that information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules
and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer,
or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
2. Internal Control Over Financial Reporting
(a) Management’s Annual Report on Internal Control
over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules
13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company’s
principal executive and principal financial officers and effected by the company’s board of directors, management and other
personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that:
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•
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pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company;
|
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and
|
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
company’s assets that could have a material effect on the financial statements.
|
Because of those inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Our management assessed the effectiveness of
our internal control over financial reporting as of June 30, 2013. In making their assessment, management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control—Integrated
Framework.
Based on our assessment, management believes that, as of June 30, 2013, our internal control over financial
reporting was not effective based on those criteria, as the following material weakness in internal control was identified:
|
·
|
the Company, given its relatively small size, did not have sufficient segregation of duties over
a variety of financial and disclosure controls.
|
Our independent registered public accounting
firm has issued its report on the effectiveness of our internal control over financial reporting, which is included below.
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Stockholders
Myrexis, Inc.
We have audited Myrexis Inc.’s (the
“Company”) internal control over financial reporting as of June 30, 2013, based on criteria established in
Internal
Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit.
We conducted our audit in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
A material weakness is a control deficiency, or combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or
interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified
and included in management’s assessment: The Company did not have sufficient segregation of duties over its financial process
or disclosures. This material weakness was considered in determining the nature, timing, and extent of audit test applied in our
audit of the 2013 financial statements, and this report does not affect our report dated July 16, 2013 on those financial statements.
In our opinion, because of the effect of
the material weaknesses described above on the achievement of the objectives of the control criteria, Myrexis, Inc. has not maintained
effective internal control over financial reporting as of June 30, 2013, based on criteria established in
Internal Control -
Integrated Framework
issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the balance sheet of Myrexis, Inc. as of June 30, 2013, and the related statements of operations and comprehensive
loss, stockholders’ equity, and cash flows for the year ended June 30, 2013, and our report dated July 16, 2013 expressed
an unqualified opinion thereon.
/s/ EisnerAmper LLP
Iselin, New Jersey
July 16, 2013
(b) Change in Internal Control over Financial
Reporting
The following change in our internal control
over financial reporting was identified in connection with the evaluation of such internal control that occurred during the fourth
quarter of our last fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting: due to the reduction in employees from five to one during the fourth quarter, there no longer exists
adequate segregation of duties at Myrexis.
|
Item 9B.
|
OTHER INFORMATION
|
Not applicable.
Notes to Financial Statements
June 30, 2013, 2012, and 2011
|
(1)
|
Organization and Summary of Significant Accounting Policies
|
|
(a)
|
Organization and Business Description
|
Prior to February 2012, Myrexis,
Inc. (“Myrexis” or the “Company”) was a biopharmaceutical company that generated a pipeline of differentiated
drug candidates in oncology and autoimmune diseases. In February 2012, the Company announced that it had suspended development
activity on all of its preclinical and clinical programs and retained Stifel Nicolaus Weisel, an investment banking firm, to assist
in reviewing and evaluating a full range of strategic alternatives to enhance shareholder value. Thereafter, in March 2012, the
Company initiated an alignment of its resources involving a phased reduction in its workforce from approximately 59 employees to
1 employee as of June 30, 2013.
Based on the Company’s
evaluation of strategic alternatives, it determined to pursue the acquisition of one or more commercial-stage biopharmaceutical
assets, with the goal of building a commercial-stage biopharmaceutical company by optimizing their performance and profitability.
Integral to these efforts, on May 11, 2012, the Company announced a change in management, including the appointment of Richard
B. Brewer as President and Chief Executive Officer and David W. Gryska as Chief Operating Officer. In addition, both Mr. Brewer
and Mr. Gryska were appointed as members of the Board of Directors.
On August 15, 2012, the
Company announced the death of Richard B. Brewer, its President and Chief Executive Officer. The Board of Directors appointed
David W. Gryska as the Acting President and Chief Executive Officer while considering succession plans and proceeded to further
evaluate the Company’s strategic direction in light of this development and the Company’s progress to date in identifying
attractive biopharmaceutical assets.
On November 9, 2012, the
Board of Directors concluded that it appeared unlikely that a strategic transaction at a valuation materially in excess of the
Company’s estimated liquidation value would be achieved in the near term. Based on these and other factors, the Board of
Directors concluded that a statutory dissolution and liquidation was in the best interests of the Company and its stockholders
and therefore unanimously adopted a Plan of Complete Liquidation and Dissolution (the “Plan of Dissolution”), subject
to stockholder approval.
On December 14, 2012,
the Company filed proxy materials with the Securities and Exchange Commission (“SEC”) for a special meeting of stockholders
on January 23, 2013, to consider and vote upon the Plan of Dissolution (the “Special Meeting”).
On December 21, 2012, we announced
that we entered into a settlement agreement (the “Settlement Agreement”) that settled fully and finally a lawsuit (the
“Litigation”) brought by the Alzheimer’s Institute of America, Inc. (“AIA”) against Myriad Genetics,
Inc. (“Myriad Genetics” or “MGI”) and its wholly owned subsidiary, Myriad Therapeutics, Inc. (formerly
known as Myriad Pharmaceuticals, Inc.) (referred to hereinafter together with Myriad Genetics as “Myriad”), and the
Mayo Clinic Jacksonville and Mayo Foundation for Medical Education and Research (referred to hereinafter together as “Mayo”).
Specifically, AIA asserted that Myriad and Mayo infringed certain patents allegedly owned by AIA in connection with Myriad’s
research and development of its failed Alzheimer’s drug candidate Flurizan (hereinafter referred to as the “Litigation”).
Myrexis, Myriad, Mayo and AIA are hereinafter referred to collectively as the “Parties”. As previously disclosed, pursuant
to our Separation and Distribution Agreement with Myriad Genetics, dated June 30, 2009, at the time of Myrexis’ separation
from Myriad Genetics, Myrexis assumed liability for certain pending or threatened legal matters related to its business, and is
obligated to indemnify Myriad Genetics for any liability arising out of such matters, including any costs and expenses of litigating
such matters, including payment of attorneys’ fees incurred to defend against claims. Accordingly, pursuant to the terms
of the Settlement Agreement, in consideration of AIA’s release of claims against and covenant not to sue the other Parties
for matters related to the Litigation, Myrexis agreed to (1) pay AIA approximately $1,525,000, and (2) transfer to AIA all program
rights and assets associated with Myrexis’ Hsp90 inhibitor program, cancer metabolism inhibitor program, and small molecule
anti-interferon (IKK€/TBK1) inhibitor program (the “Program Assets Transfer”). AIA assumed Myrexis’ liabilities
under the program contracts being transferred to AIA and all liabilities for the further conduct of the programs, subject, in each
case, to certain exclusions, including liabilities accruing or arising from events occurring prior to the Program Assets Transfer.
The Settlement Agreement also includes a release of claims against AIA by each of Myrexis, Myriad and Mayo. Simultaneously with
the delivery of the settlement payment to AIA by Myrexis on December 21, 2012, the Parties filed a stipulation of dismissal of
the Litigation.
On December 21, 2012,
David W. Gryska informed Myrexis of his resignation as Acting President and Chief Executive Officer, Chief Operating Officer and
member of the Board of Directors, effective December 24, 2012.
On January 22, 2013, the Board
unanimously determined to cancel the Special Meeting. The Board of Directors decided, after extensive and careful consideration
of strategic alternatives, to abandon the proposed Plan of Dissolution and instead, the Board of Directors declared a special cash
distribution to shareholders of record at the close of business on February 4, 2013 in the amount of $2.86 per share. The cash
distribution of $78.6 million was paid on February 15, 2013, and the Company’s common stock began trading ex-dividend on
Tuesday, February 19, 2013.
On January 22, 2013, The Board
of Directors also appointed Jonathan M. Couchman as a Class II director of the Company and as its President and Chief Executive
Officer. Mr. Couchman is also Chairman of the Board, Chief Executive Officer and Chief Financial Officer of Xstelos Holdings, Inc.
(see Note 12 – Related Parties). Subsequent to Mr. Couchman’s appointment to the Board of Directors, the remaining
members of the Board of Directors, Gerald P. Belle, Jason M. Aryeh, Robert Forrester, Timothy R. Franson, M.D., John T. Henderson,
M.D., and Dennis H. Langer, M.D., J.D., resigned.
On February 13, 2013, Steven
Scheiwe and Michael Pearce were appointed to the Board of Directors.
On February 28, 2013, Andrea
Kendell’s employment as CFO terminated voluntarily and on March 1, 2013, Mr. Couchman was appointed CFO of Myrexis.
The preparation of the financial
statements in accordance with accounting principles generally accepted in the United States of America requires Myrexis management
to make estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Significant
items subject to such estimates and assumptions include or have included assessment of impairment of long-lived assets, deferred
tax valuation allowances, the carrying amount of certain accrued liabilities and share-based compensation. Actual results could
differ from those estimates presented herein.
|
(c)
|
Cash and Cash Equivalents
|
The Company considers all cash
on deposit, money market accounts, and highly liquid debt instruments purchased with original maturities of three months or less
to be cash and cash equivalents. The Company maintains cash and cash equivalents in bank deposit and other investment accounts
which, at times, may exceed federally insured limits.
The loss per basic and diluted
share is calculated by dividing net loss by the weighted-average number of shares outstanding during the reported period.
As of June 30, 2013, there
were outstanding potential common equivalent shares of 2,200,589 compared to 2,648,774 and 2,613,945, as of the same periods in
2012 and 2011 which were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive.
These potential dilutive common equivalent shares may be dilutive to basic earnings per share in future periods.
The calculation of diluted
loss per share is the same as the basic loss per share in all years since the inclusion of any potentially dilutive securities
would be anti-dilutive.
|
(e)
|
Fair Value Disclosure
|
At June 30, 2013 and 2012,
the carrying value of the Company’s accounts payable and accrued liabilities approximates fair value, principally because
of the short term nature of these liabilities.
Research revenue is comprised
of research services related to short-term research agreements. Research revenue reflects revenues earned utilizing the Company’s
prior expertise to identify and characterize protein-protein interactions. In connection with the Company’s March 2011 corporate
reorganization, it stopped all contract research services activity.
|
(g)
|
Research and Development Expenses
|
Research and development expenses
consist primarily of costs associated with the clinical trials of the Company’s product candidates, development materials,
compensation and related benefits for research and development personnel, costs for consultants, and various overhead costs. Research
and development costs are expensed as incurred. In February 2012, the Company suspended activity on all of its preclinical and
clinical programs.
|
(h)
|
Equipment Held for Sale
|
In conjunction with the suspension
of all development activities in 2012, the Company evaluated its equipment and management committed to a plan to sell the Company’s
laboratory equipment. Equipment categorized as equipment held for sale on the balance sheet at June 30, 2012 totaled $1.0
million. Equipment held for sale is no longer subject to depreciation, and is recorded at the lower of depreciated carrying value
or fair market value less costs to sell. All such equipment had been sold as of June 30, 2013.
|
(i)
|
Equipment and Leasehold Improvements
|
Equipment and leasehold improvements
are stated at cost. Depreciation and amortization are computed using the straight-line method based on the lesser of estimated
useful lives of the related assets or lease terms. Equipment items had depreciable lives of five years. Leasehold improvements
were being depreciated over the shorter of the estimated useful lives or the associated lease terms, which ranged from three to
fifteen years. For the years ended June 30, 2013, 2012, and 2011, the Company recorded depreciation expense of $0.4 million,
$1.3 million, and $1.7 million, respectively. As of June 30, 2013, the Company had sold all its equipment and the leasehold improvements
had been completely amortized as a result of the termination of the related lease.
(j) Impairment of Long-Lived Assets
Long-lived assets are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment
charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less costs to sell. For the years ended June 30,
2013, 2012 and 2011, $20,000, $0.3 million and $1.1 million, respectively, was recorded for impairment of assets, and is included
in general and administrative expenses in the statements of operations.
The Company recognizes income
taxes under the liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.
The provision for income taxes,
including the effective tax rate and analysis of potential tax exposure items, if any, requires significant judgment and expertise
in federal and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities
and any estimated valuation allowances deemed necessary to recognize deferred tax assets at an amount that is more likely than
not to be realized. The Company has provided full valuation allowances against its deferred tax assets. The Company’s filings,
including the positions taken therein, are subject to audit by various taxing authorities. While the Company believes it has provided
adequately for its income tax liabilities, adverse determinations by these taxing authorities could have a material adverse effect
on the consolidated financial condition, results of operations or cash flows.
|
(l)
|
Share-based Compensation
|
The Company recognizes compensation
expense using a fair-value based method for costs related to stock options and other equity-based compensation. The expense is
measured based on the grant date fair value of the awards that are expected to vest, and the expense is recorded over the applicable
requisite service period. For time-based stock options and restricted stock, compensation expense is recognized over the vesting
period from the vesting commencement date using the straight-line method. In the absence of an observable market price for a share-based
award, the fair value is based upon a valuation methodology that takes into consideration various factors, including the exercise
price of the award, the expected term of the award, the current price of the underlying shares, the expected volatility of the
underlying share price based on peer companies, the expected dividends on the underlying shares and the risk-free interest rate.
|
(m)
|
Marketable Investment Securities
|
The Company has classified
its marketable investment securities as available-for-sale. These securities are carried at estimated fair value with unrealized
holding gains and losses, net of any related tax effect, included in accumulated other comprehensive income in stockholders’
equity until realized. Gains and losses on investment security transactions are reported on the specific-identification method.
Dividend and interest income are recognized when earned.
A decline in the market value
of any available-for-sale security below cost that is deemed other than temporary results in a charge to earnings and establishes
a new cost basis for the security. Losses are charged against “Other income (expense)” when a decline in fair value
is determined to be other than temporary. The Company reviews several factors to determine whether a loss is other than temporary.
These factors include but are not limited to: (i) the extent to which the fair value is less than cost and the cause for the
fair value decline, (ii) the financial condition and near term prospects of the issuer or declines in credit risk, (iii) the
length of time a security is in an unrealized loss position and (iv) the Company more likely than not, holding securities
for a period of time sufficient to allow for any anticipated recovery in fair value. The Company recognized no impairments on available-for-sale
securities for the years ended June 30, 2013, 2012 and 2011.
|
(n)
|
Segment and Related Information
|
The Company operates in one
reportable business segment, pharmaceutical development and related research activities.
The Company’s revenues
were derived from research performed in the United States. Additionally, all of the Company’s long-lived assets are located
in the United States.
|
(2)
|
Marketable Investment Securities
|
The amortized cost, gross unrealized
holding gains, gross unrealized holding losses, and fair value of available-for-sale securities by major security type and class
of security at June 30, 2013 and 2012 were as follows (in thousands):
|
|
Amortized
cost
|
|
|
Gross
unrealized
holding
gains
|
|
|
Gross
unrealized
holding
losses
|
|
|
Estimated
fair value
|
|
June 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
844
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificate of deposit
|
|
|
75
|
|
|
|
—
|
|
|
|
—
|
|
|
|
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
919
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
919
|
|
|
|
Amortized
cost
|
|
|
Gross
unrealized
holding
gains
|
|
|
Gross
unrealized
holding
losses
|
|
|
Estimated
fair value
|
|
June 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
19,707
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,707
|
|
Corporate bonds and notes
|
|
|
53,989
|
|
|
|
2
|
|
|
|
—
|
|
|
|
53,991
|
|
Federal agency issues
|
|
|
15,679
|
|
|
|
2
|
|
|
|
—
|
|
|
|
15,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
89,375
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
89,379
|
|
Cash and cash equivalents of
$1.1 million at June 30, 2013 consist of cash of $0.3 million and money market funds of $0.8 million. In addition, the Company
holds $75,000 restricted cash at June 30, 2013 in an 18-month certificate of deposit as collateral for a corporate purchasing card
program that matures in July 2013.This amount is included in short-term marketable investment securities on the balance sheet as
of June 30, 2013.
Cash and cash equivalents of $19.7 million at June 30,
2012 consist of cash and money market funds. In addition, the Company held $200,000 restricted cash in an 18-month certificate
of deposit as collateral for a corporate purchasing card program and $48,000 in a restricted cash account as collateral for office
equipment. These amounts were included in long-term marketable investment securities on the balance sheet as of June 30, 2012.
|
(3)
|
Fair Value Measurements
|
The fair value of the Company’s
financial instruments reflects the amounts that the Company estimates to receive in connection with the sale of an asset or paid
in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit
price). The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels:
Level 1—quoted prices in active markets for
identical assets and liabilities.
Level 2—observable inputs other than quoted
prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Some
of the Company’s marketable securities primarily utilize broker quotes in a non-active market for valuation of these securities.
Level 3—unobservable inputs.
The majority of the Company’s
financial instruments are valued using quoted prices in active markets or based on other observable inputs. The following table
sets forth the fair value of the Company’s financial assets that the Company re-measured:
(In thousands)
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
844
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
844
|
|
Certificate of deposit
|
|
|
—
|
|
|
|
75
|
|
|
|
—
|
|
|
|
75
|
|
Total
|
|
$
|
844
|
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
919
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
June 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
19,707
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,707
|
|
Corporate bonds and notes
|
|
|
—
|
|
|
|
53,991
|
|
|
|
—
|
|
|
|
53,991
|
|
Federal agency issues
|
|
|
—
|
|
|
|
15,681
|
|
|
|
—
|
|
|
|
15,681
|
|
Total
|
|
$
|
19,707
|
|
|
$
|
69,671
|
|
|
$
|
—
|
|
|
$
|
89,379
|
|
As of June 30, 2013 and
2012, the Company has no investments which were measured using unobservable (Level 3) inputs.
In conjunction with the suspension
of all development activities in 2012, the Company has evaluated its equipment and management committed to a plan to sell the Company’s
laboratory equipment. Equipment categorized as equipment held for sale on the balance sheet at June 30, 2012 totaled $1.0
million. Equipment held for sale is no longer subject to depreciation, and is recorded at the lower of depreciated carrying value
or fair market value less costs to sell. The fair value of the equipment was determined by using broker quotes for similar assets.
The Company has classified the inputs used for determining the fair value of these assets as Level 2 in the fair value hierarchy.
As of June 30, 2013, all such equipment had been sold.
(4) Leases
The Company entered into a sublease agreement with
Myriad Genetics (“MGI”) effective July 1, 2009, as amended on November 11, 2009, and February 19, 2010, that provided for the sublease
of certain office and laboratory space. The sublease for the Company’s facility took effect January 4, 2010 for a period
of three years from the commencement date with the option to extend for an additional four three-year periods. In addition, the
Company entered into a sublease agreement on June 1, 2012 that provided for the sublease of certain office space in Monterey,
CA. The sublease for this office space took effect July 1, 2012 for a period of one year from the commencement date with the
option to extend for an additional two one year periods. Rental expense for the years ended June 30, 2013, 2012 and 2011 was
$2.2 million, $3.8 million and $3.8 million, respectively. As of June 30, 2013, the Company had no future minimum lease payments
under the aforementioned sublease agreements.
|
(5)
|
Share-Based Compensation
|
Myrexis Share-Based Compensation Plans
The Company adopted two equity
incentive plans, the Myrexis, Inc. 2009 Employee, Director and Consultant Equity Incentive Plan (the “Equity Incentive Plan”)
and the Myrexis, Inc. 2009 Employee Stock Purchase Plan (the “ESPP”). At June 30, 2013, the Company was authorized
to issue a total of 8.6 million shares under the plans. The number of shares of common stock reserved for issuance under the
Equity Incentive Plan is subject to increase pursuant to an “evergreen” provision, which provides for an annual increase
equal to the lesser of 2,400,000 shares, 5% of the Company’s then outstanding shares of common stock, or such other amount
as the Board of Directors may determine. The Board of Directors determined not to increase the number of shares reserved under
the Equity Incentive Plan as of July 1, 2012. The number of shares of common stock reserved for issuance under the ESPP is
subject to increase pursuant to an “evergreen” provision, which provides for an annual increase equal to the lesser
of 500,000 shares, 2% of the Company’s then outstanding shares of common stock, or such other amount as the Board of Directors
may determine. The Board of Directors determined not to increase the number of shares reserved under the ESPP as of July 1,
2012.
The Equity Incentive Plan provides
for the issuance of common stock based awards, including restricted stock, restricted stock units, stock options, stock appreciation
rights and other equity based awards to the Company’s directors, officers, employees and consultants.
The ESPP is intended to qualify
as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended. Full-time
employees of Myrexis who will own less than five percent of Myrexis, Inc’s outstanding shares of common stock will be eligible
to contribute a percentage of their base salary, subject to certain limitations, over the course of six-month offering periods
for the purchase of shares of common stock. The purchase price for shares of common stock purchased under the ESPP will equal 85
percent of the fair market value of a share of common stock at the beginning or end of the relevant six-month offering period,
whichever is lower.
In connection with the separation
from MGI and related transactions, each outstanding MGI stock option was converted into an adjusted MGI common stock option, exercisable
for the same number of shares of common stock as the original MGI option, and a new Myrexis common stock option, exercisable for
one-fourth of the number of shares of common stock as the original MGI option. All other terms of the converted options remained
the same. However, the vesting and expiration of the converted options is based on the optionholder’s continuing employment
with either MGI or Myrexis, as applicable, following the separation. The adjusted exercise price of each converted option was determined
in accordance with Section 409A and Section 422 of the Code, as follows:
|
•
|
The per share exercise price of each such MGI converted option is equal to the product of (i) the per share exercise price
of the original MGI option multiplied by (ii) a fraction, the numerator of which is the closing MGI’s stock price on
the day after the distribution, and the denominator of which is the ex-dividend closing stock price of MGI on the day of the distribution
plus one-quarter of the “when-issued” Myrexis stock price on the day of the distribution.
|
|
|
|
|
•
|
The per share exercise price of each such Myrexis converted option is equal to the product of (i) the per share exercise
price of the original MGI option multiplied by (ii) a fraction, the numerator of which is the closing Myrexis stock price
on the day after the distribution, and the denominator of which is the ex-dividend closing stock price of MGI on the day of the
distribution plus one-quarter of the “when-issued” Myrexis stock price on the day of the distribution.
|
Accordingly, in connection
with the separation and related transactions, the Company issued stock options to current and former directors, officers, employees
and consultants of MGI and Myrexis.
The exercise price of options
granted during the period ended June 30, 2013, 2012 and 2011 was equivalent to the fair value of the stock on the date of
grant. The number of shares, terms, and vesting periods are determined by the Company’s Board of Directors or a committee
thereof on an option-by-option basis. Options generally vest ratably over service periods of four years and expire ten years from
the date of grant. As of June 30, 2013, 7,713,640 shares were available for future grant under the Equity Incentive Plan and
936,765 shares were available for purchase under the Myrexis ESPP.
The fair value of each option
grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions
used for grants for the fiscal years ended June 30:
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Risk-free interest rate
|
|
|
0.67
|
%
|
|
|
0.9
|
%
|
|
|
1.4
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected lives (in years)
|
|
|
6.0 -7.0
|
|
|
|
6.0 -7.0
|
|
|
|
6.0 -7.0
|
|
Expected volatility
|
|
|
73
|
%
|
|
|
77.5
|
%
|
|
|
75.4
|
%
|
Expected option lives and volatilities
are based on historical data and other factors.
A summary of option activity
is as follows:
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
Number
of
shares
|
|
|
Weighted
average
exercise
price
|
|
|
Number
of
shares
|
|
|
Weighted
average
exercise
price
|
|
|
Number
of
shares
|
|
|
Weighted
average
exercise
price
|
|
Options outstanding
at beginning of year
|
|
|
2,628,009
|
|
|
$
|
3.30
|
|
|
|
3,248,984
|
|
|
$
|
3.42
|
|
|
|
3,592,227
|
|
|
$
|
3.28
|
|
Options granted
|
|
|
60,000
|
|
|
|
2.65
|
|
|
|
1,097,400
|
|
|
|
2.79
|
|
|
|
844,060
|
|
|
|
3.84
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercised
|
|
|
(598,755
|
)
|
|
|
2.33
|
|
|
|
(536,985
|
)
|
|
|
1.63
|
|
|
|
(562,562
|
)
|
|
|
2.22
|
|
Options canceled or expired
|
|
|
(1,202,894
|
)
|
|
|
3.43
|
|
|
|
(1,181,390
|
)
|
|
|
3.92
|
|
|
|
(624,741
|
)
|
|
|
4.26
|
|
Options
outstanding at end of year
|
|
|
886,360
|
|
|
|
3.73
|
|
|
|
2,628,009
|
|
|
|
3.30
|
|
|
|
3,248,984
|
|
|
|
3.42
|
|
Options exercisable at end
of year
|
|
|
886,360
|
|
|
|
3.73
|
|
|
|
1,409,760
|
|
|
|
3.38
|
|
|
|
1,542,307
|
|
|
|
2.76
|
|
Options vested and expected
to vest
|
|
|
886,360
|
|
|
|
3.73
|
|
|
|
2,450,823
|
|
|
|
3.33
|
|
|
|
3,086,509
|
|
|
|
3.38
|
|
Weighted average fair value
of options granted during the year
|
|
|
|
|
|
|
1.64
|
|
|
|
|
|
|
|
1.84
|
|
|
|
|
|
|
|
2.53
|
|
The following table summarizes
information about the stock options outstanding under the Equity Incentive Plan for both Myrexis and MGI employees at June 30,
2013:
|
|
|
Options outstanding
|
|
|
Options
exercisable
|
|
Range
of
exercise
prices
|
|
|
Number
outstanding
at
June 30,
2013
|
|
|
Weighted
average
remaining
contractual
life (years)
|
|
|
Weighted
average
exercise
price
|
|
|
Number
exercisable
at
June 30,
2013
|
|
|
Weighted
average
exercise
price
|
|
$
|
0.62 - 3.39
|
|
|
|
178,378
|
|
|
|
3.57
|
|
|
$
|
2.09
|
|
|
|
178,378
|
|
|
$
|
2.09
|
|
|
3.56 - 3.56
|
|
|
|
232,144
|
|
|
|
5.19
|
|
|
|
3.56
|
|
|
|
232,144
|
|
|
|
3.56
|
|
|
3.65 - 4.63
|
|
|
|
185,863
|
|
|
|
1.81
|
|
|
|
4.02
|
|
|
|
185,863
|
|
|
|
4.02
|
|
|
4.67 - 4.83
|
|
|
|
289,975
|
|
|
|
5.32
|
|
|
|
4.68
|
|
|
|
289,975
|
|
|
|
4.68
|
|
|
|
|
|
|
886,360
|
|
|
|
4.20
|
|
|
|
3.73
|
|
|
|
886,360
|
|
|
|
3.73
|
|
The fair-value of each Myrexis
stock option issued pursuant to the separation was based on an allocation of the unamortized fair-value of the original MGI stock
option from which it was derived. Myrexis recognizes share-based compensation expense relating to both Myrexis and MGI options
held by current directors, officers, employees and consultants of Myrexis. Share-based compensation expense relating to Myrexis
options held by current and former directors, officers, employees and consultants of MGI will be recognized by MGI.
As of June 30, 2013, unrecognized
compensation expense related to the unvested portion of MGI’s stock options granted to Myrexis employees and the unvested
portion of Myrexis stock options granted was $0.
The total intrinsic value of
options exercised during the fiscal year ended June 30, 2013, 2012 and 2011 was $10,000, $0.7 million and $1.0 million, respectively.
The aggregate intrinsic value of options outstanding was $0 and the aggregate intrinsic value for options fully vested was $0 as
of June 30, 2013.
During the year ended June
30, 2013, the Company issued 64,078 restricted stock units under the Equity Incentive Plan at a weighted average fair value of
$2.69 per share based on the fair market stock price on date of grant. As of June 30, 2013, the unrecognized compensation
expense related to unvested restricted stock units was $0 as all outstanding restricted stock units not vested were terminated.
On May 11, 2012, the Company
issued 2,139,230 restricted stock units (1,069,615 units to each of the Company’s then serving President and Chief Executive
Officer and its Chief Operating Officer) under the Equity Incentive Plan at a fair value of $2.75. The restricted stock units issued
on May 11, 2012 include certain performance conditions as well as market conditions. As of June 30, 2012, the performance criteria
were not probable of being achieved; therefore, no stock-based compensation expense recorded during the year ended June 30, 2012.
The units that were issued to the Company’s then serving President and Chief Executive Officer, Richard B. Brewer, expired
by their terms upon his death on August 15, 2012. If specific performance conditions are met with respect to the restricted stock
units issued to the Company’s Chief Operating Officer, a substantial expense could be incurred. These shares were not vested
and cancelled by their terms upon his resignation on December 24, 2012.
Activity with respect to outstanding
restricted stock units for the fiscal years ended June 30, 2012, 2011 and 2010 is as follows:
|
|
Number
of shares
|
|
|
Weighted
average
grant
date fair
value
|
|
Balance at June 30, 2010
|
|
|
144,466
|
|
|
$
|
4.03
|
|
Granted
|
|
|
141,094
|
|
|
|
3.86
|
|
Cancelled
|
|
|
(54,657
|
)
|
|
|
3.97
|
|
Vested
|
|
|
(55,302
|
)
|
|
|
4.03
|
|
Balance at June 30, 2011
|
|
|
175,601
|
|
|
|
3.91
|
|
|
|
Number
of shares
|
|
|
Weighted
average
grant
date fair
value
|
|
Balance at June 30, 2011
|
|
|
175,601
|
|
|
$
|
3.91
|
|
Granted
|
|
|
2,192,630
|
|
|
|
2.75
|
|
Cancelled
|
|
|
(114,277
|
)
|
|
|
3.47
|
|
Vested
|
|
|
(72,302
|
)
|
|
|
3.94
|
|
Balance at June 30, 2012
|
|
|
2,181,652
|
|
|
|
2.77
|
|
|
|
Number
of shares
|
|
|
Weighted
average
grant
date fair
value
|
|
Balance at June 30, 2012
|
|
|
2,181,652
|
|
|
$
|
2.77
|
|
Granted
|
|
|
64,078
|
|
|
|
2.69
|
|
Cancelled
|
|
|
(2,159,508
|
)
|
|
|
2.76
|
|
Vested
|
|
|
(86,222
|
)
|
|
|
2.93
|
|
Balance at June 30, 2013
|
|
|
0
|
|
|
|
0
|
|
For the years ended June 30,
2013, 2012 and 2011, Myrexis employees purchased 13,085, 131,617 and 221,191 shares, respectively, under the Myrexis ESPP.
Compensation expenses associated with Myrexis employees participating in the Myrexis ESPP for the years ended June 30, 2013,
2012 and 2011 were approximately $9,000, $206,000, and $360,000, respectively. The fair value of shares issued under the Myrexis
ESPP was calculated using the Black-Scholes option-pricing model with the following weighted-average assumptions for the fiscal
years ended June 30:
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Risk-free interest rate
|
|
|
0.12
|
%
|
|
|
0.05
|
%
|
|
|
0.2
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected lives (in years)
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
0.5
|
|
Expected volatility
|
|
|
79
|
%
|
|
|
77
|
%
|
|
|
75
|
%
|
Share-based compensation expense
recognized for Myrexis employees included in the statement of operations and comprehensive loss for the fiscal years ended June 30,
2013, 2012 and 2011 is as follows (
in thousands
):
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Research and development
|
|
$
|
(37
|
)
|
|
$
|
595
|
|
|
$
|
2,086
|
|
General and administrative
|
|
|
402
|
|
|
|
912
|
|
|
|
2,746
|
|
Total employee stock-based compensation expense
|
|
$
|
365
|
|
|
$
|
1,507
|
|
|
$
|
4,832
|
|
Income tax expense (benefit)
consists of the following:
(In thousands)
|
|
Year ended June 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total Current
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(4,056
|
)
|
|
|
(9,991
|
)
|
|
|
(13,032
|
)
|
State
|
|
|
(459
|
)
|
|
|
(1,606
|
)
|
|
|
(2,380
|
)
|
Change in valuation allowance
|
|
|
4,515
|
|
|
|
11,597
|
|
|
|
15,412
|
|
Total Deferred
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total income tax expense (benefit)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The differences between income taxes at the statutory federal
income tax rate and income taxes reported in the consolidated statements of operations were as follows:
|
|
Year ended June 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Federal income tax expense at the statutory rate
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
State income taxes, net of federal benefit
|
|
|
(3.3
|
)
|
|
|
(3.3
|
)
|
|
|
(3.3
|
)
|
Research and development credits, net of the federal tax on state credits
|
|
|
(3.0
|
)
|
|
|
(0.9
|
)
|
|
|
(5.9
|
)
|
Incentive stock option and employee stock purchase plan expense
|
|
|
0.4
|
|
|
|
0.8
|
|
|
|
2.3
|
|
Uncertain tax positions, net of federal benefit on state positions
|
|
|
0.5
|
|
|
|
0.3
|
|
|
|
1.1
|
|
Other
|
|
|
0.6
|
|
|
|
—
|
|
|
|
—
|
|
Change in valuation allowance
|
|
|
38.8
|
|
|
|
37.1
|
|
|
|
39.8
|
|
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
The significant components of
the Company’s deferred tax assets and liabilities were comprised of the following at June 30, 2013 and 2012:
(In thousands)
|
|
Year ended June 30,
|
|
|
|
2013
|
|
|
2012
|
|
Net operating loss carry-forwards
|
|
$
|
48,373
|
|
|
$
|
40,026
|
|
Intangible asset basis difference
|
|
|
—
|
|
|
|
1,216
|
|
Accrued vacation
|
|
|
—
|
|
|
|
44
|
|
Stock compensation expense
|
|
|
990
|
|
|
|
3,057
|
|
Research and development credits
|
|
|
3,710
|
|
|
|
3,364
|
|
Property, plant and equipment
|
|
|
—
|
|
|
|
794
|
|
Other, net
|
|
|
84
|
|
|
|
82
|
|
Liability for unrecognized tax benefits
|
|
|
(726
|
)
|
|
|
(666
|
)
|
Total net deferred tax assets before valuation allowance
|
|
|
52,431
|
|
|
|
47,917
|
|
Less valuation allowance
|
|
|
(52,431
|
)
|
|
|
(47,917
|
)
|
Net deferred tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
Due to losses incurred, the
Company has determined that it is not more likely than not that the Company’s deferred tax assets will be realized. Accordingly,
a valuation allowance has been established for the full amount of the Company’s deferred tax assets. The valuation allowance
increased $4,515,000, $11,597,000 and $15,412,000 for the years ended June 30, 2013, 2012 and 2011, respectively.
At June 30, 2013 the Company
had total federal and state tax net operating loss (“NOL”) carry-forwards of approximately $147,177,000, of which $17,491,000
is attributable to excess tax benefits for which no deferred tax asset has been established. If not utilized, the federal NOL carry-forwards
will expire beginning in 2030 through 2033, and the state NOL carry-forwards will expire beginning in 2025 through 2028. The Company
had approximately $3,006,000 of federal research tax credit carry-forwards, which can be carried forward to reduce federal income
taxes. If not utilized, the federal research credits will expire beginning in 2030 through 2033. Additionally, the Company had
approximately $1,066,000 of Utah research tax credit carry-forwards, which can be carried forward to reduce Utah income taxes.
If not utilized, the Utah research tax credit carry-forwards will expire beginning in 2024 through 2027. Pursuant to Sections 382
and 383 of the Internal Revenue Code, with which Utah complies, the Company’s use of the carry-forward tax benefits may be
limited in any given year as a result of certain changes in the Company’s ownership, including significant increases in ownership
by the Company’s 5-percent shareholders. While the Company believes that its carry-forward tax benefits as of June 30, 2013
are not limited under Sections 382 and 383, significant changes in ownership in the future may limit such usage. In March, 2012,
in an effort to protect the use of its carry-forward tax benefits, the Company adopted a
Tax Benefits
Preservation Rights Plan that discourages significant changes in ownership of the Company’s stock that might limit the use
of our carry-forward tax benefits.
In
order to preserve the tax treatment of the Company’s NOLs and other tax benefits, o
n April 26, 2013, at the Company’s
2012 Annual Meeting of shareholders, the shareholders approved an amendment to the Company’s
Certificate
of Incorporation (the “Protective Amendment”) designed to prevent certain transfers of the Company’s Common Stock
that could result in an ownership change under Section 382 and, therefore, materially inhibit the Company’s ability to use
its NOLs and other tax attributes to reduce its future income tax liability. The Protective Amendment’s transfer restrictions
generally restrict any direct or indirect transfer of the Company’s common stock if the effect would be to increase the direct
or indirect ownership of any Person (as defined in the Certificate of Amendment) from less than 4.75% to 4.75% or more of the Company’s
common stock, or increase the ownership percentage of a Person owning or deemed to own 4.75% or more of the Company’s common
stock. Any direct or indirect transfer attempted in violation of this restriction would be void as of the date of the prohibited
transfer as to the purported transferee. The Protective Amendment permits the Company’s Board of Directors to approve
transfers of the Company’s common stock that would otherwise violate the transfer restrictions in the Protective Amendment
if it determines that the approval is in the best interests of the Company.
On January 22, 2013, the Board
of Directors of the Company declared a special cash distribution to shareholders in the amount of $2.86 per share. The special
cash distribution was paid to shareholders of record at the close of business on Monday, February 4, 2013. The cash distribution,
totaling $78.6 million, was paid on February 15, 2013. Due to the fact that the Company has no current or accumulated earnings
and profits, the cash distribution represents a return of capital to the shareholders.
The Company has adopted the
provisions of ASC Topic 740 Subtopic 10 Section 05, which addresses the accounting for uncertainty in tax positions. The guidance
requires that the impact of a tax position be recognized in the financial statements if that position is more likely than not of
being sustained on audit, based on the technical merits of the position.
A reconciliation of the beginning
and ending amount of unrecognized tax benefits is as follows:
|
|
Year ended June 30,
|
|
(In thousands)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Unrecognized tax benefits at beginning of year
|
|
$
|
666
|
|
|
$
|
541
|
|
|
$
|
90
|
|
Gross increases—current year tax positions
|
|
|
60
|
|
|
|
125
|
|
|
|
451
|
|
Unrecognized tax benefits at end of year
|
|
$
|
726
|
|
|
$
|
666
|
|
|
$
|
541
|
|
Approximately $726,000 of the
total unrecognized tax benefits as of June 30, 2013, if recognized, would affect the effective tax rate. The Company does
not anticipate that unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. Interest
and penalties related to uncertain tax positions are included as a component of income tax expense.
The Company files U.S. and
various state income tax returns. The 2009, 2010, and 2011 tax years remain subject to examination by the respective tax authorities.
The Company’s federal tax return and state tax returns are not currently under examination. Annual tax provisions include
amounts considered necessary to pay assessments that may result from examination of the Company’s tax returns. However, the
amount ultimately paid upon resolution of issues may differ materially from the amount accrued.
|
(7)
|
Employee Deferred Savings Plan
|
During fiscal years 2013, 2012
and 2011, Myrexis employees participated in a deferred savings plan which qualifies under Section 401(k) of the Internal Revenue
Code. Substantially all of the Myrexis employees were covered by the plan. Myrexis made matching contributions of 50% of each employee’s
contribution with the employer’s contribution not to exceed 4% of the employee’s compensation. Myrexis contributions
to the plan were $4,000, $166,000, and $368,000, which are included in research and development expenses and $19,000, $70,000 and
$94,000, which are included in general and administrative expenses for the three years ended June 30, 2013, 2012 and 2011, respectively,
in the accompanying statements of operations and comprehensive loss..
In March 2012, the Company
adopted a Tax Benefits Preservation Rights Plan in the form of a Rights Agreement designed to help protect and preserve its substantial
tax attributes primarily associated with net operating loss carryforwards (NOLs) and research tax credits, under Sections 382 and
383 of the Internal Revenue Code. The Tax Benefits Preservation Rights Plan is similar to plans adopted by numerous other public
companies with significant NOLs. The Tax Benefits Preservation Rights Plan replaces the Shareholder Rights Plan that Myrexis adopted
in 2009, which the Myrexis Board of Directors terminated immediately prior to the adoption of the Rights Agreement.
Myrexis’ ability to generate
a tax benefit through the use of its tax attributes would be substantially limited in the event of an “ownership change”
under Sections 382 and 383 of the Internal Revenue Code, including if shareholders who own (or are deemed to own) 5% or more of
Myrexis’ stock increase their collective ownership in Myrexis by more than 50 percentage points over a rolling three-year
period. The Tax Benefits Preservation Rights Plan is intended to reduce the likelihood of an unintended 50% “ownership change”
occurring through the buying and selling of Myrexis common stock. The Board of Directors believes that the plan serves the interests
of all shareholders as it is designed to protect the use of its tax attributes.
As part of the plan, on March 29,
2012, Myrexis’ Board of Directors declared a dividend of one preferred share purchase right for each share of Myrexis common
stock outstanding as of April 9, 2012. Any shares of Myrexis common stock issued after the record date will be issued together
with the rights. The rights are not currently exercisable and initially will trade only with shares of Myrexis common stock. However,
effective upon the initial public announcement of the Rights Agreement, if any person or group acquires 4.99% or more of the outstanding
shares of Myrexis common stock, or if a person or group that already owned 4.99% or more of Myrexis common stock at such time acquires
additional shares representing 0.1% or more of the outstanding shares of Myrexis common stock, then, subject to certain exceptions,
there would be a triggering event under the plan and the rights would separate from the common stock and become exercisable for
shares of Myrexis common stock having a market value equal to twice the exercise price, resulting in significant dilution in the
ownership interest of the acquiring person or group. Myrexis’ Board of Directors has the discretion to exempt in advance
any acquisition of common stock from the provisions of the plan if it determines that doing so would not limit or impair the availability
of the NOLs. Myrexis’ Board of Directors also has the ability to terminate the plan at any time, including but not limited
to in connection with a transaction, if it determines that doing so would be in the best interests of the shareholders.
The rights issued under the
plan will expire on March 29, 2015. The rights may also expire on an earlier date upon the occurrence of certain events, including
a determination by Myrexis’ Board that the Tax Benefits Preservation Rights Plan is no longer necessary for the preservation
of tax attributes, or the beginning of a taxable year of Myrexis to which the Board determines that no tax attributes may be carried
forward. The rights may also be redeemed, exchanged or terminated prior to their expiration.
|
(9)
|
Commitments and Contingencies
|
Our former parent Myriad Genetics
had entered into a license agreement (the “License Agreement”) for exclusive rights to utilize certain intellectual
property rights related to the drug candidate Azixa with Maxim Pharmaceuticals, Inc. and Cytovia, Inc. All licensed rights of Maxim
and Cytovia were subsequently acquired by EpiCept Corporation, and Maxim, Cytovia and EpiCept are collectively referred to herein
as EpiCept. Pursuant to the separation agreement with MGI, Myrexis assumed all rights and obligations under the License Agreement.
In September 2011, Myrexis
announced that it had suspended any further development of Azixa. On August 28, 2012, Myrexis provided EpiCept notice of termination
of the License Agreement following its election to terminate all of its efforts to develop and commercialize Azixa in any major
market as such products and markets are defined in the agreement. On January 4, 2013, Myrexis and EpiCept entered into an
Asset Purchase Agreement (the “APA”) which expressly terminated the License Agreement and assigned to EpiCept rights
in intellectual property, regulatory filings and certain other assets of Myrexis related to its Azixa development program for $1.00.
The APA expressly terminates the License Agreement without further liability of either Myrexis or EpiCept. Myrexis has no further
obligation for royalty or milestone payments to EpiCept. The APA provides for certain royalty and milestone payments to be made
to Myrexis should EpiCept or its licensee develop and commercialize a product using intellectual property rights transferred to
EpiCept under the APA.
Other income was $0.4 million,
$0.6 million and $1.7 million for the years ended June 30, 2013, 2012 and 2011, respectively. Other income in the year ended
June 30, 2013 includes $78,000 interest income and $292,000 in gains on the sale of equipment. Other income in the year ended June 30,
2012 includes interest income, realized gains on Myrexis’ marketable securities and $0.3 million in gains on the sale of
equipment. Other income in the year ended June 30, 2011 includes a one-time $1.2 million grant received in November 2010 as
a part of the qualifying therapeutic discovery project under section 48D of the Internal Revenue Code, interest income and realized
gains on Myrexis’s marketable securities.
On
November 18, 2011, Myrexis announced a corporate reorganization reducing the Company’s workforce by 20%. In connection
with this announcement, the Company recorded severance costs of approximately $0.6 million. These expenses are reflected in the
statement of operations and comprehensive loss, including $50,000 in general and administrative and $550,000 in research and development
for the year ended June 30, 2012.
On
March 1, 2012, Myrexis announced an alignment of the Company’s resources following the February 2012 announcement to
suspend development activities of all its preclinical and clinical programs. The alignment included a phased reduction in the Company’s
workforce. In connection with the resource alignment, the Company recorded severance costs of approximately $3.6 million in the
year ended June 30, 2012. Of this amount, $2.5 million was paid during the year ended June 30, 2012, and $1.1 million
was accrued and paid in 2013. These expenses are reflected in the statement of operations and comprehensive loss, including $1.0
million in general and administrative and $2.6 million in research and development for the year ended June 30, 2012.
In
addition in 2012, Myrexis recorded severance expenses of $0.7 million related to the departure of certain executives. These expenses
are reflected in the statement of operations and comprehensive loss in general and administrative for the year ended June 30,
2012.
On
May 11, 2012, Myrexis announced its Board of Directors had appointed Richard B. Brewer as President and Chief Executive Officer,
and David W. Gryska as Chief Operating Officer. In addition, both Mr. Brewer and Mr. Gryska were appointed to Myrexis’
Board of Directors. In connection with these management changes, Robert J. Lollini stepped down as President and Chief Executive
Officer and will continue on Myrexis’ Board for a transition period through November 15, 2012. The Company recorded
severance expense of $0.8 million for Mr. Lollini in addition to severance costs previously mentioned during the year ended
June 30, 2012. This severance was paid during the year ended June 30, 2012.
In conjunction with the March
2012 reorganization, the Company determined that there were indicators of impairment of certain fixed assets, based on quoted market
prices, and evaluated whether the carrying value of assets with impairment indicators is recoverable. Impairment charges of
$281,000 were recorded in the year ended June 30, 2012, in conjunction with the March 2012 reorganization. During the year
ended June 30, 2013, management reviewed the carrying value of certain fixed assets and recorded an additional $20,000 of
impairment loss. These impairment charges are reflected in general and administrative expenses in the statement of operations and
comprehensive loss.
In 2012, the Company’s
management committed to a plan to sell the Company’s laboratory equipment. Equipment categorized as equipment held for sale
on the balance sheet at June 30, 2012 totaled $974,000. Equipment held for sale is no longer subject to depreciation, and
is recorded at the lower of depreciated carrying value or fair market value less costs to sell. For the year ended June 30,
2013, the Company sold assets with a net book value of $1.2 million, recognizing a net gain of $292,000. This gain is in other
income in the statements of operation and comprehensive loss.
In connection with the wind down
of the Company’s operations, and the pursuit of other strategic alternatives, the Company recorded and paid $0.8 million
in severance costs for the year ended June 30, 2013. These expenses, which are reflected in the statements of operations and comprehensive
loss, include $763,000 in general and administrative and $16,000 in research and development for the year ended June 30, 2013.
For the year ended June 30, 2012, the Company recorded severance costs of approximately $3.6 million. These expenses are reflected
in the statements of operations and comprehensive loss, include $1.0 million in general and administrative and $2.6 million in
research and development.
|
(12)
|
Related Party Transaction
|
On February 27, 2013, Xstelos
Corp., a wholly owned subsidiary of Xstelos Holdings, Inc. (“Xstelos Corp.”) and Myrexis entered into a stock purchase
agreement (the “Stock Purchase Agreement”). Pursuant to terms of such stock purchase agreement, Myrexis agreed to issue
and sell to Xstelos Corp. 7,000,000 shares of Myrexis’s common stock, representing approximately 20% of all outstanding Myrexis
common stock after giving effect to such sale (the “Sale”). The shares were sold for an aggregate purchase price of
approximately $250,000. Xstelos Corp. also agreed to provide to Myrexis services pursuant to the terms of an Intercompany Services
Agreement (described below) as well as consent to Mr. Couchman serving as Myrexis’s Chief Financial Officer. Steven D. Scheiwe,
a member of the Xstelos Board of Directors, serves on the Board of Directors of Myrexis.
In connection with the Sale,
Myrexis entered into a letter agreement (the “Letter Agreement”) dated February 27, 2013 with Xstelos Corp. pursuant
to which Myrexis granted to Xstelos Corp. an exemption under Section 29 of Myrexis’s Tax Benefits Shareholder Rights Agreement,
embodying a shareholder rights plan adopted on March 29, 2012 to protect the use of Myrexis’s net operating losses and certain
other tax attributes. Under the exemption, Xstelos Corp. must not at any time represent more than the lesser of (i) 30% of Myrexis‘s
outstanding common stock and (ii) the maximum percentage ownership of Myrexis’s outstanding common stock from time to time
such that an ownership change would not have occurred for purposes of Section 382 of the Internal Revenue Code of 1986, as amended,
and the Treasury Regulations thereunder.
On February 27, 2013, Xstelos
Corp. and Myrexis entered into an Intercompany Services Agreement. Pursuant to the Intercompany Services Agreement, Xstelos Corp.
agreed to provide Myrexis with certain administrative, management, accounting and information services for one year in exchange
for a fee of $25,000. The Intercompany Services Agreement will terminate upon 30 days written notice given to the other party.
$6,250 in fees were accrued or paid for the year ended June 30, 2013.
(13) Quarterly Financial Data (Unaudited)
|
|
Quarter Ended
|
|
In thousands
|
|
June 30,
2013
|
|
|
March 31,
2013
|
|
|
December 31,
2012
|
|
|
September 30,
2012
|
|
Research revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total revenue
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
|
(4
|
)
|
|
|
61
|
|
|
|
117
|
|
|
|
291
|
|
General and administrative expense
|
|
|
157
|
|
|
|
3,150
|
|
|
|
4,734
|
|
|
|
3,485
|
|
Total costs and expenses
|
|
|
153
|
|
|
|
3,211
|
|
|
|
4,851
|
|
|
|
3,776
|
|
Operating loss
|
|
|
(153
|
)
|
|
|
(3,211
|
)
|
|
|
(4,851
|
)
|
|
|
(3,776
|
)
|
Other income (expense), net
|
|
|
1
|
|
|
|
(27
|
)
|
|
|
41
|
|
|
|
355
|
|
Net loss
|
|
$
|
(152
|
)
|
|
$
|
(3,238
|
)
|
|
$
|
(4,810
|
)
|
|
$
|
(3,421
|
)
|
|
|
Quarter Ended
|
|
|
|
June 30,
2012
|
|
|
March 31,
2012(1)
|
|
|
December 31,
2011
|
|
|
September 30,
2011
|
|
Research revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total revenue
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
|
558
|
|
|
|
5,603
|
|
|
|
3,769
|
|
|
|
4,300
|
|
General and administrative expense
|
|
|
4,129
|
|
|
|
5,216
|
|
|
|
3,841
|
|
|
|
4,385
|
|
Total costs and expenses
|
|
|
4,687
|
|
|
|
10,819
|
|
|
|
7,610
|
|
|
|
8,685
|
|
Operating loss
|
|
|
(4,687
|
)
|
|
|
(10,819
|
)
|
|
|
(7,610
|
)
|
|
|
(8,685
|
)
|
Other income, net
|
|
|
266
|
|
|
|
127
|
|
|
|
100
|
|
|
|
99
|
|
Net loss
|
|
$
|
(4,421
|
)
|
|
$
|
(10,692
|
)
|
|
$
|
(7,510
|
)
|
|
$
|
(8,586
|
)
|
|
(1)
|
Includes one-time severance costs related to corporate reorganizations of $3.6 million for the period ending March 31,
2012.
|