UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 11, 2019
MATEON THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 000-21990 | 13-3679168 | ||
| (State
or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS
Employer Identification No.) |
29397 Agoura Road, Suite 107
Agoura Hills, CA 91301
(Address of principal executive offices and Zip Code)
Registrant’s telephone number, including area code
(650) 635-7000
Not applicable.
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of class | Trading Symbols | Name of each exchange on which registered | ||
| N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
| Item 1.01 | Entry into a Material Definitive Agreement. |
Close of Fall 2019 Debt Financing
On December 11, 2019, the Company closed its Fall 2019 Debt Financing raising an additional $500,000 for gross proceeds of $1.0 million. The transactions complete the previously announced offering, under which the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with certain accredited investors for the sale of convertible promissory notes (the “Notes”).
The Company completed the initial closing under the Note Purchase Agreement on November 23, 2019, issuing a $250,000 principal amount Note to each of Dr. Vuong Trieu, the Company’s Chief Executive Officer, and Stephen Boesch, in exchange for gross proceeds of $500,000.
In connection with the second and final closing the Company issued Notes to additional investors including $250,000 to Dr. Sanjay Jha, the former CEO of Motorola and COO/President of Qualcomm, $35,000 to Dr. Vuong Trieu, the Company’s Chief Executive Officer & President, $27,000 to Chulho Park, the Company’s Chief Technology Officer, $20,000 to Amit Shah, the Company’s Chief Financial Officer and $168,000 to two unaffiliated accredited investors.
All the Notes provide for interest at the rate of 5% per annum, and are unsecured. All amounts outstanding under the Notes becomes due and payable upon the approval of the holders of a majority of the principal amount of outstanding Notes (the “Majority Holders”) on or after (a) November 23, 2020 or (b) the occurrence of an event of default (either, the “Maturity Date”). The Company may prepay the Notes at any time. Events of default under the Notes include failure to make payments under the Notes within thirty (30) days of the date due, failure to observe of the Note Purchase Agreement or Notes which is not cured within thirty (30) days of notice of the breach, bankruptcy, or a change in control of the Company (as defined in the Note Purchase Agreement).
The Majority Holders have the right, at any time not more than five (5) days following the Maturity Date, to elect to convert all, and not less than all, of the outstanding accrued and unpaid interest and principal on the Notes. The Notes may be converted, at the election of the Majority Holders, either (a) into shares of the Company’s Common Stock at a conversion price of $0.18 per share, or (b) into shares of EdgePoint’s, the Company’s to be newly formed subsidiary for AI/Blockchain in pharmaceutical manufacturing, common stock at a conversion price of $5.00 (based on a $5 million pre-money valuation) of EdgePoint and 1 million shares outstanding.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information in Item 1.01 is incorporated by reference herein.
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| Item 3.02 | Unregistered Sales of Equity Securities. |
In connection with the final closing under the Note Purchase Agreement, the Company issued four Notes to four accredited investors in exchange for gross proceeds of $1.0 million. The Notes are convertible into shares of the Company’s Common Stock as described in Item 1.01 above.
The Notes were issued in reliance upon exemptions from registration requirements pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended, the rules promulgated thereunder and pursuant to applicable state securities laws and regulations.
References to Agreements
The descriptions of the Note Purchase Agreement and the Notes do not purport to be complete and are qualified in their entirety by reference to the forms of Note Purchase Agreement and Note which were filed as exhibits to our Current Report on form 8-K filed on November 24, 2019, and each of which is incorporated herein by reference.
The agreements have been included to provide investors and stockholders with information regarding their respective terms. Those agreements are not intended to provide any other factual information about the Company. The representations, warranties and covenants contained in those agreements were made only for purposes of those agreements and as of specific dates, were solely for the benefit of the parties to those agreements, may be subject to limitations agreed upon by the contracting parties, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under any of the agreements and should not rely on the representations, warranties or covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the agreements, which subsequent information may or may not be fully reflected in our public disclosures.
| Item 8.01 | Other Events. |
On December 11, 2019, the Company issued a press release announcing it has established EdgePoint AI, as a division within Mateon, to develop and commercialize Mateon’s AI Vision Fabric for pharmaceutical manufacturing, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K.
Forward-Looking Statements
This document contains “forward-looking statements” that involve substantial risks and uncertainties for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this communication regarding strategy, future operations, future financial position, prospects, plans and objectives of management are forward-looking statements. In addition, when or if used in this communication, the words “will,” “may,” “would,” “approximate,” “expect,” “intend,” and similar expressions and their variants may identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements relating the adequacy Company’s capital to support its future operations; and expectations for the market opportunity or potential success of Edgepoint AI. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, the risk factors included in the Company’s Annual Report on Form 10-K filed with the SEC on April 10, 2019. Forward looking statements are based on information available and assumptions as of the date of this report. Except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. | Description | Incorporation by reference | ||
| 4.1 | Form of Convertible Promissory Note, issued by the Company under the Note Purchase Agreement dated as of November 23, 2019. | Exhibit 4.1 to the Form 8-K filed with the SEC on November 24, 2019 | ||
| 10.1 | Form of Note Purchase Agreement, dated as of November 23, 2019, by and among the Company and the investors identified therein. | Exhibit 10.1 to the Form 8-K filed with the SEC on November 24, 2019 | ||
| 99.1 | Press Release dated December 11, 2019 | Filed herewith. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Mateon Therapeutics, Inc. | ||
| Date: December 16, 2019 | /s/ Vuong Trieu | |
| By: | Vuong Trieu | |
| Chief Executive Officer | ||
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Exhibit 99.1
STEVEN KING NAMED AS PROSPECTIVE CEO OF EDGEPOINT AI
Brings over 20 years of experience in drug development and pharmaceutical manufacturing, as well as Nasdaq listed public company experience
EdgePoint AI is to commercialize TrustPoint AI artificial intelligence driven vision fabric/blockchain technology for pharmaceutical manufacturing
Closing of $1 million Fall 2019 Debt Financing investment in Mateon led by certain industry leaders
AGOURA HILLS, Calif., Dec. 11, 2019 (GLOBE NEWSWIRE)—Mateon Therapeutics, Inc. (OTCQB:MATN) (‘Mateon” or “the Company”) a biopharmaceutical company dedicated to the development of innovative treatments for cancer, announced today that they have established EdgePoint AI, as a division within Mateon, to develop and commercialize Mateon’s AI Vision Fabric for pharmaceutical manufacturing. EdgePoint AI will have exclusive rights to the Mateon AI Fabric technologies, including patents, knowhow, and Mateon AI Vision related to pharmaceutical development and manufacturing. The platform will be known as TrustPoint AI Vision Fabric. The Company expects to spin off EdgePoint AI in the near future as a dividend to Mateon shareholders.
The TrustPoint technology, is trained to automatically perform routine inspections that verify manual data documentation and digitally document the transfer/status change of materials using processes established by the manufacturer. The TrustPoint System with its machine vision AI functions will automate current manual entry processes while working within the manufacturer’s quality systems. The technology is expected to streamline manufacturing operations resulting in substantial manufacturing cost reductions while maintaining compliance. The machine generated data from TrustPoint will be stored in a blockchain ledger, to ensure data integrity, immutability and auditability. The platform has broad application potential across virtually all types of pharmaceutical manufacturing including biologics, cell and gene therapy, small molecule manufacturing, bulk drug substance, fill finish, packaging and labeling. This technology is already employed in the retail sector for tracking customer purchases and in the Transportation industry to monitor and detect potential failure points.
The overall pharmaceutical market is over a trillion dollar industry with growing concerns over data integrity/data manipulation/data falsification which has been detected in as high as 60% of manufacturing operations overseas and in the US that have been audited by the FDA. The pharmaceutical contract manufacturing industry alone is $70+B and represents only about 25% of the overall pharmaceutical manufacturing capacity. Pharmaceutical developers and manufacturers are expected to be under continued mounting pressure to reduce costs associated with drug development and commercial manufacturing while maintaining a high level of quality and compliance. In addition, there have been growing concerns over data integrity, data manipulation, and data falsification, requiring pharmaceutical developers and manufacturers to give immediate and strategic consideration to data integrity solutions that reduce costs while meeting regulatory expectations across all phases of drug development including manufacturing. The goal of EdgePoint is to apply machine Vision AI technology in pharmaceutical manufacturing whether it is in house manufacturing or outsourced contract manufacturing organization/contract development and manufacturing organization (CDMO) facilities.
“The potential of TrustPoint AI technology implementation is tremendous throughout GMP manufacturing operations and could have a significant impact on improving compliance while simultaneously reducing costs associated with pharmaceutical manufacturing which is good for pharmaceutical drug developers and the patients they seeking to help. The combination of Mateon’s AI vision platform, including its incredible energy efficiency, and blockchain to enhance data integrity, security and auditability is very attractive in an industry that is reliant on the quality of data associated with its drug development activities.” said Steven King, prospective CEO of EdgePoint AI. “Having a single product that can seamlessly resolve data integrity issues by addressing system and process inefficiencies directly is highly needed. I look forward to working with the established team at Mateon to advance the TrustPoint platform implementation and commercialization.”
“Simultaneously with this important milestone, we are pleased to announced the closing of our previously announced Fall 2019 Debt Financing investment in Mateon by certain industry leaders”, said Amit Shah, CFO for Mateon. “EdgePoint AI represents our initial effort at commercialization of our AI Fabric technology in drug development applications. The area of pharmaceutical manufacturing was particularly attractive because the Mateon AI Vision platform is already being used to record transactions in the retail space enabling us to move quickly into implementation and revenue generation.”
About Mateon Therapeutics
Mateon was created by the recent reverse merger with Oncotelic which became a wholly owned subsidiary of Mateon Therapeutics Inc. (OTCQB:MATN) creating an immuno-oncology company dedicated to the development of first in class RNA therapeutics as well as small molecule drugs against cancer. OT-101, the lead immune-oncology drug candidate of Mateon/Oncotelic, is a first-in-class RNA therapeutic targeting TGF beta that exhibited single agent activity in some relapsed/refractory cancer patients in clinical trial settings. The founding team members of Oncotelic were responsible for the development of Abraxane as chemotherapeutic agents for breast, lung, melanoma, and pancreatic cancer. Abraxane was approved in 2005 and has more than $1B in sales annually. The same founding team was responsible for the development of Cynviloq, a next generation Abraxane, which was acquired by NantPharma for $1.3B. Mateon/Oncotelic will leverage its deep expertise in oncology and RNA therapeutic drug development to improve treatment outcomes and survival of cancer patients. For more information, please visit www.oncotelic.com and www.mateon.com.
About EdgePoint AI
EdgePoint AI was established in order to advance the company’s revolutionary cluster-computer platform for AI that crunches machine learning models at a fraction of the power and budget of mainstream computing in pharmaceutical manufacturing. The company’s technology platform, called TrustPoint provides for an AI computing platform for pharmaceutical and healthcare verticals including blockchain support for manufacturing where data integrity and security are of utmost importance. EdgePoint is composed of a team of executives with pharmaceutical drug development, GMP manufacturing and deep AI knowledge. The team includes Steven King who was the former CEO of Peregrine Pharmaceuticals, Inc. (NASDAQ) and its wholly-owned contract biomanufacturing subsidiary Avid Bioservices, Inc., for over 15 years, during which time the company advanced its lead compound through Phase 3 development, while growing revenues to over $55 million; Seasoned executive, Saran Saund who has been founder, CEO and GM at several startups and public companies for which he returned significant value to shareholders in his startups and chief technology officer; Burcak Beser who has been founder and CTO of several successful private and public companies with over 144 patents during his career.
About Mateon’s Lead Product Candidate, OT-101
High-grade gliomas (HGG) are characterized by a T-cell exhaustion signature and pronounced T-cell hyporesponsiveness of the tumor microenvironment (TME). Transforming growth factor beta 2 (TGFB2) has been implicated as a key contributor to the immunosuppressive landscape of the TME in HGG. OT101, a first-in-class RNA therapeutic, is designed to abrogate the immunosuppressive actions of TGF-beta 2. In a completed Phase 2 clinical study, OT-101 exhibited clinically meaningful single-agent activity and induced durable complete and partial responses in recurrent and refractory adult high-grade glioma patients, including adults with GBM. Further development of OT-101 may offer renewed hope for salvage therapy of pediatric diffuse intrinsic pontine glioma (DIPG) patients who have this rare and fatal disease. The FDA granted Mateon rare pediatric disease designation for DIPG. Under the FDA’s Rare Pediatric Disease Priority Review Voucher program, a sponsor who receives an approval of a new drug application or biologics license application for a product for the prevention or treatment of a rare pediatric disease may be eligible for a voucher, which can be redeemed to obtain priority review for any subsequent marketing application, and may be sold or transferred.
Mateon’s Cautionary Note on Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this communication regarding strategy, future operations, future financial position, prospects, plans and objectives of management are forward-looking statements. Words such as “may”, “expect”, “anticipate” “hope”, “vision”, “optimism”, “design”, “exciting”, “promising”, “will”, “conviction”, “estimate,” “intend,” “believe”, “quest for a cure of cancer”, “innovation-driven”, “paradigm-shift”, “high scientific merit”, “impact potential” and similar expressions are intended to identify forward-looking statements. Forward-looking statements contained in this press release include, but are not limited to, statements about future plans, the progress, timing, clinical development, scope and success of future clinical trials, the reporting of clinical data for the company’s product candidates and the potential use of the company’s product candidates to treat various cancer indications. Statements concerning the anticipated completion of the proposed merger, the anticipated success of the PointR technology, or the benefits expected to be gained from the merger are all forward-looking statements. Each of these forward-looking statements involves risks and uncertainties and actual results may differ materially from these forward-looking statements. Many factors may cause differences between current expectations and actual results, including unexpected safety or efficacy data observed during preclinical or clinical studies, clinical trial site activation or enrollment rates that are lower than expected, changes in expected or existing competition, changes in the regulatory environment, failure of collaborators to support or advance collaborations or product candidates and unexpected litigation or other disputes. These risks are not exhaustive, the company faces known and unknown risks, including the risk factors described in the company’s annual report on Form 10-K filed with the SEC on April 10, 2019 and in the company’s other periodic filings. Forward-looking statements are based on expectations and assumptions as of the date of this press release. Except as required by law, the company does not assume any obligation to update forward-looking statements contained herein to reflect any change in expectations, whether as a result of new information future events, or otherwise.
Contact Information:
For Mateon Therapeutics, Inc.:
Amit Shah
Email: ashah@oncotelic.com