UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 _________________

 

FORM 10-Q

 _________________

 

 

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2018

 

or

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 001-35443

 

ARGOS THERAPEUTICS, INC.

 

(Exact name of registrant as specified in its charter)

 

Delaware	56-2110007
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4233 Technology Drive Durham, North Carolina	27704
(Address of principal executive offices)	(Zip Code)

 

 

Registrant’s telephone number, including area code: (919) 287-6300

 

 

No changes

(Former name, former address and former fiscal year, if changed since last report)

 

 

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 ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		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. ☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of November 17, 2018, there were 10,586,661 shares outstanding of the registrant’s common stock, par value $0.001 per share.

 

 

ARGOS THERAPEUTICS, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended September 30, 2018

 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION
Item 1.		Financial Statements	3
		Condensed Consolidated Balance Sheets (unaudited)	3
		Condensed Consolidated Statements of Operations (unaudited)	4
		Condensed Consolidated Statements of Comprehensive Loss (unaudited)	5
		Condensed Consolidated Statements of Cash Flows (unaudited)	6
		Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	55
Item 4.		Controls and Procedures	55
PART II. OTHER INFORMATION
Item 1.		Legal Proceedings	56
Item 1A.		Risk Factors	56
Item 6.		Exhibits	57
Signatures			58

 

Argos Therapeutics®, Argos® and Arcelis™, the Argos Therapeutics logo and other trademarks or service marks of Argos appearing in this Quarterly Report on Form 10-Q are the property of Argos Therapeutics, Inc. The other trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

 

Unless otherwise indicated, all information in this Quarterly Report on Form 10-Q gives effect to a 1-for-20 reverse stock split of Argos’s outstanding common stock that became effective on January 18, 2018.

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

ARGOS THERAPEUTICS, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ARGOS THERAPEUTICS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ARGOS THERAPEUTICS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ARGOS THERAPEUTICS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ARGOS THERAPEUTICS, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

 

 

 

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes appearing in “Item 1. Financial Statements” in this Quarterly Report on Form 10-Q. In addition to historical information, some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, future financial performance, expense levels and liquidity sources, includes forward-looking statements that involve risks and uncertainties. You should read “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

 

We are an immuno-oncology company that has been focused on the development and commercialization of individualized immunotherapies for the treatment of cancer and infectious diseases based on our proprietary precision immunotherapy technology platform called Arcelis.

 

In April 2018, we terminated our development program for rocapuldencel-T, our lead product candidate, which we had been developing for the treatment of metastatic renal cell carcinoma, or mRCC, and other cancers. Additionally, in August 2018, we ceased our support for the development of our other clinical product candidate, AGS-004, which we were developing for the eradication of HIV. We have ceased our research and development activities and we have significantly reduced our workforce. Based on a review of the status of our internal programs, resources and capabilities, we are pursuing a strategic alternative that may involve an asset sale, dissolution, liquidation, wind-down or protection under bankruptcy laws. There can be no assurance that we will be able to enter into a strategic transaction on a timely basis, on terms that are favorable to us, or at all. If we decide to seek protection under the bankruptcy laws, and if we decide to wind down the company under the bankruptcy laws or otherwise, it is unclear to what extent we will be able to pay our obligations to creditors, and, whether and to what extent any resources will be available for distributions to our stockholders. However, based on our current resources, we believe that it is unlikely that any resources will be available for distributions to our stockholders and that a likely outcome of our wind-down and potential bankruptcy proceeding will be the cancellation or extinguishment of all outstanding shares in the company without any payment or other distribution on account of those shares.

 

Prior to April 2018, we had been conducting a pivotal Phase 3 clinical trial of rocapuldencel-T in combination with sunitinib / standard of care for the treatment of newly diagnosed mRCC, or the ADAPT trial. In February 2017, the independent data monitoring committee, or the IDMC, for the ADAPT trial recommended that the trial be discontinued for futility based on its planned interim data analysis. The IDMC concluded that the trial was unlikely to demonstrate a statistically significant improvement in overall survival in the combination treatment arm, utilizing the intent-to-treat population at the pre-specified number of 290 events (deaths), the original primary endpoint of the study.

 

Notwithstanding the IDMC’s recommendation, we determined to continue to conduct the trial while we analyzed interim data from the trial. Following a meeting with the U.S. Food and Drug Administration, or FDA, we determined to continue the ADAPT trial until at least the pre-specified number of 290 events occurred, and to submit to the FDA a protocol amendment to increase the pre-specified number of events for the primary analysis of overall survival in the trial beyond 290 events. In April 2018, we submitted a protocol amendment to the FDA that included an amended primary endpoint analysis with four co-primary endpoints. Subsequently in April 2018, we conducted another interim analysis of the data from the ADAPT trial, at which time 51 new events (deaths) had occurred subsequent to the February 2017 interim analysis. Based upon review of the interim data from this analysis, we determined that the endpoints were unlikely to be achieved if the trial were to be continued and decided to discontinue the ADAPT clinical trial.  

 

We had also been developing AGS-004, also an Arcelis-based product candidate, for the treatment of HIV. We have completed Phase 1 and Phase 2 trials funded by government grants and a Phase 2b trial that was funded in full by the National Institutes of Health, or NIH, and the National Institute of Allergy and Infectious Diseases, or NIAID. More recently, we were supporting an investigator-initiated clinical trial of AGS-004 in adult HIV patients evaluating the use of AGS-004 in combination with vorinostat, a latency reversing drug, for HIV eradication. In connection with the cessation of our research and development activities, we recently ceased our support for the trial, and enrollment was suspended.

 

 

On March 3, 2017, we entered into a payoff letter with Horizon Technology Finance Corporation and Fortress Credit Co LLC, or the Lenders, under our venture loan and security agreement, or the Loan Agreement, pursuant to which we paid, on March 6, 2017, a total of $23.1 million to the Lenders, representing the principal balance and accrued interest outstanding under the Loan Agreement in repayment of our outstanding obligations under the Loan Agreement. In addition, we issued to the Lenders five year warrants to purchase an aggregate of 5,000 shares of common stock at an exercise price of $26.00 per share in consideration of the Lenders acceptance of $23.1 million as payment in full. Upon the payment of the $23.1 million and the issuance of the warrants pursuant to the payoff letter, all of our outstanding indebtedness and obligations to the Lenders under the Loan Agreement were paid in full, and the Loan Agreement and the notes thereunder were terminated.

 

In March 2017, we announced that our board of directors approved a workforce action plan designed to streamline operations and reduce operating expenses. During the year ended December 31, 2017, we recognized $1.2 million in severance costs, all of which was paid as of December 31, 2017. We also recognized $3.2 million in stock-based compensation expense from the acceleration of vesting of stock options and restricted stock held by the terminated employees during the year ended December 31, 2017.

 

In June 2017, we raised net proceeds of $6.0 million through the issuance of a secured convertible note to Pharmstandard International S.A., or Pharmstandard, a collaborator and our largest stockholder, in the aggregate principal amount of $6.0 million.

 

In August 2017, we entered into an agreement with Medpace, Inc., or Medpace, regarding $1.5 million in deferred fees that we owed Medpace for contract research and development services. Under the agreement we paid $0.85 million of the amount during the third quarter of 2017 and paid the balance in April 2018.

 

In September 2017, we entered into a satisfaction and release agreement, or the Invetech Satisfaction and Release Agreement, with Invetech Pty Ltd, or Invetech. Under the Invetech Satisfaction and Release Agreement, we agreed to make, issue and deliver to Invetech (i) a cash payment of $0.5 million, (ii) 57,142 shares of our common stock and (iii) an unsecured convertible promissory note in the original principal amount of $5.2 million on account of and in full satisfaction and release of all of our payment obligations to Invetech arising under our development agreement with Invetech, or the Invetech Development Agreement, prior to the date of the Invetech Satisfaction and Release Agreement, including our obligation to pay Invetech up to a total of $8.3 million in deferred fees, bonus payments and accrued interest.

 

In November 2017, we entered into a satisfaction and release agreement, or the Saint-Gobain Satisfaction and Release Agreement, with Saint-Gobain Performance Plastics Corporation, or Saint-Gobain. Under the Saint Gobain Satisfaction and Release Agreement, we agreed to make, issue and deliver to Saint-Gobain (i) a cash payment of $0.5 million, (ii) 34,499 shares of our common stock, (iii) an unsecured convertible promissory note in the original principal amount of $2.4 million, and (iv) certain specified equipment originally provided to us by Saint-Gobain under the development agreement with Saint-Gobain, or the Saint-Gobain Development Agreement, on account of and in full satisfaction and release of all of our payment obligations to Saint-Gobain arising under the Saint-Gobain Development Agreement, prior to the date of the Saint-Gobain Satisfaction and Release Agreement, including the development fees and charges. In connection with entering into the Saint-Gobain Satisfaction and Release Agreement, we and Saint-Gobain entered into an amendment to the Saint-Gobain Development Agreement to extend the term to December 31, 2019.

 

From June 2017 through December 31, 2017, we raised proceeds of $15.5 million through the issuance of common stock in an at-the-market offering under our original sales agreement with Cowen & Company, LLC, or Cowen. In February 2018, we amended and restated the original sales agreement with Cowen to increase the maximum aggregate offering price of the shares of our common stock which we may sell under the agreement from $30 million to up to $45 million. From December 31, 2017 through April 25, 2018, we raised an additional $7.5 million of proceeds. However, upon the delisting of our common stock from The Nasdaq Capital Market in April 2018, we ceased to sell any additional shares under the sales agreement.

 

 

In January 2018, we entered into a stock purchase agreement with Lummy (Hong Kong), Ltd., or Lummy HK, under which we agreed to issue and sell to Lummy HK in a private financing 375,000 shares of common stock for an aggregate purchase price of $1.5 million. In March 2018, we and Lummy HK amended the stock purchase agreement to reduce the aggregate price for the shares to $450,000. Concurrent with such amendment, we entered into a third amendment to our license agreement with Lummy HK pursuant to which Lummy HK agreed to pay us a $1.05 million milestone payment. The $450,000 payment for the shares of common stock and the $1.05 million milestone payment were received in April 2018.

 

On April 23, 2018, we received a notification from The Nasdaq Stock Market LLC indicating that, because we had indicated that we would be unable to meet the stockholders’ equity requirement for continued listing as of the April 24, 2018 deadline that had been set by the Nasdaq Hearing Panel, the Nasdaq Hearing Panel determined to delist our common stock from The Nasdaq Capital Market and to suspend trading in our common stock effective at the open of business on April 25, 2018. Following such delisting, we transferred our common stock to the OTCQB® Venture Market.

 

As of September 30, 2018, we had cash and cash equivalents of $7.9 million. We do not currently have sufficient cash resources to pay all of our accrued obligations in full or to continue our business operations beyond the end of 2018.

 

Our consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As of September 30, 2018, our current assets totaled $9.0 million compared with current liabilities of $9.4 million, and we had cash and cash equivalents of $7.9 million. Based upon our current and projected cash flow, we note there is substantial doubt about our ability to continue as a going concern within one year after the date that these financial statements are issued. The financial statements for the three and nine months ended September 30, 2018 do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to our ability to continue as a going concern.

 

Prior to the termination of the development of rocapuldencel-T and the cessation of our research and development activities, we had devoted substantially all of our resources to our drug development efforts, including advancing our Arcelis precision immunotherapy technology platform, conducting clinical trials of our product candidates, protecting our intellectual property and providing general and administrative support for these operations. We have not generated any revenue from product sales and, to date, have funded our operations primarily through public offerings of our common stock and warrants, a venture loan, private placements of common stock, preferred stock and warrants, convertible debt financings, government contracts, government and other third party grants and license and collaboration agreements. From inception in May 1997 through September 30, 2018, we have raised a total of $526.0 million in cash, including:

 

•

$360.7 million from the sale of our common stock, convertible debt, warrants and preferred stock;

 

•

$32.9 million from the licensing of our technology;

 

•

$107.4 million from government contracts, grants and license and collaboration agreements; and

 

•

$25.0 million from the Loan Agreement with the Lenders.

 

We have incurred losses in each year since our inception in May 1997. Our net loss was $53.0 million and $40.6 million for the years ended December 31, 2016, and 2017, respectively and $13.6 million for the nine months ended September 30, 2018. As of September 30, 2018, we had an accumulated deficit of $386.2 million. Substantially all of our operating losses have resulted from costs incurred in connection with our development programs and from general and administrative costs associated with our operations.

 

 

In light of the termination of the development of rocapuldencel-T, cessation of our research and development activities and our cash resources, and based on a review of the status of our internal programs, resources and capabilities, we are pursuing a strategic alternative that may involve an asset sale, dissolution, liquidation, wind-down or protection under bankruptcy laws.. There can be no assurance that we will be able to enter into a strategic transaction on a timely basis, on terms that are favorable to us, or at all. If we decide to seek protection under the bankruptcy laws, and if we decided to wind down the company under the bankruptcy laws or otherwise, it is unclear to what extent we will be able to pay our obligations to creditors, and, whether and to what extent any resources will be available for distributions to our stockholders. However, based on our current resources, we believe that it is unlikely that any resources will be available for distributions to our stockholders and that a likely outcome of our wind-down and potential bankruptcy proceeding will be the cancellation or extinguishment of all outstanding shares in the company without any payment or other distribution on account of those shares.

 

 

NIH Funding

 

In September 2006, we entered into a multi-year research contract with the NIH and NIAID to design, develop and clinically test an autologous HIV immunotherapy capable of eliciting therapeutic immune responses. We have used funds from this contract to develop AGS-004, including to fund in full our Phase 2b clinical trial of AGS-004. On June 29, 2016, a contract modification was agreed to that extended the NIH and NIAID’s commitment under the contract to July 31, 2018. We have agreed to a statement of work under the contract, and are obligated to furnish all the services, qualified personnel, material, equipment, and facilities not otherwise provided by the U.S. government needed to perform the statement of work. This contract expired as of July 31, 2018.

 

 

Under this contract, as amended, the NIH and NIAID committed to fund up to a total of $39.8 million, including reimbursement of direct expenses and allocated overhead and general and administrative expenses of up to $38.4 million and payment of other specified amounts totaling up to $1.4 million upon our achievement of specified development milestones. This amount includes a September 2014 modification of the contract under which the NIH and NIAID agreed to fund up to an additional $0.5 million to cover a portion of the manufacturing costs of the planned Phase 2 clinical trial of AGS-004 for long-term viral control in pediatric patients. Since September 2010, we have received reimbursement of our allocated overhead and general and administrative expenses at provisional indirect cost rates equal to negotiated provisional indirect cost rates agreed to with the NIH and NIAID in September 2010. These provisional indirect cost rates were subject to adjustment based on our actual costs pursuant to the agreement with the NIH and NIAID.

 

We have recorded revenue of $38.2 million through September 30, 2018 under the NIH and NIAID contract. This contract is the only arrangement under which we have generated substantial revenue.

 

Development and Commercialization Agreements

 

An important part of our business strategy has been to enter into arrangements with third parties both to assist in the development and commercialization of our product candidates, particularly in international markets, and to in-license product candidates in order to expand our pipeline.

 

Pharmstandard. In August 2013, in connection with the purchase of shares of our series E preferred stock by Pharmstandard, we entered into an exclusive royalty-bearing license agreement with Pharmstandard. Under this license agreement, we granted Pharmstandard and its affiliates a license, with the right to sublicense, to develop, manufacture and commercialize rocapuldencel-T and other products for the treatment of human diseases, which are developed by Pharmstandard using our individualized immunotherapy platform, in the Russian Federation, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine and Uzbekistan, which we refer to as the Pharmstandard Territory. We also provided Pharmstandard with a right of first negotiation for development and commercialization rights in the Pharmstandard Territory to specified additional products we may develop.

 

Under the terms of the license agreement, Pharmstandard licensed us rights to clinical data generated by Pharmstandard under the agreement and granted us an option to obtain an exclusive license outside of the Pharmstandard Territory to develop and commercialize improvements to our Arcelis technology generated by Pharmstandard under the agreement, a non-exclusive worldwide royalty-free license to Pharmstandard improvements to manufacture products using our Arcelis technology and a license to specified follow-on licensed products generated by Pharmstandard outside of the Pharmstandard Territory, each on terms to be negotiated upon our request for a license. In addition, Pharmstandard agreed to pay us pass-through royalties on net sales of all licensed products in the low single digits until it has generated a specified amount of aggregate net sales. Once the net sales threshold is achieved, Pharmstandard will pay us royalties on net sales of specified licensed products, including rocapuldencel-T, in the low double digits below 20%. These royalty obligations last until the later of the expiration of specified licensed patent rights in a country or the twelfth anniversary of the first commercial sale in such country on a country by country basis and no further royalties on specified other licensed products. After the net sales threshold is achieved, Pharmstandard has the right to offset a portion of the royalties Pharmstandard pays to third parties for licenses to necessary third party intellectual property against the royalties that Pharmstandard pays to us.

 

The agreement will terminate upon expiration of the royalty term, upon which all licenses will become fully paid up perpetual exclusive licenses. Either party may terminate the agreement for the other party’s uncured material breach or if specified conditions occur relating to the other party’s insolvency or bankruptcy and we may terminate the agreement if Pharmstandard challenges or assists a third party in challenging specified patent rights of ours. If Pharmstandard terminates the agreement upon our material breach or bankruptcy, Pharmstandard is entitled to terminate our licenses to improvements generated by Pharmstandard, upon which we may come to rely for the development and commercialization of rocapuldencel-T and other licensed products outside of the Pharmstandard Territory, and Pharmstandard is entitled to retain its licenses from us and to pay us substantially reduced royalty payments following such termination.

 

 

In November 2013, we entered into an agreement with Pharmstandard under which Pharmstandard purchased shares of our series E preferred stock. Under this agreement, we agreed to enter into a manufacturing rights agreement for the European market with Pharmstandard and that the manufacturing rights agreement would provide for the issuance of warrants to Pharmstandard to purchase 24,989 shares of our common stock at an exercise price of $116.40 per share. As of November 17, 2018, we had not entered into this manufacturing rights agreement or issued the warrants.

 

Pharmstandard and Actigen. On February 1, 2018, we entered into an option agreement with Pharmstandard and Actigen Limited, or Actigen, under which we obtained an exclusive option to license certain patent rights and know-how related to a group of fully human PD1 monoclonal antibodies and related technology held by Actigen. Actigen previously granted Pharmstandard an option to exclusively license these patent rights. Under the option agreement, Pharmstandard granted to us an exclusive license for evaluation purposes only to make, have made, use and import the PD1 monoclonal antibodies covered by these patent rights (but not offer to sell or sell products and processes covered by or incorporating the patent rights) for a period of one year from the date of the agreement and an option exercisable during the option exercise period to obtain an exclusive license (with the right to sublicense) under the patent rights to make, have made, use, offer for sale, sell and import (with a right to grant sublicenses) the PD1 monoclonal antibodies for all prophylactic, therapeutic and diagnostic uses and for all human diseases and conditions in the United States and Canada. The parties have agreed that, if we exercise the option during the option exercise period, the parties will negotiate in good faith a license agreement, on the terms and conditions outlined in the option agreement, including payments by us to Pharmstandard of an upfront license fee of $3.6 million, payable upon execution of the license agreement in our common stock, various development and regulatory milestone payments totaling $8.5 million, and upper single digit percentage royalties on net sales of any pharmaceutical product or therapeutic regimen incorporating the licensed PD1 monoclonal antibodies that will apply on a country-by-country basis until the later of the last to expire patent or ten years from the date of first commercial sale, against which the first $5.0 million of our development expenditures will be credited as prepaid royalties.

 

In consideration for the rights granted under the option agreement, we issued 169,014 shares of our common stock to Pharmstandard the value of which will be creditable against the upfront license fee of $3.6 million payable under the option agreement if we enter into a license agreement. Unless earlier terminated by any party for uncured material breach or by us without cause upon thirty days prior written notice, the option agreement will terminate upon the later of the end of the option exercise period if we decide not to exercise the option or sixty days after we exercise the option.

 

Green Cross. In July 2013, in connection with the purchase of our series E preferred stock by Green Cross Corp., or Green Cross, we entered into an exclusive royalty-bearing license agreement with Green Cross. Under this agreement we granted Green Cross a license to develop, manufacture and commercialize rocapuldencel-T for mRCC in South Korea. We also provided Green Cross with a right of first negotiation for development and commercialization rights in South Korea to specified additional products we may develop.

 

Under the terms of the license, Green Cross has agreed to pay us $0.5 million upon the initial submission of an application for regulatory approval of a licensed product in South Korea, $0.5 million upon the initial regulatory approval of a licensed product in South Korea and royalties ranging from the mid-single digits to low double digits below 20% on net sales until the fifteenth anniversary of the first commercial sale in South Korea. In addition, Green Cross has granted us an exclusive royalty free license to develop and commercialize all Green Cross improvements to our licensed intellectual property in the rest of the world, excluding South Korea, except that, as to such improvements for which Green Cross makes a significant financial investment and that generate significant commercial benefit in the rest of the world, we are required to negotiate in good faith a reasonable royalty that we will be obligated to pay to Green Cross for such license. Under the terms of the agreement, we are required to continue to develop and to use commercially reasonable efforts to obtain regulatory approval for rocapuldencel-T in the United States.

 

The agreement will terminate upon expiration of the royalty term, which is 15 years from the first commercial sale, upon which all licenses will become fully paid up perpetual non-exclusive licenses. Either party may terminate the agreement for the other party’s uncured material breach or if specified conditions occur relating to the other party’s insolvency or bankruptcy and we may terminate the agreement if Green Cross challenges or assists a third party in challenging specified patent rights of ours. If Green Cross terminates the agreement upon our material breach or bankruptcy, Green Cross is entitled to terminate our licenses to improvements and retain its licenses from us and to pay us substantially reduced milestone and royalty payments following such termination.

 

 

Medinet. In December 2013, we entered into a license agreement with Medinet. Under this agreement, we granted Medinet an exclusive, royalty-free license to manufacture in Japan rocapuldencel-T and other products using our Arcelis technology solely for the purpose of the development and commercialization of rocapuldencel-T and these other products for the treatment of mRCC. We refer to this license as the manufacturing license. In addition, under this agreement, we granted Medinet an option to acquire a nonexclusive, royalty-bearing license under our Arcelis technology to sell in Japan rocapuldencel-T and other products for the treatment of mRCC. We refer to the option as the sale option and the license as the sale license.

 

The sale option expired on April 30, 2016. As a result, Medinet has only retained the manufacturing license and may only manufacture rocapuldencel-T and these other products for us or our designee. We have agreed to negotiate in good faith a supply agreement under which Medinet would supply us or our designee with rocapuldencel-T and these other products for development and sale for the treatment of mRCC in Japan. During the term of the manufacturing license, we may not manufacture rocapuldencel-T or these other products for us or any designee for development or sale for the treatment of mRCC in Japan.

 

In consideration for the manufacturing license, Medinet paid us $1.0 million. Medinet also loaned us $9.0 million in connection with us entering into the agreement. We have agreed to use these funds in the development and manufacturing of rocapuldencel-T and the other products. Medinet also agreed to pay us milestone payments of up to a total of $9.0 million upon the achievement of developmental and regulatory milestones and $5.0 million upon the achievement of a sales milestone related to rocapuldencel-T and these products.

 

We borrowed the $9.0 million pursuant to an unsecured promissory note that bears interest at a rate of 3.0 % per annum. The principal and interest under the note are due and payable on December 31, 2018. Under the terms of the note and the manufacturing license agreement, any milestone payments related to the developmental and regulatory milestones that become due will be applied first to the repayment of the loan. We have achieved $5.0 million in milestones. As a result, the outstanding principal of the loan as of February 1, 2018 has been reduced to $4.0 million. We have the right to prepay the loan at any time. If we have not repaid the loan by December 31, 2018, then we have agreed to grant to Medinet a non-exclusive, royalty-bearing license to make and sell Arcelis products in Japan for the treatment of cancer. In such event, the amounts owing under the loan as of December 31, 2018 may constitute pre-paid royalties under the license or would be due and payable. We do not expect to pay the amounts owing under the loan by December 31, 2018. Royalties under this license would be paid until the expiration of the licensed patent rights in Japan at a rate to be negotiated. If we cannot agree on the royalty rate, we have agreed to submit the matter to arbitration.

 

Under the agreement, we had the right to revoke both the manufacturing license and the sale license to be granted to Medinet or the sale license only. In February 2018, we notified Medinet that we irrevocably agreed to have no further right to exercise our right under the license agreement to revoke the manufacturing and the sale license, or the sale license only. As a result of our decision to forego these revocation rights, during the three months ended March 31, 2018, we recognized as revenue $5.8 million of milestone payments that had previously been received and recorded as deferred revenue.

 

The agreement will terminate upon expiration of the royalty term, upon which all licenses will become fully paid up, perpetual non-exclusive licenses. Either party may terminate the agreement for the other party’s uncured material breach or if specified conditions occur relating to the other party’s insolvency or bankruptcy, and we may terminate the agreement if Medinet challenges or assists a third party in challenging specified patent rights of ours. If Medinet terminates the agreement upon our material breach or bankruptcy, Medinet is entitled to terminate our licenses to improvements and retain its royalty-bearing licenses from us.

 

Lummy. On April 7, 2015, we and Lummy HK, entered into a license agreement pursuant to which we granted to Lummy HK an exclusive license under the Arcelis technology, including patents, know-how and improvements to manufacture, develop and commercialize products for the treatment of cancer in China, Hong Kong, Taiwan and Macau. Lummy HK also has a right of first negotiation with respect to a license under the Arcelis technology for the treatment of infectious diseases in China, Hong Kong, Taiwan and Macau. This agreement was subsequently amended in December 2016, October 2017 and March 2018.

 

 

Under the terms of the license agreement, the parties will share relevant data, and we will have a right to reference Lummy HK data for purposes of its development programs under the Arcelis technology. In addition, Lummy HK has granted to us an exclusive, royalty-free license under and to any and all Lummy HK improvements to the Arcelis technology conceived or reduced to practice by Lummy HK and Lummy HK data to develop and/or commercialize products outside China, Hong Kong, Taiwan and Macau, an exclusive, royalty-free license under and to any and all investigational new drugs, or INDs, and other regulatory approvals and Lummy HK trademarks used for an Arcelis-based product to develop and/or commercialize an Arcelis-based product outside China, Hong Kong, Taiwan and Macau and a non-exclusive, worldwide, royalty-free license under any Lummy HK improvements and Lummy HK data to manufacture Arcelis-based products anywhere in the world. Lummy HK has the right to reference our data, INDs and other regulatory filings and submissions for the purpose of developing and obtaining regulatory approval of licensed products in China, Hong Kong, Taiwan and Macau.

 

Pursuant to the license agreement, Lummy HK will pay us royalties on net sales and an aggregate of up to $22.3 million upon the achievement of manufacturing, regulatory and commercial milestones. On October 18, 2017, we entered into a second amendment to the license agreement and Lummy HK paid us $1.5 million upon the achievement of a manufacturing milestone in October 2017. On March 23, 2018, we entered into a third amendment to the license agreement pursuant to which Lummy agreed to pay us a $1.05 million milestone. Lummy also agreed to purchase 375,000 shares of our common stock for a purchase price of $450,000 pursuant to an amended stock purchase agreement. We received payments for the achievement of this milestone and for the purchase of these shares of common stock in April 2018.

 

Of the potential $22.3 million in milestone payments, to date we have earned $2.55 million, of which we received $1.5 million as of March 31, 2018, and $1.05 million in April 2018. The license agreement will terminate upon expiration of the last to expire royalty term for all Arcelis-based products, with each royalty term being the longer of the expiration of the last valid patent claim covering the applicable Arcelis-based product and 10 years from the first commercial sale of such Arcelis-based product. Either party may terminate the license agreement for the other party’s uncured material breach or if specified conditions occur relating to the other party’s insolvency or bankruptcy. We may terminate the license agreement if Lummy HK challenges or assists a third party in challenging specified patent rights of ours. If Lummy HK terminates the license agreement upon our material breach or bankruptcy, Lummy HK is entitled to terminate the licenses it granted to us and retain its licenses from us with respect to Arcelis-based products then in development or being commercialized, subject to Lummy HK’s continued obligation to pay royalties and milestones with respect to such Arcelis-based products.

 

Invetech. In October 2014, we entered into the Invetech Development Agreement. Under the Invetech Development Agreement, Invetech had agreed to continue to develop and provide prototypes of the automated production system to be used for the manufacture of our Arcelis-based products. Subsequent to signing the Invetech Development Agreement, Invetech agreed to defer 30% of its fees, up to $5.0 million subject to payments by us in installments over 2017 and 2018. 

 

On September 22, 2017, we entered into the Invetech Satisfaction and Release Agreement. Under the Invetech Satisfaction and Release Agreement, we agreed to make, issue and deliver to Invetech (i) a cash payment of $0.5 million (ii) 57,142 shares of our common stock and (iii) an unsecured convertible promissory note in the original principal amount of $5.2 million on account of and in full satisfaction and release of all of our payment obligations to Invetech arising under the Invetech Development Agreement prior to the date of the Invetech Satisfaction and Release Agreement, including our obligation to pay Invetech up to a total of $8.3 million in deferred fees, bonus payments and accrued interest.

 

Although we currently have no ongoing activities under the Invetech Development Agreement, the term of the Invetech Development Agreement will continue until the completion of the development of the production systems. The Invetech Development Agreement can be terminated early by either party because of a technical failure or by us without cause. We own all intellectual property arising from the development services with the exception of existing Invetech intellectual property incorporated therein-under which we have a license.

 

 

Saint-Gobain. In January 2015, we entered into the Saint-Gobain Development Agreement, that was subsequently amended in 2015, 2016 and 2017. Under the Saint-Gobain Development Agreement, Saint-Gobain agreed to develop a range of disposables for use in our automated production systems to be used for the manufacture of our Arcelis-based products. The Saint-Gobain agreement requires the parties to execute a commercial supply agreement under which Saint-Gobain would become the exclusive supplier of disposables for the manufacture of our products treating solid tumors for no less than fifteen years. The Saint-Gobain agreement will continue until December 31, 2019, but can be terminated by written agreement of the parties because of a material default, including the failure to execute the commercial supply agreement, or a failure to achieve a performance milestone.

 

On November 22, 2017, we entered into the Saint-Gobain Satisfaction and Release Agreement. Under the Saint-Gobain Satisfaction and Release Agreement, we agreed to make, issue and deliver to Saint-Gobain (i) a cash payment of $0.5 million, (ii) 34,499 shares of our common stock (iii) an unsecured convertible promissory note in the original principal amount of $2.4 million, and (iv) certain specified equipment originally provided to us under the development agreement, on account of and in full satisfaction and release of all payment obligations to Saint-Gobain arising under the development agreement, including the development fees and charges owed by us to Saint-Gobain.

 

Cellscript. In December 2015, we entered into a development and supply agreement with Cellscript, LLC, or Cellscript. Under the agreement, Cellscript agreed to develop cGMP processes for the manufacture and production of CD40L RNA, a ribonucleic acid used in the production of our Arcelis-based products, and to manufacture and produce CD40L RNA.

 

In consideration for these development and production services, we agreed to pay Cellscript total fees of $4.6 million. Upon the execution of the agreement, we made an initial payment to Cellscript of $2.1 million through the issuance to Cellscript of 45,309 shares of our common stock. The balance of the fees was payable to Cellscript, at our option, in cash, common stock or a combination of cash and common stock upon the achievement of development milestones. Any shares of common stock issued pursuant to the agreement are subject to a lock-up period of 180 days from the date of issuance of such shares to Cellscript.

 

Under the terms of the agreement, Cellscript was to be the sole and exclusive manufacturer and supplier to us of CD40L RNA, and we had agreed upon cash payments to Cellscript for CD40L RNA produced for us during the term of the agreement. Under the agreement, Cellscript was to be our sole and exclusive supplier of enzymes and various kits comprising enzymes for transcription, capping and/or polyadenylation of RNA. We had agreed upon cash payments to Cellscript for each kit that is purchased under the agreement.

 

The agreement expired on June 30, 2018. As of September 30, 2018, we accrued $2.0 million of total fees for development and production services performed by Cellscript under the development and supply agreement prior to termination of the agreement.

 

Manufacturing

 

We currently have a manufacturing suite located at our Technology Drive leased facility in Durham, North Carolina. However, we have determined to cease the manufacture of Arcelis-based product candidates. Primarily due to our decision to cease support for the Phase 2 trial of AGS-004 for the eradication of HIV, we elected to close our Patriot Center facility, a manufacturing facility we previously leased in Durham, North Carolina, during the second quarter of 2018.

 

In January 2017, we entered into a ten-year lease agreement with two five-year renewal options for 40,000 square feet of manufacturing and office space at the Center for Technology Innovation, or CTI, on the Centennial Campus of North Carolina State University in Raleigh, North Carolina. We provided a security deposit in the amount of $2.4 million as security for obligations under the lease agreement, which was provided in the form of a letter of credit. We had intended to utilize this facility to manufacture rocapuldencel-T to support submission of a biologics license application, or BLA, to the FDA and to support initial commercialization of rocapuldencel-T.

 

To provide for capacity expansion beyond the initial few years following potential launch of rocapuldencel-T, we also had planned to build-out and equip a second facility, which we refer to as the Centerpoint facility. In August 2014, we entered into a ten-year lease agreement with renewal options. Under the lease agreement, we agreed to lease certain land and an approximately 125,000 square-foot building to be constructed in Durham County, North Carolina. We initially intended this facility to house our corporate headquarters and commercial manufacturing before we entered into the lease for the Center for Technology Innovation, or CTI, facility. The shell of the new facility was constructed on a build-to-suit basis in accordance with agreed upon specifications and plans and was completed in June 2015. However, the build-out and equipping of the interior of the facility was suspended as we pursued financing arrangements to support the further build out of the facility.

 

 

Due to the recommendation of the IDMC in February 2017 to discontinue the ADAPT trial, we reassessed our manufacturing plans. In March 2017, we entered into a lease termination agreement with the landlord of our CTI facility terminating the lease as of March 17, 2017. From the $2.4 million letter of credit, the landlord drew down $0.7 million to cover unpaid construction costs in March 2017 and $1.7 million in April 2017 for lease termination damages and agreed to return $0.1 million in consideration for being able to salvage some of the construction costs. Pursuant to the lease termination agreement, we have no further obligations under the lease. During the year ended December 31, 2017, we recorded a lease termination fee of $1.6 million that is included in restructuring costs on the statement of operations. We also recorded an impairment loss on Construction-in-progress on the property of $0.9 million during the year ended December 31, 2017.

 

In November 2017, we and TKC Properties, the landlord of the Centerpoint facility, entered into a lease termination agreement terminating the lease agreement as of November 21, 2017. In addition, TKC Properties completed the sale of the facility to a third party and we received cash proceeds of approximately $1.8 million. As of December 31, 2017, we recorded $0 for the Centerpoint facility and $0 for the lease liability. Additionally, we are no longer required to maintain restricted cash of approximately $0.7 million as a security deposit.

 

Results of Operations

 

Comparison of the Three and Nine Months Ended September 30, 2017 with the Three and Nine Months Ended September 30, 2018

 

The following table summarizes the results of our operations for each of the three and nine month periods ended September 30, 2017 and 2018, together with the changes in those items in dollars and as a percentage:

 

		Three Months Ended September 30,								$				%				Nine Months Ended September 30,								$				%
		2017				2018				Change				Change				2017				2018				Change				Change
		(in thousands)
Revenue		$	53			$	1,247			$	1,194				*			$	228			$	7,234			$	7,006				*
Operating expenses
Research and development			4,550				3,325				(1,226	)			(26.9	)%			17,585				12,794				(4,791	)			(27.2	)%
General and administrative			2,879				3,015				136				4.7	%			9,522				8,010				(1,512	)			(15.9	)%
Impairment of property and equipment			—				—				—				—				27,204				—				(27,204	)			(100.0	)%
Restructuring costs			679				—				(679	)			(100.0	)%			6,032				—				(6,032	)			(100.0	)%
Total operating expenses			8,108				6,340				(1,769	)			(21.8	)%			60,343				20,804				(39,539	)			(65.5	)%
Loss from operations			(8,055	)			(5,093	)			2,962				36.8	%			(60,115	)			(13,569	)			46,545				77.4	%
Interest income			11				24				13				119.2	%			50				62				12				23.1	%
Interest expense			(67	)			(166	)			(98	)			(146.5	)%			(1,090	)			(467	)			623				57.2	%
Gain on early extinguishment of debt			1,507				282				(1,225	)			81.3	%			1,756				282				(1,475	)			84.0	%
Change in fair value of warrant liability			502				—				(502	)			100.0	%			20,682				168				(20,514	)			99.2	%
Other expense			36				(48	)			(85	)			*				31				(66	)			(98	)			*
Net loss		$	(6,066	)		$	(5,001	)		$	1,065				17.6	%		$	(38,685	)		$	(13,591	)		$	25,094				64.9	%

_______________

 

*	Not meaningful

 

 

Revenue

 

To date, we have not generated revenue from the sale of any products. Substantially all of our revenue has been derived from our NIH and NIAID contract and our license agreements with Medinet and Lummy HK.

 

Revenue was $1.25 million for the three months ended September 30, 2018, compared with $53,000 for the three months ended September 30, 2017, an increase of $1.2 million. The increase for the three months ended September 30, 2018 compared with the three months ended September 30, 2017 primarily resulted from the recognition of a $1.1 million milestone payment previously recorded as deferred revenue under the collaboration agreement with Lummy HK.

 

Revenue was $7.2 million for the nine months ended September 30, 2018, compared with $0.2 million for the nine months ended September 30, 2017, an increase of $7.0 million. The increase for the nine months ended September 30, 2018 compared with the nine months ended September 30, 2017 resulted from the recognition of $5.9 million of revenue from milestone payments from Medinet that had previously been recorded as deferred revenue as a result of our decision to irrevocably forego our revocation right under our license agreement with Medinet and the recognition of a $1.1 million milestone payment previously recorded as deferred revenue under the collaboration agreement with Lummy HK.

 

Research and Development Expenses

 

Since our inception in 1997, we focused our resources on our research and development activities, including conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for our product candidates. We recognize our research and development expenses as they are incurred. Our research and development expenses consist primarily of:

 

•	salaries and related expenses for personnel in research and development functions;

 

•	fees paid to consultants and clinical research organizations, or CROs, including in connection with our clinical trials, and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work and statistical compilation and analysis;

 

•	commercial manufacturing development consisting of costs incurred under our development agreement with Invetech under which Invetech has agreed to develop and provide prototypes of the automated production system to be used for the manufacture of our Arcelis-based products;

 

•	allocation of facility lease and maintenance costs;

 

•	costs incurred under our development agreement with Saint-Gobain to develop a range of disposables for use in the automated production system;

 

•	depreciation of leasehold improvements, laboratory equipment and computers;

 

•	costs related to production of product candidates for clinical trials;

 

•	costs related to compliance with regulatory requirements;

 

•	consulting fees paid to third parties related to non-clinical research and development;

 

•	costs related to stock options or other share-based compensation granted to personnel in research and development functions; and

 

•	acquisition fees, license fees and milestone payments related to acquired and in-licensed technologies.

 

 

 

The table below summarizes our direct research and development expenses by program for the periods indicated. Our direct research and development expenses consist principally of external costs, such as fees paid to investigators, consultants, central laboratories and CROs, including in connection with our clinical trials, and related clinical trial fees. Research and development expenses also include commercial manufacturing development costs consisting primarily of costs incurred under our Invetech Development Agreement to develop and provide prototypes of the automated production system to be used for the manufacture of our Arcelis-based products and our Saint-Gobain Development Agreement to develop a range of disposables to be used in both our manual and automated manufacturing processes. We had been developing rocapuldencel-T and AGS-004 in parallel, and typically use our employee and infrastructure resources across multiple research and development programs. We do not allocate salaries, share-based compensation, employee benefit or other indirect costs related to our research and development function to specific product candidates. Those expenses are included in “Indirect research and development expense” in the table below.

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2017				2018				2017				2018
		(in thousands)
Direct research and development expense by program:
Rocapuldencel-T		$	1,175			$	1,086			$	5,729			$	4,655
AGS-004			25				6				102				31
Total direct research and development program expense			1,200				1,092				5,831				4,686
Commercial manufacturing development expense			—				—				(373	)			—
Indirect research and development expense			3,350				2,233				12,127				8,108
Total research and development expense		$	4,550			$	3,325			$	17,585			$	12,794

 

 

Three months ended September 30, 2017 and 2018.

 

Research and development expenses were $3.3 million for the three months ended September 30, 2018, compared with $4.6 million for the three months ended September 30, 2017, a decrease of $1.2 million, or 26.9%. The decrease in research and development expense reflects a $0.1 million decrease in direct research and development expense and a $1.1 million decrease in indirect research and development expense.

 

Direct research and development expense for rocapuldencel-T was $1.1 million in the three months ended September 30, 2018, compared with $1.2 million for the three months ended September 30, 2017, a decrease of $0.1 million. This decrease reflects a reduction of costs for the ADAPT trial following the termination of this trial in April 2018.

 

Direct research and development expense for AGS-004 was not significantly different in the three months ended September 30, 2018 compared with the three months ended September 30, 2017.

 

The decrease in indirect research and development expense was primarily due to the reduction in the size of our workforce engaged in research and development activities. As of September 30, 2018, we had 15 employees engaged in such activities, compared with 29 employees engaged in such activities as of September 30, 2017.

 

Nine Months ended September 30, 2017 and 2018.

 

Research and development expenses were $12.8 million for the nine months ended September 30, 2018, compared with $17.6 million for the nine months ended September 30, 2017, a decrease of $4.8 million, or 27.2%. The decrease in research and development expense reflects a $1.1 million decrease in direct research and development expense and a $4.0 million decrease in indirect research and development expense, partially offset by a credit of $0.4 million during the nine months ended September 30, 2017 related to our Saint Gobain Development Agreement.

 

The decrease in direct research and development expenses for rocapuldencel-T and AGS-004 resulted primarily from the following:

 

•

Direct research and development expense for rocapuldencel-T decreased to $4.7 million in the nine months ended September 30, 2018 from $5.7 million for the nine months ended September 30, 2017. This decrease primarily reflects a reduction of costs for the ADAPT trial following the termination of this trial in April 2018.

 

•	Direct research and development expense with respect to AGS-004 was not significantly different in the nine months ended September 30, 2018 compared with the nine months ended September 30, 2017.

 

 

During the nine months ended September 30, 2017, we recorded a credit of $0.4 million related to amounts owed under our Saint-Gobain Development Agreement, which we recorded as a reduction of research and development expense. No commercial manufacturing development expense was recorded for the nine months ended September 30, 2018.

 

The decrease in indirect research and development expense was primarily due to the reduction in the size of our workforce engaged in research and development activities, as noted above.

 

The successful development of any product candidate is highly uncertain. Even if we resume our research and development activities, at this time we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the development of any product candidate, or the period, if any, in which material net cash inflows from such product candidates may commence. This is due to the numerous risks and uncertainties associated with developing drugs, including the uncertainty of:

 

•

the scope, rate of progress, expense and results of our ongoing clinical trials;

 

•

the scope, rate of progress, expense and results of additional clinical trials that we may conduct;

 

•

the scope, rate of progress, expense and results of our commercial manufacturing development efforts;

 

•

other research and development activities; and

 

•

the timing of regulatory approvals.

 

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. If the FDA or another regulatory authority were to require additional clinical trials or if there were significant delays in enrollment, significant additional financial resources and time would be expended on the completion of clinical development.

 

General and Administrative Expenses

 

General and administrative expenses were $3.0 million for the three months ended September 30, 2018, compared with $2.9 million for the three months ended September 30, 2017, an increase of $0.1 million or 4.7%. This increase was primarily due to an increase in legal expenses.

 

General and administrative expenses were $8.0 million for the nine months ended September 30, 2018, compared with $9.5 million for the nine months ended September 30, 2017, a decrease of $1.5 million or 15.9%. This decrease was primarily due to a reduction in personnel costs consisting primarily of salaries and stock-based compensation.

 

General and administrative expenses consist primarily of salaries and related costs for employees in executive, operational and finance, information technology and human resources functions. Other significant general and administrative expenses include allocation of facilities costs, professional fees for accounting and legal services and expenses associated with obtaining and maintaining patents.

 

Impairment Loss on Property and Equipment

 

We did not recognize an impairment loss on property and equipment for the three and nine months ended September 30, 2018, and the three months ended September 30, 2017. We recognized an impairment loss on property and equipment of $27.2 million for the nine months ended September 30, 2017. We review our property and equipment for impairment whenever events or changes indicate its carrying value may not be recoverable.

 

 

Impairment of Centerpoint Facility and Construction-in-Progress

 

We determined during the nine months ended September 30, 2017 that we no longer planned to develop our Centerpoint facility. Accordingly, we recorded an impairment loss of $18.3 million for the Construction-in-progress on the property.

 

Additionally, we determined during the nine months ended September 30, 2017 that we would no longer need to develop various equipment included in Construction-in-progress under our current manufacturing plans. As such, we entered into agreements and understandings with various vendors to attempt to sell or dispose this equipment at prices less than our carrying value. Accordingly, we determined that the fair value of this equipment held for sale was $0.7 million as of March 31, 2017 and recorded an impairment loss of $1.1 million as of March 31, 2017. Additionally, we recorded a $6.1 million impairment loss on other equipment included in Construction-in-progress that had to be abandoned or had no net realizable value. Finally, we recorded an impairment loss of $0.9 million on Construction-in-progress that was abandoned at the CTI facility.

 

Impairment of Capital Leases

 

In August 2016, we entered into two agreements, or the Power Generation Agreements, with an electric utility company. The Power Generation Agreements were accounted for as capital leases for financial reporting purposes. Under the lease agreements, the electric utility company agreed to design, procure, install, own and maintain electrical equipment at Centerpoint to provide required electrical loads. Property, plant and equipment included $2.4 million as of December 31, 2016 under the Power Generation Agreements in the Construction-in-progress account. As of September 30, 2017, $2.2 million of these assets were classified as Assets held for sale on our Balance Sheet. Since the capital leases are for electrical equipment held for sale on the Centerpoint property, we recorded an impairment loss of $0 and $0.1 million during the three and nine months ended September 30, 2017, respectively.

 

Restructuring Costs

 

We recognized restructuring costs of $0.6 million and $6.0 million during the three and nine months ended September 30, 2017, respectively, compared with $0 during the three and nine months ended September 30, 2018, respectively. The restructuring costs during the three and nine months ended September 30, 2017 were related to the restructuring of our operations following the recommendation by the IDMC to discontinue the ADAPT trial in February 2017.

 

Workforce Action Plan

 

On March 10, 2017, we enacted a workforce action plan designed to streamline operations and reduce our operating expenses. Under this plan, we reduced our workforce by 61 employees during the nine months ended September 30, 2017. During the three and nine months ended September 30, 2017, we recognized $0.1 million and $1.2 million in severance costs, respectively, and $0.6 and $3.2 million in stock compensation cost, respectively, from the acceleration of vesting of stock options held by the terminated employees. Through additional targeted reductions and attrition, the workforce was further reduced to 21 employees as of September 30, 2018.

 

CTI Lease Agreement

 

In January 2017, we entered into a ten-year lease agreement with two five-year renewal options for 40,000 square feet of manufacturing and office space at CTI on the Centennial Campus of North Carolina State University in Raleigh, North Carolina. We provided a security deposit in the amount of $2.4 million as security for obligations under the lease agreement, which was provided in the form of a letter of credit. In March 2017, we initiated discussions with the landlord of the CTI facility regarding the termination of this lease.

 

In March 2017 the landlord of our CTI facility notified us that it was terminating the lease due to nonpayment of invoices for up-fit costs, effective immediately. On March 31, 2017, we entered into a termination agreement with the landlord terminating the lease as of March 17, 2017. From the $2.4 million letter of credit, the landlord drew down $0.7 million to cover unpaid construction costs in March 2017 and $1.7 million in April 2017 for lease termination damages and agreed to return $0.1 million in consideration for being able to salvage some of the construction costs. Pursuant to the termination agreement, we have no further obligations under the lease. During the three and nine months ended September 30, 2017, we recorded a lease termination fee of $0 and $1.6 million, respectively, which is included in Restructuring costs on the statement of operations. We also recorded an impairment loss on Construction-in-progress on the property of $0 and $0.9 million during the three and nine months ended September 30, 2017, respectively.

 

 

Interest Expense

 

Interest expense was $0.2 million for the three months ended September 30, 2018, compared with $0.1 million for the three months ended September 30, 2017, an increase of $0.1 million or 146.5%. The increase primarily resulted from the reversal of accrued interest during the three months ended September 30, 2017 associated with the recognition of a milestone payment against the Medinet Note.

 

Interest expense was $0.5 million for the nine months ended September 30, 2018, compared with $1.1 million for the nine months ended September 30, 2017, a decrease of $0.6 million or 57.2%. The decrease resulted primarily from our repayment of the balance outstanding under the Loan Agreement on March 6, 2017 and the termination of the Power Generation Agreements in November 2017 that were accounted for as capital leases.

 

Gain on Early Extinguishment of Debt

 

We recognized a gain on early extinguishment of debt of $1.5 million and $1.8 million for the three and nine months ended September 30, 2017, respectively, compared with $0.3 million for each of the three and nine months ended September 30, 2018. On March 3, 2017, we entered into a payoff letter with the Lenders, pursuant to which we paid on March 6, 2017, a total of $23.1 million to the Lenders, representing the principal balance and accrued interest outstanding under the Loan Agreement in repayment of our outstanding obligations under the Loan Agreement. In addition, we issued to the Lenders five year warrants to purchase an aggregate of 5,000 shares of our common stock at an exercise price of $26.00 per share in consideration of the Lenders accepting the $23.1 million as repayment in full. During the three and nine months ended September 30, 2018, we recognized a gain on early extinguishment of debt of $0.3 million for forgiveness of debt on our convertible note with Invetech.

 

Change in Fair Value of Warrant Liability

 

The gain from the change in fair value of the warrant liability was $0 and $0.2 million for the three and nine months ended September 30, 2018, respectively, compared with $0.5 million and $20.7 million for the three and nine months ended September 30, 2017, respectively. These amounts represent the change in the fair value of our warrant liability for the warrants issued in August 2016. The August 2016 warrants contain provisions that could require cash settlement and are recorded as a liability at fair value on the date of issuance and as of the end of each reporting period. The fair value of the August 2016 warrants declined primarily due to a significant decline in the price of our common stock and a shorter expected life of the warrants. As of September 30, 2018, the fair value of the August 2016 warrants was $0.

 

Liquidity and Capital Resources

 

Sources of Liquidity

 

As of September 30, 2018, we had cash and cash equivalents of $7.9 million.

 

Since our inception in May 1997 through September 30, 2018, we have funded our operations principally with $360.7 million from the sale of common stock, convertible debt, warrants and preferred stock, $32.9 million from the licensing of our technology, $107.4 million from government contracts, grants and license and collaboration agreements, and $25.0 million from the Loan Agreement.

 

Troubled Debt Restructuring with Invetech. As of June 30, 2017, we had recorded a manufacturing research and development obligation payable to Invetech on our consolidated balance sheet of $8.3 million, representing $5.2 million in deferred fees, $2.3 million in estimated bonus payments and $0.7 million in accrued interest. On September 22, 2017, we entered into the Invetech Satisfaction and Release Agreement. Under the Invetech Satisfaction and Release Agreement, we agreed to make, issue and deliver to Invetech (i) a cash payment of $0.5 million, (ii) 57,142 shares of our common stock and (iii) an unsecured convertible promissory note in the original principal amount of $5.2 million on account of and in full satisfaction and release of all of our payment obligations to Invetech arising under the Invetech Development Agreement prior to the date of the Invetech Satisfaction and Release Agreement, including our obligation to pay Invetech up to a total of $8.3 million in deferred fees, bonus payments and accrued interest.

 

 

The maturity date for the payment of principal and interest under the note is September 30, 2020. The note bears interest at a rate of 6.0% per annum, which interest will compound annually. For the quarterly periods ended December 31, 2017, March 31, 2018, June 30, 2018 and September 30, 2018, we paid Invetech $200,000, $200,000, $150,000 and $150,000, respectively, in cash under the note. For the fiscal quarters ending December 31, 2018 through March 31, 2019, we are required to make quarterly installment payments under the note, each in an aggregate amount of up to $0.3 million, consisting of (i) cash in the amount of $150,000 and (ii) if certain specified conditions are met as of the corresponding payment date, up to $150,000 of shares of our common stock. For the fiscal quarters ending June 30, 2019 through June 30, 2020, we are required to make quarterly installment payments under the note, each in an amount of $150,000, payable in cash. Subject to Invetech’s conversion rights, we may prepay the note in full or in part at any time without penalty or premium.

 

The note also provides that on the anniversary of the issue date of the note for each of the first three years following the issue date, the outstanding principal amount of the note, if any, plus accrued and unpaid interest thereon shall automatically be deemed to be reduced by $250,000, if and only if we have paid all debt service payments due under the note on or prior to the relevant anniversary date and no event of default, fundamental transaction or change of control, each as defined in the note, has occurred on or prior to such anniversary date. As a result, on September 21, 2018, the anniversary of the issue date of the note, the outstanding principal amount of the note was automatically reduced by $250,000.

 

Upon maturity of the note or at any time within 75 days of such maturity, or upon the occurrence of certain events of default, Invetech may, at its option, elect to convert any amount of the outstanding principal and accrued interest into shares of our common stock. Upon a change of control pursuant to which Invetech has a redemption right, Invetech may, at its option, elect to convert any amount of the outstanding principal and accrued interest, less any remaining installment payments required to be made in cash, into shares of our common stock. We will be required to pay any amount not so converted in cash. Upon the occurrence of certain events of default, Invetech may, at its option, elect to convert any amount of the outstanding principal and accrued interest into shares of our common stock. We will be required to pay any amount not so converted in cash. In each case, the number of shares of common stock issuable upon such complete or partial conversion of the note is determined by dividing the portion of the principal and accrued or unpaid interest to be converted by $10.00 per share (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction). Unless Invetech has elected to exercise these conversion rights, we, subject to specified exceptions, may prepay the note in whole or in part, in cash, at any time without penalty or premium.

 

Troubled Debt Restructuring with Saint-Gobain. As of September 30, 2017, we had recorded accrued expenses of $4.8 million payable to Saint-Gobain. On November 22, 2017, we entered into the Saint-Gobain Satisfaction and Release Agreement. Under the Saint Gobain Satisfaction and Release Agreement, we agreed to make, issue and deliver to Saint-Gobain (i) a cash payment of $0.5 million, (ii) 34,499 shares of common stock, (iii) an unsecured convertible promissory note in the original principal amount of $2.4 million, and (iv) certain specified equipment originally provided to us by Saint-Gobain under the Saint-Gobain Development Agreement, on account of and in full satisfaction and release of all of our payment obligations to Saint-Gobain arising under the Saint-Gobain Development Agreement, prior to the date of the Saint-Gobain Satisfaction and Release Agreement, including the development fees and charges. As a result, we recognized a gain on the early extinguishment of debt of $0.6 million during the year ended December 31, 2017.

 

The maturity date for the payment of principal and interest under the note is September 30, 2020. The note bears interest at a rate of 6.0% per annum, which interest will compound quarterly. For the quarterly periods ended December 31, 2017, March 31, 2018, June 30, 2018 and September 30, 2018, we paid Saint-Gobain $270,000, $270,000, $185,000 and $185,000, respectively, in cash under the note. For the fiscal quarters ending December 31, 2018 and March 31, 2019, we are required to make quarterly installment payments under the note, each in an aggregate amount of up to $220,000, consisting of (i) cash in the amount of $100,000 and (ii) if certain specified conditions are met as of the corresponding payment date, up to $120,000 of shares of our common stock. For the fiscal quarters ending December 31, 2017, March 31, 2018, June 30, 2018, September 30, 2018, December 31, 2018 and March 31, 2019, if the conditions required for the issuance of common stock are not met solely because the price of the common stock at the time is less than $4.058 per share (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction), then we are required to pay in each such quarter cash equal to 50% of the value of the common stock that would otherwise have been issued. For the fiscal quarters ending June 30, 2019 through June 30, 2020, we are required to make quarterly installment payments under the note, each in an amount of $100,000, payable in cash.

 

 

Upon maturity of the note or at any time during the 75-day period prior to the maturity date of the note, Saint-Gobain may, at its option, elect to convert any amount of the outstanding principal and accrued interest into shares of our common stock. Upon a change of control pursuant to which Saint-Gobain has a redemption right, Saint-Gobain may, at its option, elect to convert any amount of the outstanding principal and accrued interest, less any remaining installment payments required to be made in cash, into shares of our common stock. We will be required to pay any amount not so converted in cash. Upon the occurrence of certain events of default, Saint-Gobain may, at its option, elect to convert any amount of the outstanding principal and accrued interest into shares of our common stock. We will be required to pay any amount not so converted in cash. In each case, the number of shares of common stock issuable upon such complete or partial conversion of the note is determined by dividing the portion of the principal and accrued or unpaid interest to be converted by $10.00 per share (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction). Unless Saint-Gobain has elected to exercise these conversion rights, we, subject to specified exceptions, may prepay the note in whole or in part, in cash, at any time without penalty or premium.

 

Venture Loan and Security Agreement. In September 2014, we entered into the Loan Agreement with the Lenders, under which we borrowed $25.0 million in two tranches of $12.5 million each. The per annum interest rate for each tranche was a floating rate equal to 9.25% plus the amount by which the one-month LIBOR exceeds 0.50% (effectively a floating rate equal to 8.75% plus the one-month LIBOR Rate). The total per annum interest rate could not exceed 10.75%.

 

On March 3, 2017, we entered into a payoff letter with the Lenders, pursuant to which we paid, on March 6, 2017, a total of $23.1 million to the Lenders, representing the principal balance and accrued interest outstanding under the Loan Agreement in repayment of our outstanding obligations under the Loan Agreement. In addition, we issued to the Lenders five year warrants to purchase an aggregate of 5,000 shares of common stock at an exercise price of $26.00 per share in consideration of the Lenders acceptance of $23.1 million as payment in full. Upon the payment of the $23.1 million and the issuance of the warrants pursuant to the payoff letter, all of our outstanding indebtedness and obligations to the Lenders under the Loan Agreement were deemed paid in full, and the Loan Agreement and the notes thereunder were terminated.

 

At-the-market Offering. On May 8, 2015, we filed a shelf registration statement on Form S-3, or the 2015 Shelf, with the SEC, which covers the offering, issuance and sale of up to $125.0 million of our common stock, preferred stock, debt securities, depositary shares, purchase contracts, purchase units and warrants. We simultaneously entered into a sales agreement, or the Original Sales Agreement, with Cowen and Company LLC, or Cowen, to provide for the offering, issuance and sale of up to $30.0 million of our common stock from time to time in “at-the-market” offerings under the 2015 Shelf. The 2015 Shelf was declared effective by the SEC on May 14, 2015.

 

On January 9, 2017, we filed a shelf registration statement on Form S-3, or the 2017 Shelf, with the SEC, which covers the offering, issuance and sale of up to $200.0 million of our common stock, preferred stock, debt securities, depositary shares, purchase contracts, purchase units and warrants and which became effective on January 24, 2017. On February 2, 2018, we amended and restated the Original Sales Agreement with Cowen, or the Amended and Restated Sales Agreement, in order to increase the maximum aggregate offering price of our shares of common stock that may be offered from time to time in “at-the-market offerings” by $15.0 million from $30.0 million to $45.0 million. On February 2, 2018, we filed a prospectus supplement with the SEC in connection with the issuance and sale of the additional shares available under the 2017 Shelf. We refer to the Original Sales Agreement and the Amended and Restated Sales Agreement collectively as the Sales Agreement.

 

 

Under the Sales Agreement, we paid Cowen a commission of up to 3% of the gross proceeds. From December 31, 2017 through April 25, 2018, the Company sold 4,135,993 shares of common stock pursuant to the Sales Agreement, resulting in proceeds of $7.5 million, net of commissions and issuance costs. However, upon the delisting of our common stock from The Nasdaq Capital Market in April 2018, we ceased to sell any additional shares under the Sales Agreement.

 

Follow-On Public Offering. On August 2, 2016, we issued and sold 454,545 shares of common stock and warrants to purchase an aggregate of 340,909 shares of common stock, in an underwritten public offering at a price to the public of $110.00 per share and accompanying warrant. The shares of common stock and warrants were sold in combination, with one warrant to purchase up to 0.75 of a share of common stock accompanying each share of common stock sold. The warrants have an exercise price of $110.00 per share, became immediately exercisable upon issuance and will expire on August 2, 2021. The aggregate net proceeds to us of the offering were approximately $48.2 million after deducting underwriting discounts and commissions and offering expenses.

 

Convertible Note. On June 15, 2017, we entered into a convertible note purchase agreement with Pharmstandard, pursuant to which we agreed to issue and sell to Pharmstandard a convertible secured promissory note in the original principal amount of $6.0 million in a private placement. We issued the note to Pharmstandard on June 21, 2017, the closing date of the financing. Under the note, the maturity date for the payment of principal and interest is the fifth anniversary of the issue date. The note bears interest at a rate of 9.5% per annum, which interest compounds annually. The note is secured by a lien on and security interest in all of our intellectual property. We may prepay the note in whole or in part at any time without penalty or premium. Upon the occurrence of certain events of default, Pharmstandard will have the option to require us to repay the unpaid principal amount of the note and any unpaid accrued interest.

 

In addition, at Pharmstandard’s election, Pharmstandard may convert the entire principal and interest of the note into shares of our common stock at a price per share equal to $10.00. However, Pharmstandard will not be permitted to convert the entire note if such conversion would result in Pharmstandard and its affiliates holding shares that exceed 39.9% of the total number of outstanding shares of our common stock or 39.9% of the combined voting power of all of our outstanding securities. To the extent that conversion of the entire note would cause Pharmstandard and its affiliates to exceed these thresholds, Pharmstandard may convert a portion of the note to the extent these thresholds are not exceeded by such partial conversion.

 

Pharmstandard is our largest stockholder, and beneficially owned, in the aggregate, shares representing approximately 14.7% of our outstanding common stock as of November 17, 2018. In addition, two members of our board of directors are closely associated with Pharmstandard.

 

We paid $23,000 in legal expenses of Pharmstandard, including legal expenses incurred in connection with our resale registration obligations set forth in a registration rights agreement that we entered into with Pharmstandard. We have granted Pharmstandard, and Pharmstandard has granted us, indemnification rights with respect to each parties’ respective representations, warranties, covenants and agreements under the note purchase agreement.

 

Cash Flows

 

The following table sets forth the major sources and uses of cash for the periods set forth below:

 

		Nine Months Ended September 30,
		2017				2018
		(in thousands)
Net cash (used in) provided by:
Operating activities		$	(31,513	)		$	(14,646	)
Investing activities			(2,213	)			630
Financing activities			(9,884	)			6,771
Effect of exchange rate changes on cash			9				(3	)
Net increase (decrease) in cash and cash equivalents		$	(43,601	)		$	(7,248	)

 

 

 

Operating Activities.

 

Net cash used in operating activities of $14.6 million during the nine months ended September 30, 2018 was primarily a result of our $13.6 million net loss and an increase in net operating assets of $5.1 million, partially offset by non-cash items of $4.1 million.

 

The increase in net operating assets reflects a decrease in deferred revenue of $6.0 million and a decrease in accounts payable of $0.6 million partially offset by a decrease in prepaid expenses and other receivables of $0.3 million and an increase in accrued expenses of $1.3 million.

 

The non-cash items primarily reflect compensation expense related to stock options of $2.0 million, depreciation and amortization expense of $1.7 million, interest accrued on long term debt of $0.5 million and issuance of common stock for a license option of $0.4 million, partially offset by a gain on the early extinguishment of debt of $0.3 million and a decrease in the fair value of the warrant liability of $0.2 million.

 

Net cash used in operating activities of $31.5 million during the nine months ended September 30, 2017 was primarily a result of our $38.7 million net loss and an increase in net operating assets of $5.9 million, partially offset by non-cash items of $12.9 million.

 

The increase in net operating assets reflects a decrease in accounts payable of $2.4 million, a decrease in accrued expenses of $2.8 million, an increase in prepaid expenses and other receivables of $0.4 million, a decrease in the manufacturing research and development obligation of $0.4 million and a decrease in deferred liabilities of $0.1 million, partially offset by an increase in the current portion of the restructuring obligation of $0.2 million.

 

The non-cash items primarily reflect an impairment loss on property and equipment of $27.2 million, compensation expense related to stock options of $7.0 million, depreciation and amortization expense of $0.7 million and interest accrued on long term debt of $0.5 million, partially offset by a decrease in the fair value of the warrant liability of $20.7 million and a gain on the early extinguishment of debt of $1.7 million.

 

Investing Activities.

 

Net cash provided by investing activities was $0.6 million during the nine months ended September 30, 2018, consisting of proceeds of $0.6 million from the sale of property and equipment.

 

Net cash used in investing activities was $2.2 million during the nine months ended September 30, 2017, consisting of $3.7 million of purchases of property and equipment, partially offset by proceeds of $1.5 million from the sale of property and equipment.

 

Financing Activities.

 

Net cash provided by financing activities was $6.8 million during the nine months ended September 30, 2018, consisting primarily of $7.5 million of proceeds from the issuance of common stock through our at-the-market offering and the sale of $0.4 million of common stock to Lummy HK, partially offset by $1.1 million of debt amortization payments. 

 

 

Net cash used in financing activities was $9.9 million during the nine months ended September 30, 2017, consisting primarily of $23.6 million for repayment of the Loan Agreement, partially offset by $6.0 million of proceeds from the convertible note issued to Pharmstandard and $7.8 million of proceeds from the issuance of common stock through our at-the-market offering.

 

Funding Requirements

 

To date, we have not generated any product revenue from our development stage product candidates. We do not know when, or if, we will generate any product revenue. We do not expect to generate significant product revenue unless or until we obtain marketing approval of, and commercialize, a product candidate.

 

As of September 30, 2018, we had cash and cash equivalents of $7.9 million. We do not currently have sufficient cash resources to pay all of our accrued obligations in full or to continue our business operations beyond the end of 2018.

 

In light of the termination of the development of rocapuldencel-T, cessation of our research and development activities and our cash resources, and based on a review of the status of our internal programs, resources and capabilities, we are pursuing a strategic alternative that may involve an asset sale, dissolution, liquidation, wind-down or protection under the bankruptcy laws. There can be no assurance that we will be able to enter into a strategic transaction on a timely basis, on terms that are favorable to us, or at all. If we decide to seek protection under the bankruptcy laws, and if we decide to wind down the company under the bankruptcy laws or otherwise, it is unclear to what extent we will be able to pay our obligations to creditors, and, whether and to what extent any resources will be available for distributions to our stockholders. However, based on our current resources, we believe that it is unlikely that any resources will be available for distributions to our stockholders and that a likely outcome of our wind-down and potential bankruptcy proceeding will be the cancellation or extinguishment of all outstanding shares in the company without any payment or other distribution on account of those shares.

 

On April 23, 2018, we received a notification from The Nasdaq Stock Market LLC indicating that, because we had indicated that we would be unable to meet the stockholders’ equity requirement for continued listing as of the April 24, 2018 deadline that had been set by the Nasdaq Hearing Panel, the Nasdaq Hearing Panel had determined to delist our common stock from The Nasdaq Capital Market and to suspend trading in our common stock effective at the open of business on April 25, 2018. Following such delisting, we transferred our common stock to the OTCQB® Venture Market. Because our common stock is not listed for trading on a national securities exchange, our ability to raise capital to continue to fund our operations by selling shares and our ability to acquire other companies or technologies by using our shares as consideration has been impaired.

  

 

We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the development of product candidates.

 

Critical Accounting Estimates

 

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

 

Our significant accounting policies are described in Note 1 of the notes to our financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017. Other than as described below, there have been no significant changes to our critical accounting policies since December 31, 2017.

 

Revenue Recognition. An important part of our business strategy has been to enter into arrangements with third parties both to assist in the development and commercialization of our product candidates, particularly in international markets, and to in-license product candidates in order to expand our pipeline. The terms of the agreements typically include non-refundable license fees, funding of research and development, payments based upon achievement of clinical development and regulatory objectives, and royalties on product sales. We have adopted the provisions of the Financial Accounting Standards Board, or FASB, Codification Topic 606, Revenue from Contracts with Customers, or Topic 606, effective January 1, 2018. This guidance supersedes the provisions of FASB Codification Topic 605, Revenue Recognition.

 

License Fees and Multiple Element Arrangements. If a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from non-refundable, up-front fees allocated to the license at such time as the license is transferred to the licensee and the licensee is able to use, and benefit from, the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. We evaluate the measure of progress in each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

 

 

If we are involved in a steering committee as part of a multiple element arrangement, we assess whether our involvement constitutes a performance obligation or a right to participate. Steering committee services that are determined to be performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which we expect to complete our aggregate performance obligations.

 

If we cannot reasonably measure its progress toward complete satisfaction of a performance obligation because it lacks reliable information that would be required to apply an appropriate method of measuring progress, but we can reasonably estimate when the performance obligation ceases or the remaining obligations become inconsequential and perfunctory, then revenue is not recognized until we can reasonably estimate when the performance obligation ceases or becomes inconsequential. Revenue is then recognized over the remaining estimated period of performance.

 

Significant management judgment is required in determining the level of effort required under an arrangement and the period over which we are expected to complete our performance obligations under an arrangement.

 

Development Milestone Payments. At the inception of each arrangement that includes development milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the control of the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. We evaluate factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, we reevaluate the probability of achievement of all milestones subject to constraint and, if necessary, adjusts our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

 

Reimbursement of Costs. Reimbursement of research and development costs by third party collaborators is recognized as revenue over time provided we have determined that it transfers control (for example, performs the services) of a service over time and, therefore, satisfies a performance obligation according to the provisions outlined in the FASB Codification Topic 606-10-25-27, Revenue Recognition.

 

Royalty Revenue. For arrangements that include sales-based royalties, including milestone payments based on a level of sales, which are the result of a customer-vendor relationship and for which the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, we have not recognized any royalty revenue resulting from any of its collaboration agreements.

 

 

Deferred Revenue. Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in the accompanying condensed consolidated balance sheets. Short-term deferred revenue would consist of amounts that are expected to be recognized as revenue within the next fiscal year. Amounts that the we expect will not be recognized in the next fiscal year would be classified as long-term deferred revenue.

 

With respect to each of the foregoing areas of revenue recognition, we exercise significant judgment in determining whether an arrangement contains multiple elements, and, if so, how much revenue is allocable to each element. In addition, we exercise our judgment in determining when its significant obligations have been met under such agreements and the specific time periods over which we recognized revenue, such as non-refundable, up-front license fees. To the extent that actual facts and circumstances differ from our initial judgments, revenue recognition with respect to such transactions would change accordingly and any such change could affect our reported financial results.

 

Contractual Obligations

 

During the nine months ended September 30, 2018, there were no material changes outside the ordinary course of our business to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Our primary exposure to market risk is limited to our cash and cash equivalents, all of which have maturities of three months or less. The related interest income sensitivity is affected by changes in the general level of short-term U.S. interest rates. We primarily invest in high quality, short-term marketable debt securities issued by high quality financial and industrial companies.

 

Due to the short-term duration and low risk profile of our cash, cash equivalents and short-term investments, an immediate 10.0% change in interest rates would not have a material effect on the fair value of our portfolio. Accordingly, we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a sudden change in market interest rates on our cash, cash equivalents and short-term investments.

 

We do not believe that our cash and cash equivalents have significant risk of default or illiquidity. While we believe our cash and cash equivalents do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in fair value. In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits.

 

All of our other debt instruments and liabilities that incur interest charges do so at fixed rates. We incur interest expense at fixed rates under the promissory note payable to Medinet (3% per annum), the convertible note payable to Pharmstandard (9.5% per annum), the convertible note payable to Invetech (6% per annum) and the convertible note payable to Saint-Gobain (6% per annum).

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision of and with the participation of our management, including our chief executive officer, who is our principal executive officer, and our chief financial officer, who is our principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2018. The term “disclosure controls and procedures,” as set forth in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms promulgated by the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2018, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

 

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not a party to any legal proceedings and are not aware of any claims or actions pending or threatened against us. In the future, we might from time to time become involved in litigation relating to claims arising from our ordinary course of business. 

 

Item 1A. Risk Factors

 

Investing in our securities involves a high degree of risk. In addition to the information contained elsewhere in this report and under this Item 1A, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our Annual Report filed on Form 10-K for the year ended December 31, 2017, and any updates thereto contained in the Quarterly Report on form 10-Q for the period ending March 31, 2018, which could materially affect our business, financial condition or future results. 

 

If we decide to seek protection under the bankruptcy laws, and if we decide to wind down the company under the bankruptcy laws or otherwise, risks and uncertainties associated with a potential bankruptcy proceeding and a wind-down may lead to adverse effects on recoveries for our stakeholders.

 

Due to the risks and uncertainties associated with a potential bankruptcy proceeding and a wind-down of our company, we cannot assure our creditors or stockholders of any recovery, or any specific level of recovery, on their claims and interests if we determine to seek protection under the bankruptcy laws or wind down the company. Our wind-down and potential bankruptcy proceeding, and any distributions made in connection with our wind-down and bankruptcy proceeding, will be affected by a number of factors, including:

 

	•	the timing, duration, and cost of the wind-down and potential bankruptcy process;
	•	our ability to effectuate transactions, if any, in the course of our wind-down and potential bankruptcy proceeding, and the value to be realized in any such transactions;
	•	our ability to obtain bankruptcy court approval with respect to motions we file in the potential bankruptcy proceeding and the impact of bankruptcy court rulings on the case in general;
	•	motions and other papers filed by third parties in the bankruptcy proceeding, and the bankruptcy court’s reaction to the same; and
	•	our ability to conclude the bankruptcy proceeding through a plan of liquidation or other means.

 

Notwithstanding these and other variables, based on our current resources, we believe that it is unlikely that any resources will be available for distributions to our stockholders and that a likely outcome of our wind-down and potential bankruptcy proceeding will be the cancellation or extinguishment of all outstanding shares in the company without any payment or other distribution on account of those shares.

 

 

Item 6. Exhibits

 

Exhibit Number		Description of Exhibit
10.1*		Retention Agreement, dated July 20, 2018, by and between the Registrant and Jeffrey D. Abbey
10.2*		Retention Agreement, dated July 20, 2018, by and between the Registrant and Richard Katz
10.3*		Retention Agreement, dated July 20, 2018, by and between the Registrant and Charles Nicolette
10.4*		Release of Claims Agreement, dated July 20, 2018, by and between the Registrant and Jeffrey D. Abbey
10.5*		Release of Claims Agreement, dated July 20, 2018, by and between the Registrant and Richard Katz
10.6*		Release of Claims Agreement, dated July 20, 2018, by and between the Registrant and Charles Nicolette
10.7*		Consulting Agreement, dated August 29, 2018, by and between the Registrant and Jeffrey D. Abbey
10.8*		Consulting Agreement, dated August 29, 2018, by and between the Registrant and Richard Katz
10.9*		Consulting Agreement, dated August 29, 2018, by and between the Registrant and Charles Nicolette
31.1*		Certification of principal executive officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of principal financial officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1#		Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, by the Registrant’s principal executive officer and principal financial officer
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

 

*	Filed herewith.
#	This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.

 

 

 

SIGNATURES

 

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, thereunto duly authorized.

 

ARGOS THERAPEUTICS, INC.
By:	/s/ Jeffrey D. Abbey
	Name: Jeffrey D. Abbey
	Title: President and Chief Executive Officer

 

Date: November 19, 2018

 

 

 

 

 

 

 

 

58

Exhibit 10.1

 

 

RETENTION AGREEMENT

 

 

This Retention Agreement (the “Agreement”) is entered into as of July 20, 2018, by and between Argos Therapeutics, Inc. (the “Company”) and Jeffrey D. Abbey (“Executive”).

 

 

WHEREAS, Executive and the Company entered into that certain offer letter dated December 9, 2013 (the “Offer Letter”); and

 

WHEREAS, the Offer Letter provides for the payment of certain amounts of salary and severance upon certain conditions; and

 

WHEREAS, the Company is in the process of pursuing various strategic alternatives, including without limitation a merger of the Company or the winding down of the Company (the “Transition”); and

 

WHEREAS, in the Executive’s position as President and Chief Executive Officer, Executive has obtained considerable knowledge and expertise about the Company and its business operations; and

 

WHEREAS, in order to complete any strategic alternatives as part of the Transition, the Company desires to continue to retain the services of Executive and the benefits of Executive’s experience and knowledge; and

 

WHEREAS, the Company recognizes the effort and commitment required of Executive to complete any transactions as part of the Transition and wants to create an incentive for Executive to continue to be employed by the Company during the Transition; and

 

WHEREAS, the Executive desires to continue to perform services for the Company in accordance with the terms set forth below.

 

NOW, THEREFORE, in consideration of the premises (which are incorporated herein by reference) and the consideration set forth below, the sufficiency of which is hereby acknowledged and agreed, the parties hereby agree as follows:

 

1.

Initial Retention Payment. The Company will pay Executive an initial retention payment (the “Initial Retention Payment”) of $ 97,200 upon the date hereof (the “First Payment Date”), subject to the following terms and conditions: (a) the Executive must execute and deliver to the Company a Release of Claims Agreement as set forth in Exhibit A, attached hereto, on or before the date hereof; and (b) the payment of the Initial Retention Payment will be subject to applicable taxes and withholdings.

 

2.

Second Retention Payment. The Company will pay Executive a second retention payment (the “Second Retention Payment”) of $ 223,915 on August 15, 2018 (the “Second Payment Date”), subject to the following terms and conditions: (a) the Executive must have satisfied the conditions for the payment of the Initial Retention Payment; (b) the Executive must be employed by the Company on the Second Payment Date or the Executive’s employment must have been terminated by the Company without Cause or by the Executive with Good Reason before the Second Payment Date; (c) Executive must execute the Reaffirmation of Release of Claims Agreement attached hereto as Exhibit B on or before August 15, 2018; (d) the payment of the Second Retention Payment will be subject to applicable taxes and withholdings; and (e) the Executive must execute and deliver the Consulting Agreement attached hereto as Exhibit C on or before August 15, 2018. If Executive fails to execute the Reaffirmation of Release of Claims Agreement or the Consulting Agreement on or before August 15, 2018, the Company shall provide the Executive with written notification of such deficiency. Executive shall then have ten (10) business days to correct any deficiency without any penalty.

 

3.

Amendment of Salary. The Company and Executive agree that, for the period from July 16 to August 15, 2018 only, the Executive’s base salary shall be increased such that the amount paid during each semi-monthly pay period during such period will equal $30,000 (the “Salary Adjustment”). The Salary Adjustment, less applicable taxes and deductions, shall be paid in the Company’s normal payroll periods. After August 15, 2018, the Executive’s salary shall return to its amount in effect immediately prior to the signing of this Retention Agreement.

 

4.

Amendment of Offer Letter. In consideration of the Salary Adjustment and the payment of the Retention Payments, upon payment of the First Retention Payment, Executive hereby waives his right to receive severance and any other post-employment benefits upon the termination of employment without Cause or for Good Reason, including termination of employment without Cause or for Good Reason following a Change of Control, each as defined and set forth in the Offer Letter (the “Severance Waiver”). All of the other terms and conditions of the Offer Letter will remain in full force and effect. Notwithstanding the foregoing, if for any reason either the First or Second Retention Payment or the Salary Adjustment is required to be repaid by Executive or is otherwise voided or recovered or the Company fails to pay the Second Retention Payment when due, then the Executive’s Severance Waiver shall immediately and without further notice be revoked and Executive shall retain all rights to severance and any other post-employment benefits set forth in the Offer Letter.

 

5.

Effect of Breach of Consulting Agreement. If Executive materially breaches the Consulting Agreement during the first 60 days that it is in effect, Executive shall repay 25% of the Initial Retention Payment and the Second Retention Payment.

 

6.

Termination Prior to Second Retention Payment. If the Executive's employment is terminated by the Company or if the Executive resigns for Good Reason prior to the payment of the Second Retention Payment, the Company shall pay the Executive the Second Retention Payment and any unpaid Salary Adjustment amount upon such termination or resignation.

 

7.

Section 409A. The terms of this Agreement are intended to comply or be exempt from the provisions of Section 409A (as defined in the Offer Letter) and will be construed in accordance therewith. The Company makes no representations or warranties to the Executive and has no liability to Executive if any of the provisions or payments under this Agreement are determined to constitute deferred compensation subject to the terms of 409A but not to satisfy the conditions of that Section.

 

8.

Governing Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina (without reference to the conflicts of law provisions thereof.) Any action, suit or other legal proceeding which is commenced to resolve any matter arising under or relating to any provision of this Agreement shall be commenced only in a court in Durham County, North Carolina.

 

9.

Counterparts. This Agreement may be executed in two or more counterparts, each of which will deemed an original and all of which taken together shall constitute one and the same instrument.

 

10.

Successors and Assigns. This Agreement, together with the Exhibits attached hereto, and the Offer Letter sets forth the entire agreement between the Company and the Executive and replaces all prior communications, agreements and understandings, whether oral or written, with respect to the subject matter hereof. This Agreement may only be modified or amended by written agreement executed by the Company and Executive.

 

 

IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of the date set forth above.

 

 

 

	ARGOS THERAPEUTICS, INC.
	/s/ Hubert Birner
	By: Hubert Birner
	Its: Chairman of the Board
	JEFFREY ABBEY
	/s/ Jeffrey Abbey

 

---

Exhibit 10.2

 

RETENTION AGREEMENT

 

 

This Retention Agreement (the “Agreement”) is entered into as of July 20, 2018, by and between Argos Therapeutics, Inc. (the “Company”) and Richard D. Katz (“Executive”).

 

 

WHEREAS, Executive and the Company entered into that certain offer letter dated July 1, 2016 (the “Offer Letter”); and

 

WHEREAS, the Offer Letter provides for the payment of certain amounts of salary and severance upon certain conditions; and

 

WHEREAS, the Company is in the process of pursuing various strategic alternatives, including without limitation a merger of the Company or the winding down of the Company (the “Transition”); and

 

WHEREAS, in the Executive’s position as Vice President and Chief Financial Officer, Executive has obtained considerable knowledge and expertise about the Company and its business operations; and

 

WHEREAS, in order to complete any strategic alternatives as part of the Transition, the Company desires to continue to retain the services of Executive and the benefits of Executive’s experience and knowledge; and

 

WHEREAS, the Company recognizes the effort and commitment required of Executive to complete any transactions as part of the Transition and wants to create an incentive for Executive to continue to be employed by the Company during the Transition; and

 

WHEREAS, the Executive desires to continue to perform services for the Company in accordance with the terms set forth below.

 

NOW, THEREFORE, in consideration of the premises (which are incorporated herein by reference) and the consideration set forth below, the sufficiency of which is hereby acknowledged and agreed, the parties hereby agree as follows:

 

1.

Initial Retention Payment. The Company will pay Executive an initial retention payment (the “Initial Retention Payment”) of $ 61,762 upon the date hereof (the “First Payment Date”), subject to the following terms and conditions: (a) the Executive must execute and deliver to the Company a Release of Claims Agreement as set forth in Exhibit A, attached hereto, on or before the date hereof; and (b) the payment of the Initial Retention Payment will be subject to applicable taxes and withholdings.

 

2.

Second Retention Payment. The Company will pay Executive a second retention payment (the “Second Retention Payment”) of $ 148,519 on August 15, 2018 (the “Second Payment Date”), subject to the following terms and conditions: (a) the Executive must have satisfied the conditions for the payment of the Initial Retention Payment; (b) the Executive must be employed by the Company on the Second Payment Date or the Executive’s employment must have been terminated by the Company without Cause or by the Executive with Good Reason before the Second Payment Date; (c) Executive must execute the Reaffirmation of Release of Claims Agreement attached hereto as Exhibit B on or before August 15, 2018; (d) the payment of the Second Retention Payment will be subject to applicable taxes and withholdings; and (e) the Executive must execute and deliver the Consulting Agreement attached hereto as Exhibit C on or before August 15, 2018. If Executive fails to execute the Reaffirmation of Release of Claims Agreement or the Consulting Agreement on or before August 15, 2018, the Company shall provide the Executive with written notification of such deficiency. Executive shall then have ten (10) business days to correct any deficiency without any penalty.

 

3.

Amendment of Salary. The Company and Executive agree that, for the period from July 16 to August 15, 2018 only, the Executive’s base salary shall be increased such that the amount paid during each semi-monthly pay period during such period will equal $19,062 (the “Salary Adjustment”). The Salary Adjustment, less applicable taxes and deductions, shall be paid in the Company’s normal payroll periods. After August 15, 2018, the Executive’s salary shall return to its amount in effect immediately prior to the signing of this Retention Agreement.

 

4.

Amendment of Offer Letter. In consideration of the Salary Adjustment and the payment of the Retention Payments, upon payment of the First Retention Payment, Executive hereby waives his right to receive severance and any other post-employment benefits upon the termination of employment without Cause or for Good Reason, including termination of employment without Cause or for Good Reason following a Change of Control, each as defined and set forth in the Offer Letter (the “Severance Waiver”). All of the other terms and conditions of the Offer Letter will remain in full force and effect. Notwithstanding the foregoing, if for any reason either the First or Second Retention Payment or the Salary Adjustment is required to be repaid by Executive or is otherwise voided or recovered or the Company fails to pay the Second Retention Payment when due, then the Executive’s Severance Waiver shall immediately and without further notice be revoked and Executive shall retain all rights to severance and any other post-employment benefits set forth in the Offer Letter.

 

5.

Effect of Breach of Consulting Agreement. If Executive materially breaches the Consulting Agreement during the first 60 days that it is in effect, Executive shall repay 25% of the Initial Retention Payment and the Second Retention Payment.

 

6.

Termination Prior to Second Retention Payment. If the Executive's employment is terminated by the Company or if the Executive resigns for Good Reason prior to the payment of the Second Retention Payment, the Company shall pay the Executive the Second Retention Payment and any unpaid Salary Adjustment amount upon such termination or resignation.

 

7.

Section 409A. The terms of this Agreement are intended to comply or be exempt from the provisions of Section 409A (as defined in the Offer Letter) and will be construed in accordance therewith. The Company makes no representations or warranties to the Executive and has no liability to Executive if any of the provisions or payments under this Agreement are determined to constitute deferred compensation subject to the terms of 409A but not to satisfy the conditions of that Section.

 

8.

Governing Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina (without reference to the conflicts of law provisions thereof.) Any action, suit or other legal proceeding which is commenced to resolve any matter arising under or relating to any provision of this Agreement shall be commenced only in a court in Durham County, North Carolina.

 

9.

Counterparts. This Agreement may be executed in two or more counterparts, each of which will deemed an original and all of which taken together shall constitute one and the same instrument.

 

10.

Successors and Assigns. This Agreement, together with the Exhibits attached hereto, and the Offer Letter sets forth the entire agreement between the Company and the Executive and replaces all prior communications, agreements and understandings, whether oral or written, with respect to the subject matter hereof. This Agreement may only be modified or amended by written agreement executed by the Company and Executive.

 

 

IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of the date set forth above.

 

 

 

	ARGOS THERAPEUTICS, INC.
	/s/ Jeffrey Abbey
	By: Jeffrey Abbey
	Its: President and Chief Executive Officer
	RICHARD KATZ
	/s/ Richard Katz

 

---

Exhibit 10.3

 

RETENTION AGREEMENT

 

 

This Retention Agreement (the “Agreement”) is entered into as of July 20, 2018, by and between Argos Therapeutics, Inc. (the “Company”) and Charles Nicolette (“Executive”).

 

 

WHEREAS, Executive and the Company entered into that certain offer letter dated December 9, 2013 (the “Offer Letter”); and

 

WHEREAS, the Offer Letter provides for the payment of certain amounts of salary and severance upon certain conditions; and

 

WHEREAS, the Company is in the process of pursuing various strategic alternatives, including without limitation a merger of the Company or the winding down of the Company (the “Transition”); and

 

WHEREAS, in the Executive’s position as Vice President of Research and Development and Chief Scientific Officer, Executive has obtained considerable knowledge and expertise about the Company and its business operations; and

 

WHEREAS, in order to complete any strategic alternatives as part of the Transition, the Company desires to continue to retain the services of Executive and the benefits of Executive’s experience and knowledge; and

 

WHEREAS, the Company recognizes the effort and commitment required of Executive to complete any transactions as part of the Transition and wants to create an incentive for Executive to continue to be employed by the Company during the Transition; and

 

WHEREAS, the Executive desires to continue to perform services for the Company in accordance with the terms set forth below.

 

NOW, THEREFORE, in consideration of the premises (which are incorporated herein by reference) and the consideration set forth below, the sufficiency of which is hereby acknowledged and agreed, the parties hereby agree as follows:

 

1.

Initial Retention Payment. The Company will pay Executive an initial retention payment (the “Initial Retention Payment”) of $ 77,963 upon the date hereof (the “First Payment Date”), subject to the following terms and conditions: (a) the Executive must execute and deliver to the Company a Release of Claims Agreement as set forth in Exhibit A, attached hereto, on or before the date hereof; and (b) the payment of the Initial Retention Payment will be subject to applicable taxes and withholdings.

 

2.

Second Retention Payment. The Company will pay Executive a second retention payment (the “Second Retention Payment”) of $ 178,276 on August 15, 2018 (the “Second Payment Date”), subject to the following terms and conditions: (a) the Executive must have satisfied the conditions for the payment of the Initial Retention Payment; (b) the Executive must be employed by the Company on the Second Payment Date or the Executive’s employment must have been terminated by the Company without Cause or by the Executive with Good Reason before the Second Payment Date; (c) Executive must execute the Reaffirmation of Release of Claims Agreement attached hereto as Exhibit B on or before August 15, 2018; (d) the payment of the Second Retention Payment will be subject to applicable taxes and withholdings; and (e) the Executive must execute and deliver the Consulting Agreement attached hereto as Exhibit C on or before August 15, 2018. If Executive fails to execute the Reaffirmation of Release of Claims Agreement or the Consulting Agreement on or before August 15, 2018, the Company shall provide the Executive with written notification of such deficiency. Executive shall then have ten (10) business days to correct any deficiency without any penalty.

 

3.

Amendment of Salary. The Company and Executive agree that, for the period from July 16 to August 15, 2018 only, the Executive’s base salary shall be increased such that the amount paid during each semi-monthly pay period during such period will equal $24,063 (the “Salary Adjustment”). The Salary Adjustment, less applicable taxes and deductions, shall be paid in the Company’s normal payroll periods. After August 15, 2018, the Executive’s salary shall return to its amount in effect immediately prior to the signing of this Retention Agreement.

 

4.

Amendment of Offer Letter. In consideration of the Salary Adjustment and the payment of the Retention Payments, upon payment of the First Retention Payment, Executive hereby waives his right to receive severance and any other post-employment benefits upon the termination of employment without Cause or for Good Reason, including termination of employment without Cause or for Good Reason following a Change of Control, each as defined and set forth in the Offer Letter (the “Severance Waiver”). All of the other terms and conditions of the Offer Letter will remain in full force and effect. Notwithstanding the foregoing, if for any reason either the First or Second Retention Payment or the Salary Adjustment is required to be repaid by Executive or is otherwise voided or recovered or the Company fails to pay the Second Retention Payment when due, then the Executive’s Severance Waiver shall immediately and without further notice be revoked and Executive shall retain all rights to severance and any other post-employment benefits set forth in the Offer Letter.

 

5.

Effect of Breach of Consulting Agreement. If Executive materially breaches the Consulting Agreement during the first 60 days that it is in effect, Executive shall repay 25% of the Initial Retention Payment and the Second Retention Payment.

 

6.

Termination Prior to Second Retention Payment. If the Executive's employment is terminated by the Company or if the Executive resigns for Good Reason prior to the payment of the Second Retention Payment, the Company shall pay the Executive the Second Retention Payment and any unpaid Salary Adjustment amount upon such termination or resignation.

 

7.

Section 409A. The terms of this Agreement are intended to comply or be exempt from the provisions of Section 409A (as defined in the Offer Letter) and will be construed in accordance therewith. The Company makes no representations or warranties to the Executive and has no liability to Executive if any of the provisions or payments under this Agreement are determined to constitute deferred compensation subject to the terms of 409A but not to satisfy the conditions of that Section.

 

8.

Governing Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina (without reference to the conflicts of law provisions thereof.) Any action, suit or other legal proceeding which is commenced to resolve any matter arising under or relating to any provision of this Agreement shall be commenced only in a court in Durham County, North Carolina.

 

9.

Counterparts. This Agreement may be executed in two or more counterparts, each of which will deemed an original and all of which taken together shall constitute one and the same instrument.

 

10.

Successors and Assigns. This Agreement, together with the Exhibits attached hereto, and the Offer Letter sets forth the entire agreement between the Company and the Executive and replaces all prior communications, agreements and understandings, whether oral or written, with respect to the subject matter hereof. This Agreement may only be modified or amended by written agreement executed by the Company and Executive.

 

 

IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of the date set forth above.

 

 

 

	ARGOS THERAPEUTICS, INC.
	/s/ Jeffrey Abbey
	By: Jeffrey Abbey
	Its: President and Chief Executive Officer
	CHARLES NICOLETTE
	/s/ Charles Nicolette

 

 

---

Exhibit 10.4

 

RELEASE OF CLAIMS AGREEMENT

 

 

In exchange for the consideration set forth in the Retention Agreement dated July 20, 2018 (the “Retention Agreement”) to which this Release of Claims Agreement (the “Release Agreement”) is attached as Exhibit A, including receipt of the Initial Retention Amount (as defined therein) and eligibility to receive the Temporary Revised Salary Amount and Second Retention Amount (each as defined therein), all of which I acknowledge I would not otherwise be entitled to receive, I hereby agree as follows:

 

1.                  Release – I hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its affiliates, subsidiaries, parent companies, predecessors, and successors, and all of their respective past and present officers, directors, stockholders, partners, members, managers, employees, agents, representatives, plan administrators, attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature that I ever had or now have against any or all of the Released Parties, including, but not limited to, any and all claims arising out of or relating to my employment with and/or separation from the Company, including, but not limited to, the following and any and all claims for or related to aiding or abetting the following, whether direct or derivative, and whether brought myself or by or through the Company or any trustee, assignee, agent, or other representative thereof: all claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Genetic Information Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., all as amended; all claims arising out of the North Carolina Equal Employment Practices Act, N.C. Gen. Stat. § 143-422.1 et seq., the North Carolina Persons with Disabilities Protection Act, N.C. Gen. Stat. § 168A-1 et seq., North Carolina Retaliatory Employment Discrimination Act, N.C. Gen. Stat. § 95-240 et seq., N.C. Gen. Stat. § 50B-5.5 (North Carolina domestic violence and crime leave law), N.C. Gen. Stat. § 95-28.3 (North Carolina parental leave for involvement at schools law), N.C. Gen. Stat. § 95-28.1A (North Carolina genetic testing law), and N.C. Gen. Stat. § 95-28.1 (North Carolina sickle cell law), all as amended; all common law claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, breach of duty, misrepresentation, fraud, fraudulent transfer, wrongful discharge, and breach of contract (including without limitation all claims arising out of or related to the Employment Agreement and/or any benefits to which I may otherwise have been entitled thereunder); all claims to any unvested ownership interest in the Company, contractual or otherwise; all state and federal whistleblower claims to the maximum extent permitted by law; and any claim or damage arising out of my employment with and/or separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that nothing in this Release Agreement (a) prevents me from filing a charge with, cooperating with, or participating in any investigation or proceeding before, the Equal Employment Opportunity Commission or a state fair employment practices agency (except that I acknowledge that I may not recover any monetary benefits in connection with any such charge, investigation, or proceeding, and I further waive any rights or claims to any payment, benefit, attorneys’ fees or other remedial relief in connection with any such charge, investigation or proceeding), or (b) releases claims to any payments to which I may be entitled under the Retention Agreement).

 

2.                  Continuing Obligations – I acknowledge and reaffirm my obligation to keep confidential and not to use or disclose any and all non-public information concerning the Company that I acquired during the course of my employment with the Company, including any non-public information concerning the Company’s business affairs, business prospects, and financial condition, except as otherwise permitted by paragraph 7 below. Further, I acknowledge that I remain subject to any and all continuing confidentiality, non-competition and other obligations that I have pursuant to any previous agreement(s) with the Company (“Restrictive Covenant Obligations”), including, but not limited to, my obligations under Sections 5 and 6 of the Employment Agreement and any agreements referenced therein, which remain in full force and effect. For the avoidance of doubt, I further acknowledge that all of my Restrictive Covenant Obligations continue to apply during and after my engagement as a consultant to the Company pursuant to the Consulting Agreement attached as Exhibit C to the Retention Agreement.

 

3.                  Non-Disparagement – I understand and agree that, to the extent permitted by law and except as otherwise permitted by paragraph 7 below, I will not, in public or private, make any false, disparaging, derogatory or defamatory statements, online (including, without limitation, on any social media, networking, or employer review site) or otherwise, to any person or entity, including, but not limited to, any media outlet, industry group, financial institution or current or former employee, board member, consultant, client or customer of the Company, regarding the Company or any of the other Released Parties, or regarding the Company’s business affairs, business prospects, or financial condition.

 

4.                  Cooperation – I agree that, to the extent permitted by law, I shall cooperate fully with the Company in the investigation, defense or prosecution of any claims or actions which already have been brought, are currently pending, or which may be brought in the future against the Company by a third party or by or on behalf of the Company against any third party, whether before a state or federal court, any state or federal government agency, or a mediator or arbitrator. My full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with the Company’s counsel, at reasonable times and locations designated by the Company, to investigate or prepare the Company’s claims or defenses, to prepare for trial or discovery or an administrative hearing, mediation, arbitration or other proceeding and to act as a witness when requested by the Company. I further agree that, to the extent permitted by law, I will notify the Company promptly in the event that I am served with a subpoena (other than a subpoena issued by a government agency), or in the event that I am asked to provide a third party (other than a government agency) with information concerning any actual or potential complaint or claim against the Company.

 

5.                  Return of Company Property and Information – I agree that on the last day of my employment with the Company, or earlier upon request by the Company, I will return to the Company all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, flash drives and storage devices, wireless handheld devices, cellular phones, tablets, etc.), Company identification, and any other Company-owned property and information in my possession or control and that I will leave intact all electronic Company documents and information, including but not limited to those documents and that information that I developed or helped to develop during my employment, and I will not retain any copies. I further confirm that I will, on the last day of my employment with the Company, or earlier upon request by the Company, cancel all accounts for my benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone accounts, and computer accounts. Notwithstanding the foregoing, I understand that to the extent I am retained as a consultant to the Company after termination of my employment, and to the extent required in connection with the consulting services requested of me, I may retain property and information of the Company and accounts in the Company’s name for the duration of the Consultation Period or until such earlier time as the Company may request, and return such property and information, and cancel such accounts, at the end of such period or upon such request, whichever is sooner.

 

6.                  Confidentiality – I understand and agree that, to the extent permitted by law and except as otherwise permitted by paragraph 7 below, the terms and contents of this Release Agreement and the Retention Agreement, and the contents of the negotiations and discussions resulting in this Release Agreement and the Retention Agreement, shall be maintained as confidential by me and my agents and representatives and shall not be disclosed except as otherwise agreed to in writing by the Company.

 

7.                  Scope of Disclosure Restrictions – I understand that nothing in this Release Agreement or elsewhere prohibits me from communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing information to government agencies, filing a complaint with government agencies, or participating in government agency investigations or proceedings. I understand that I am not required to notify the Company of any such communications; provided, however, that nothing herein authorizes the disclosure of information I obtained through a communication that was subject to the attorney-client privilege. Further, notwithstanding my confidentiality and nondisclosure obligations, I understand that I am hereby being advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”

 

8.                  Amendment and Waiver; Successors and Assigns – This Release Agreement may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the Company. This Release Agreement is binding upon me and my agents, assigns, heirs, executors, successors and administrators, and any party acting on my behalf or by or through myself or my rights, and shall inure to the benefit of the Company’s agents, assigns, successors and administrators. No delay or omission by the Company in exercising any right under this Release Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

 

9.                  Validity – Should any provision of this Release Agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Release Agreement.

 

10.              Nature of Agreement – I understand and agree that this Release Agreement does not constitute an admission of liability or wrongdoing on the part of the Company.

 

11.              Acknowledgments and Voluntary Assent – I acknowledge that I have been given a reasonable amount of time to consider this Release Agreement. I affirm that no other promises or agreements of any kind have been made to or with me by any person or entity whatsoever to cause me to sign this Release Agreement, and that I fully understand the meaning and intent of this Release Agreement. I state and represent that I have had an opportunity to fully discuss and review the terms of this Release Agreement with an attorney. I further state and represent that I have carefully read this Release Agreement, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign my name of my own free act.

 

12.              Applicable Law – This Release Agreement shall be interpreted and construed by the laws of the State of North Carolina, without regard to conflict of laws provisions. I hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the courts of the State of North Carolina, or if appropriate, a federal court located in the State of North Carolina (which courts, for purposes of this Release Agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this Release Agreement or the subject matter hereof.

 

13.              Entire Agreement – This Release Agreement, together with the Retention Agreement and its other exhibits, contains and constitutes the entire understanding and agreement between the parties hereto with respect to the subject matter thereof and cancels any and all previous oral and written negotiations, agreements, and commitments in connection therewith.

 

14.              Tax Acknowledgement – In connection with the Initial Retention Amount and Temporary Revised Salary Amount and any Second Retention Amount I may receive, each as described in the Retention Agreement, I understand that the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and that I shall be responsible for all applicable taxes with respect to such payments and benefits under applicable law. I further acknowledge that I am not relying upon the advice or representation of the Company with respect to the tax treatment of any payments or benefits described in the Retention Agreement.

 

I hereby agree to the terms and conditions set forth above.

 

 

 

/s/ Jeffrey Abbey		July 20, 2018
Jeffrey Abbey		Date

 

 

To be returned in a timely manner as set forth in the Retention Agreement.

 

 

 

 

 

 

- 5 -

---

 

Exhibit 10.5

 

RELEASE OF CLAIMS AGREEMENT

 

 

In exchange for the consideration set forth in the Retention Agreement dated July 20, 2018 (the “Retention Agreement”) to which this Release of Claims Agreement (the “Release Agreement”) is attached as Exhibit A, including receipt of the Initial Retention Amount (as defined therein) and eligibility to receive the Temporary Revised Salary Amount and Second Retention Amount (each as defined therein), all of which I acknowledge I would not otherwise be entitled to receive, I hereby agree as follows:

 

1.                  Release – I hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its affiliates, subsidiaries, parent companies, predecessors, and successors, and all of their respective past and present officers, directors, stockholders, partners, members, managers, employees, agents, representatives, plan administrators, attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature that I ever had or now have against any or all of the Released Parties, including, but not limited to, any and all claims arising out of or relating to my employment with and/or separation from the Company, including, but not limited to, the following and any and all claims for or related to aiding or abetting the following, whether direct or derivative, and whether brought myself or by or through the Company or any trustee, assignee, agent, or other representative thereof: all claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Genetic Information Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., all as amended; all claims arising out of the North Carolina Equal Employment Practices Act, N.C. Gen. Stat. § 143-422.1 et seq., the North Carolina Persons with Disabilities Protection Act, N.C. Gen. Stat. § 168A-1 et seq., North Carolina Retaliatory Employment Discrimination Act, N.C. Gen. Stat. § 95-240 et seq., N.C. Gen. Stat. § 50B-5.5 (North Carolina domestic violence and crime leave law), N.C. Gen. Stat. § 95-28.3 (North Carolina parental leave for involvement at schools law), N.C. Gen. Stat. § 95-28.1A (North Carolina genetic testing law), and N.C. Gen. Stat. § 95-28.1 (North Carolina sickle cell law), all as amended; all common law claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, breach of duty, misrepresentation, fraud, fraudulent transfer, wrongful discharge, and breach of contract (including without limitation all claims arising out of or related to the Employment Agreement and/or any benefits to which I may otherwise have been entitled thereunder); all claims to any unvested ownership interest in the Company, contractual or otherwise; all state and federal whistleblower claims to the maximum extent permitted by law; and any claim or damage arising out of my employment with and/or separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that nothing in this Release Agreement (a) prevents me from filing a charge with, cooperating with, or participating in any investigation or proceeding before, the Equal Employment Opportunity Commission or a state fair employment practices agency (except that I acknowledge that I may not recover any monetary benefits in connection with any such charge, investigation, or proceeding, and I further waive any rights or claims to any payment, benefit, attorneys’ fees or other remedial relief in connection with any such charge, investigation or proceeding), or (b) releases claims to any payments to which I may be entitled under the Retention Agreement).

 

2.                  Continuing Obligations – I acknowledge and reaffirm my obligation to keep confidential and not to use or disclose any and all non-public information concerning the Company that I acquired during the course of my employment with the Company, including any non-public information concerning the Company’s business affairs, business prospects, and financial condition, except as otherwise permitted by paragraph 7 below. Further, I acknowledge that I remain subject to any and all continuing confidentiality, non-competition and other obligations that I have pursuant to any previous agreement(s) with the Company (“Restrictive Covenant Obligations”), including, but not limited to, my obligations under Sections 5 and 6 of the Employment Agreement and any agreements referenced therein, which remain in full force and effect. For the avoidance of doubt, I further acknowledge that all of my Restrictive Covenant Obligations continue to apply during and after my engagement as a consultant to the Company pursuant to the Consulting Agreement attached as Exhibit C to the Retention Agreement.

 

3.                  Non-Disparagement – I understand and agree that, to the extent permitted by law and except as otherwise permitted by paragraph 7 below, I will not, in public or private, make any false, disparaging, derogatory or defamatory statements, online (including, without limitation, on any social media, networking, or employer review site) or otherwise, to any person or entity, including, but not limited to, any media outlet, industry group, financial institution or current or former employee, board member, consultant, client or customer of the Company, regarding the Company or any of the other Released Parties, or regarding the Company’s business affairs, business prospects, or financial condition.

 

4.                  Cooperation – I agree that, to the extent permitted by law, I shall cooperate fully with the Company in the investigation, defense or prosecution of any claims or actions which already have been brought, are currently pending, or which may be brought in the future against the Company by a third party or by or on behalf of the Company against any third party, whether before a state or federal court, any state or federal government agency, or a mediator or arbitrator. My full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with the Company’s counsel, at reasonable times and locations designated by the Company, to investigate or prepare the Company’s claims or defenses, to prepare for trial or discovery or an administrative hearing, mediation, arbitration or other proceeding and to act as a witness when requested by the Company. I further agree that, to the extent permitted by law, I will notify the Company promptly in the event that I am served with a subpoena (other than a subpoena issued by a government agency), or in the event that I am asked to provide a third party (other than a government agency) with information concerning any actual or potential complaint or claim against the Company.

 

5.                  Return of Company Property and Information – I agree that on the last day of my employment with the Company, or earlier upon request by the Company, I will return to the Company all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, flash drives and storage devices, wireless handheld devices, cellular phones, tablets, etc.), Company identification, and any other Company-owned property and information in my possession or control and that I will leave intact all electronic Company documents and information, including but not limited to those documents and that information that I developed or helped to develop during my employment, and I will not retain any copies. I further confirm that I will, on the last day of my employment with the Company, or earlier upon request by the Company, cancel all accounts for my benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone accounts, and computer accounts. Notwithstanding the foregoing, I understand that to the extent I am retained as a consultant to the Company after termination of my employment, and to the extent required in connection with the consulting services requested of me, I may retain property and information of the Company and accounts in the Company’s name for the duration of the Consultation Period or until such earlier time as the Company may request, and return such property and information, and cancel such accounts, at the end of such period or upon such request, whichever is sooner.

 

6.                  Confidentiality – I understand and agree that, to the extent permitted by law and except as otherwise permitted by paragraph 7 below, the terms and contents of this Release Agreement and the Retention Agreement, and the contents of the negotiations and discussions resulting in this Release Agreement and the Retention Agreement, shall be maintained as confidential by me and my agents and representatives and shall not be disclosed except as otherwise agreed to in writing by the Company.

 

7.                  Scope of Disclosure Restrictions – I understand that nothing in this Release Agreement or elsewhere prohibits me from communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing information to government agencies, filing a complaint with government agencies, or participating in government agency investigations or proceedings. I understand that I am not required to notify the Company of any such communications; provided, however, that nothing herein authorizes the disclosure of information I obtained through a communication that was subject to the attorney-client privilege. Further, notwithstanding my confidentiality and nondisclosure obligations, I understand that I am hereby being advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”

 

8.                  Amendment and Waiver; Successors and Assigns – This Release Agreement may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the Company. This Release Agreement is binding upon me and my agents, assigns, heirs, executors, successors and administrators, and any party acting on my behalf or by or through myself or my rights, and shall inure to the benefit of the Company’s agents, assigns, successors and administrators. No delay or omission by the Company in exercising any right under this Release Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

 

9.                  Validity – Should any provision of this Release Agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Release Agreement.

 

10.              Nature of Agreement – I understand and agree that this Release Agreement does not constitute an admission of liability or wrongdoing on the part of the Company.

 

11.              Acknowledgments and Voluntary Assent – I acknowledge that I have been given a reasonable amount of time to consider this Release Agreement. I affirm that no other promises or agreements of any kind have been made to or with me by any person or entity whatsoever to cause me to sign this Release Agreement, and that I fully understand the meaning and intent of this Release Agreement. I state and represent that I have had an opportunity to fully discuss and review the terms of this Release Agreement with an attorney. I further state and represent that I have carefully read this Release Agreement, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign my name of my own free act.

 

12.              Applicable Law – This Release Agreement shall be interpreted and construed by the laws of the State of North Carolina, without regard to conflict of laws provisions. I hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the courts of the State of North Carolina, or if appropriate, a federal court located in the State of North Carolina (which courts, for purposes of this Release Agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this Release Agreement or the subject matter hereof.

 

13.              Entire Agreement – This Release Agreement, together with the Retention Agreement and its other exhibits, contains and constitutes the entire understanding and agreement between the parties hereto with respect to the subject matter thereof and cancels any and all previous oral and written negotiations, agreements, and commitments in connection therewith.

 

14.              Tax Acknowledgement – In connection with the Initial Retention Amount and Temporary Revised Salary Amount and any Second Retention Amount I may receive, each as described in the Retention Agreement, I understand that the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and that I shall be responsible for all applicable taxes with respect to such payments and benefits under applicable law. I further acknowledge that I am not relying upon the advice or representation of the Company with respect to the tax treatment of any payments or benefits described in the Retention Agreement.

 

I hereby agree to the terms and conditions set forth above.

 

 

 

/s/ Richard Katz		July 20, 2018
Richard Katz		Date

 

 

To be returned in a timely manner as set forth in the Retention Agreement.

 

 

 

 

- 5 -

---

Exhibit 10.6

 

RELEASE OF CLAIMS AGREEMENT

 

 

In exchange for the consideration set forth in the Retention Agreement dated July 20, 2018 (the “Retention Agreement”) to which this Release of Claims Agreement (the “Release Agreement”) is attached as Exhibit A, including receipt of the Initial Retention Amount (as defined therein) and eligibility to receive the Temporary Revised Salary Amount and Second Retention Amount (each as defined therein), all of which I acknowledge I would not otherwise be entitled to receive, I hereby agree as follows:

 

1.                  Release – I hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its affiliates, subsidiaries, parent companies, predecessors, and successors, and all of their respective past and present officers, directors, stockholders, partners, members, managers, employees, agents, representatives, plan administrators, attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature that I ever had or now have against any or all of the Released Parties, including, but not limited to, any and all claims arising out of or relating to my employment with and/or separation from the Company, including, but not limited to, the following and any and all claims for or related to aiding or abetting the following, whether direct or derivative, and whether brought myself or by or through the Company or any trustee, assignee, agent, or other representative thereof: all claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Genetic Information Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., all as amended; all claims arising out of the North Carolina Equal Employment Practices Act, N.C. Gen. Stat. § 143-422.1 et seq., the North Carolina Persons with Disabilities Protection Act, N.C. Gen. Stat. § 168A-1 et seq., North Carolina Retaliatory Employment Discrimination Act, N.C. Gen. Stat. § 95-240 et seq., N.C. Gen. Stat. § 50B-5.5 (North Carolina domestic violence and crime leave law), N.C. Gen. Stat. § 95-28.3 (North Carolina parental leave for involvement at schools law), N.C. Gen. Stat. § 95-28.1A (North Carolina genetic testing law), and N.C. Gen. Stat. § 95-28.1 (North Carolina sickle cell law), all as amended; all common law claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, breach of duty, misrepresentation, fraud, fraudulent transfer, wrongful discharge, and breach of contract (including without limitation all claims arising out of or related to the Employment Agreement and/or any benefits to which I may otherwise have been entitled thereunder); all claims to any unvested ownership interest in the Company, contractual or otherwise; all state and federal whistleblower claims to the maximum extent permitted by law; and any claim or damage arising out of my employment with and/or separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that nothing in this Release Agreement (a) prevents me from filing a charge with, cooperating with, or participating in any investigation or proceeding before, the Equal Employment Opportunity Commission or a state fair employment practices agency (except that I acknowledge that I may not recover any monetary benefits in connection with any such charge, investigation, or proceeding, and I further waive any rights or claims to any payment, benefit, attorneys’ fees or other remedial relief in connection with any such charge, investigation or proceeding), or (b) releases claims to any payments to which I may be entitled under the Retention Agreement).

 

2.                  Continuing Obligations – I acknowledge and reaffirm my obligation to keep confidential and not to use or disclose any and all non-public information concerning the Company that I acquired during the course of my employment with the Company, including any non-public information concerning the Company’s business affairs, business prospects, and financial condition, except as otherwise permitted by paragraph 7 below. Further, I acknowledge that I remain subject to any and all continuing confidentiality, non-competition and other obligations that I have pursuant to any previous agreement(s) with the Company (“Restrictive Covenant Obligations”), including, but not limited to, my obligations under Sections 5 and 6 of the Employment Agreement and any agreements referenced therein, which remain in full force and effect. For the avoidance of doubt, I further acknowledge that all of my Restrictive Covenant Obligations continue to apply during and after my engagement as a consultant to the Company pursuant to the Consulting Agreement attached as Exhibit C to the Retention Agreement.

 

3.                  Non-Disparagement – I understand and agree that, to the extent permitted by law and except as otherwise permitted by paragraph 7 below, I will not, in public or private, make any false, disparaging, derogatory or defamatory statements, online (including, without limitation, on any social media, networking, or employer review site) or otherwise, to any person or entity, including, but not limited to, any media outlet, industry group, financial institution or current or former employee, board member, consultant, client or customer of the Company, regarding the Company or any of the other Released Parties, or regarding the Company’s business affairs, business prospects, or financial condition.

 

4.                  Cooperation – I agree that, to the extent permitted by law, I shall cooperate fully with the Company in the investigation, defense or prosecution of any claims or actions which already have been brought, are currently pending, or which may be brought in the future against the Company by a third party or by or on behalf of the Company against any third party, whether before a state or federal court, any state or federal government agency, or a mediator or arbitrator. My full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with the Company’s counsel, at reasonable times and locations designated by the Company, to investigate or prepare the Company’s claims or defenses, to prepare for trial or discovery or an administrative hearing, mediation, arbitration or other proceeding and to act as a witness when requested by the Company. I further agree that, to the extent permitted by law, I will notify the Company promptly in the event that I am served with a subpoena (other than a subpoena issued by a government agency), or in the event that I am asked to provide a third party (other than a government agency) with information concerning any actual or potential complaint or claim against the Company.

 

5.                  Return of Company Property and Information – I agree that on the last day of my employment with the Company, or earlier upon request by the Company, I will return to the Company all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, flash drives and storage devices, wireless handheld devices, cellular phones, tablets, etc.), Company identification, and any other Company-owned property and information in my possession or control and that I will leave intact all electronic Company documents and information, including but not limited to those documents and that information that I developed or helped to develop during my employment, and I will not retain any copies. I further confirm that I will, on the last day of my employment with the Company, or earlier upon request by the Company, cancel all accounts for my benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone accounts, and computer accounts. Notwithstanding the foregoing, I understand that to the extent I am retained as a consultant to the Company after termination of my employment, and to the extent required in connection with the consulting services requested of me, I may retain property and information of the Company and accounts in the Company’s name for the duration of the Consultation Period or until such earlier time as the Company may request, and return such property and information, and cancel such accounts, at the end of such period or upon such request, whichever is sooner.

 

6.                  Confidentiality – I understand and agree that, to the extent permitted by law and except as otherwise permitted by paragraph 7 below, the terms and contents of this Release Agreement and the Retention Agreement, and the contents of the negotiations and discussions resulting in this Release Agreement and the Retention Agreement, shall be maintained as confidential by me and my agents and representatives and shall not be disclosed except as otherwise agreed to in writing by the Company.

 

7.                  Scope of Disclosure Restrictions – I understand that nothing in this Release Agreement or elsewhere prohibits me from communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing information to government agencies, filing a complaint with government agencies, or participating in government agency investigations or proceedings. I understand that I am not required to notify the Company of any such communications; provided, however, that nothing herein authorizes the disclosure of information I obtained through a communication that was subject to the attorney-client privilege. Further, notwithstanding my confidentiality and nondisclosure obligations, I understand that I am hereby being advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”

 

8.                  Amendment and Waiver; Successors and Assigns – This Release Agreement may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the Company. This Release Agreement is binding upon me and my agents, assigns, heirs, executors, successors and administrators, and any party acting on my behalf or by or through myself or my rights, and shall inure to the benefit of the Company’s agents, assigns, successors and administrators. No delay or omission by the Company in exercising any right under this Release Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

 

9.                  Validity – Should any provision of this Release Agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Release Agreement.

 

10.              Nature of Agreement – I understand and agree that this Release Agreement does not constitute an admission of liability or wrongdoing on the part of the Company.

 

11.              Acknowledgments and Voluntary Assent – I acknowledge that I have been given a reasonable amount of time to consider this Release Agreement. I affirm that no other promises or agreements of any kind have been made to or with me by any person or entity whatsoever to cause me to sign this Release Agreement, and that I fully understand the meaning and intent of this Release Agreement. I state and represent that I have had an opportunity to fully discuss and review the terms of this Release Agreement with an attorney. I further state and represent that I have carefully read this Release Agreement, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign my name of my own free act.

 

12.              Applicable Law – This Release Agreement shall be interpreted and construed by the laws of the State of North Carolina, without regard to conflict of laws provisions. I hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the courts of the State of North Carolina, or if appropriate, a federal court located in the State of North Carolina (which courts, for purposes of this Release Agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this Release Agreement or the subject matter hereof.

 

13.              Entire Agreement – This Release Agreement, together with the Retention Agreement and its other exhibits, contains and constitutes the entire understanding and agreement between the parties hereto with respect to the subject matter thereof and cancels any and all previous oral and written negotiations, agreements, and commitments in connection therewith.

 

14.              Tax Acknowledgement – In connection with the Initial Retention Amount and Temporary Revised Salary Amount and any Second Retention Amount I may receive, each as described in the Retention Agreement, I understand that the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and that I shall be responsible for all applicable taxes with respect to such payments and benefits under applicable law. I further acknowledge that I am not relying upon the advice or representation of the Company with respect to the tax treatment of any payments or benefits described in the Retention Agreement.

 

I hereby agree to the terms and conditions set forth above.

 

 

 

/s/ Charles Nicolette		July 20, 2018
Charles Nicolette		Date

 

 

To be returned in a timely manner as set forth in the Retention Agreement.

 

 

 

Exhibit 10.7

 

ARGOS THERAPEUTICS, INC.

 

CONSULTING AGREEMENT

 

This Consulting Agreement (this “Agreement”) is entered into as of August 29, 2018 (the “Effective Date”) by and between Argos Therapeutics, Inc. (the “Company”), and Jeffrey Abbey (the “Consultant”).

 

WHEREAS, the Consultant has certain knowledge and expertise regarding the Company as a result of having served as its President and Chief Executive Officer; and

 

WHEREAS, the Company desires to have the benefit of the Consultant’s knowledge and experience, and the Consultant desires to provide strategic advisory and consulting services to the Company in connection with the wind-down of its regular business operations, all as hereinafter provided in this Agreement.

 

NOW, THEREFORE, in consideration of the promises and mutual agreements hereinafter set forth, the sufficiency of which are hereby acknowledged, the Company and the Consultant hereby agree as follows:

 

1.                  Services.

 

a.                   Services; Performance. Upon the Company’s request, the Consultant shall render to the Company the strategic advisory and consulting services described in Attachment A to this Agreement and any additional consulting services as mutually agreed to by the Consultant and the Company from time to time in writing (collectively, the “Services”). The Consultant shall perform, during such hours as may be reasonably required for satisfactory performance of the Services, such Services in a professional manner and consistent with the highest industry standards. The Consultant shall be available to spend thirty (30) hours during the first 30 days during which this Agreement is in effect in performing the Services, and fifteen (15) hours during the next 30 days during which this Agreement is in effect and each following month during the Consultation Period in performing the Services, but the Company may request that the Consultant spend fewer or more hours in any month during the Consultation Period (if fewer are requested, the Consultant shall not work more hours than requested; if more are requested, the Consultant may choose to work such additional hours or not). The Consultant shall comply with all rules, procedures and standards promulgated from time to time by the Company with respect to the Consultant’s access to and use of the Company’s property, information, equipment and facilities in the course of the Consultant’s provision of Services hereunder.

 

b.                  Non-Exclusive. The parties agree that, at all times during the term of this Agreement, (i) the Company shall be free to obtain consulting and advisory services from any third party, and (ii) the Consultant shall be free to provide consulting and advisory services to any third party, or to be employed by any third party, so long as the provision of such services by the Consultant does not conflict with (x) the Consultant’s provision of Services to the Company as described in Section 1(a), or (y) the Consultant’s continuing obligations to the Company as detailed in the Retention Agreement entered into by the Company and the Consultant to which this Consulting Agreement is attached as Exhibit C (the “Retention Agreement”).

 

2.                  Compensation and Reimbursement.

 

a.                   Consulting Fees. As partial consideration for the performance of Services by the Consultant hereunder, the Company previously paid to the Consultant certain retention amounts pursuant to the Retention Agreement (the “Retention Amounts”). In addition, during the Consultation Period (as defined below), the Company shall also pay to the Consultant an hourly consulting fee in the amount of $600 (the “Consulting Fees”), to be paid as set forth in Section 2(c).

 

 

b.                  Expense Reimbursement. The Company shall reimburse the Consultant for all reasonable out-of-pocket expenses incurred by the Consultant in connection with the performance of the Services under this Agreement, so long as, in the case of any single expenditure over $1,000, it is approved in writing in advance by the Company.

 

c.                   Itemized Statements. At the end of any month in which the Consultant performs Services and incurs expenses in accordance with Section 2(b), the Consultant shall submit to the Company an itemized statement of the Services performed, including the number of hours worked and the project to which the Services relate, and the expenses incurred, including appropriate and reasonable documentation. The Company shall pay the Consultant the amount set forth on such itemized statement within forty-five (45) days after receipt.

 

d.                  No Employee Benefits. The Consultant’s relationship with the Company will be that of an independent contractor, and the Consultant shall not, in connection with this relationship, be entitled to any benefits, coverages or privileges, including without limitation health insurance, social security, unemployment, workers compensation, pension payments, administrative support or office space on the Company’s premises, made available to employees of the Company.

 

3.                  Term and Termination.

 

a.                   Consultation Period. Subject to the terms and conditions hereinafter set forth, the term of this Agreement shall commence immediately following the termination of Consultant’s employment with the Company and shall continue for six (6) months thereafter unless earlier terminated in accordance with the provisions below (such period, the “Consultation Period”). The Consultation Period shall automatically terminate upon the death, physical incapacitation or mental incompetence of the Consultant. This Agreement may further be terminated prior to the six-month anniversary of the Effective Date in the following manner: (i) by the Company at any time upon written notice if the Consultant has materially breached this Agreement or the Retention Agreement, subject to the notice provision and cure period provided for in Section 3(b); (ii) by the Consultant at any time upon written notice if the Company has materially breached this Agreement or the Retention Agreement, subject to the notice provision and cure period provided for in Section 3(b); (iii) at any time upon the mutual written consent of the parties hereto; (iv) by the Company upon not less than ten (10) days’ notice to the Consultant; or (v) after sixty (60) days following the Effective Date, by the Consultant upon not less than ten (10) days’ notice to the Company.

 

b.                  Effects of Termination. In the event of any termination under this Section 3, the Consultant shall be entitled only to the Consulting Fees payable for the month in which termination occurs and expenses (including reimbursements) incurred in accordance with Section 2(a) and (b) prior to the effective date of such termination, and no further payments of any kind will be due under this Agreement. Such payment shall constitute full settlement of any and all claims of the Consultant of every description against the Company. In the event that either party materially breaches the Consulting Agreement, the non-breaching party shall provide written notice of same to the breaching party and provide the breaching party with a period of ten (10) business days to correct such deficiency. If the Consultant fails to correct such deficiency within this time period, the Consultant shall repay to the Company twenty-five percent (25%) of the Initial Retention Payment and the Second Retention Payment received under the Retention Agreement.

 

 

4.                  Independent Contractor. During the Consultation Period, the Consultant shall not be, and shall not be deemed to be, an employee of the Company. The Consultant’s status and relationship with the Company shall be that of an independent contractor and consultant. The Consultant is not authorized to assume or create any obligation or responsibility, express or implied, on behalf of, or in the name of, the Company or to bind the Company in any manner. Nothing herein shall create, expressly or by implication, a partnership, joint venture or other association between the parties. The Consultant shall be solely responsible for payment of all charges and taxes arising from the payments to be made to the Consultant under this Agreement and the Consultant agrees that the Company shall have no obligation or liability with respect to such charges and/or taxes.

 

5.                  Notice. Any notice required or desired to be given shall be governed solely by this paragraph. Notice shall be deemed given only upon (a) mailing of any letter or instrument by overnight delivery with a reputable carrier or by registered mail, return receipt requested, postage prepaid by the sender, or (b) personal delivery.

 

If to the Consultant: Jeffrey Abbey ________________________ ________________________

If to the Company: Argos Therapeutics, Inc. 4233 Technology Drive Durham, NC 27704 Attn: Chair of the Board

 

From time to time, either party may, by written notice to the other in accordance with this Section 5, designate another address that shall thereupon become the effective address of such party for the purpose of this Section 5.

 

6.                  Miscellaneous. This Agreement, together with the Retention Agreement and all exhibits and attachments hereto and thereto, constitutes the entire understanding of the parties hereto with respect to the matters contained herein and supersedes all proposals and agreements, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. For the avoidance of doubt, nothing herein supersedes the Retention Agreement (including without limitation the ongoing force and effect of the Consultant’s continuing obligations). This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina without regard to its conflict of laws rules. The headings contained in this Agreement are for the convenience of the parties and are not to be construed as a substantive provision hereof. This Agreement may not be modified or amended except in writing signed or executed by the Consultant and the Company. In the event any provision of this Agreement is held to be unenforceable or invalid, such unenforceability or invalidity shall not affect any other provisions of this Agreement and such other provisions shall remain in full force and effect. If any provision of this Agreement is held to be excessively broad, it shall be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law. This Agreement shall be binding upon, and inure to the benefit of, both parties hereto and their respective successors and assigns, including any corporation with or into which the Company may be merged or which may succeed to its assets or business; provided, however, that the responsibility for actual performance of the Services is the Consultant’s and may not be assigned or delegated by the Consultant to any other person or entity. This Agreement may be executed in counterparts and by facsimile, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Remainder of page intentionally left blank]

 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

 

JEFFREY ABBEY     /s/ Jeffrey Abbey

Argos Therapeutics, Inc.     By: /s/ Hubert Birner Name: Hubert Birner Its: Chairman of the Board

 

 

 

 

 

 

 

 

 

 

[Signature Page to Consulting Agreement]

 

Attachment A

 

Description of Services

 

·

The Consultant shall provide consulting and advisory services in connection with the Company’s wind-down, including in the following areas:

 

o

Assisting with the termination of the Company’s contracts and other relationships with employees and former employees and with third parties

 

o

Assisting with the winding up of the Company’s physical operations, including the disposition of its equipment and other personal property and the removal of the Company’s property from its leased premises

 

o

Assisting with the preparation of such information, reports, and other documentation as may be necessary in connection with the Company’s wind-down and, to the extent the Company pursues a bankruptcy or similar filing, in connection with such filing

 

o

Assisting with such tax, accounting, legal, and other aspects of the Company’s wind-down, including interfacing with professionals and other consultants retained by the Company

 

 

 

 

 

 

 

 

 

1

Exhibit 10.8

 

ARGOS THERAPEUTICS, INC.

 

CONSULTING AGREEMENT

 

This Consulting Agreement (this “Agreement”) is entered into as of August 29, 2018 (the “Effective Date”) by and between Argos Therapeutics, Inc. (the “Company”), and Richard Katz (the “Consultant”).

 

WHEREAS, the Consultant has certain knowledge and expertise regarding the Company as a result of having served as its Vice President and Chief Financial Officer; and

 

WHEREAS, the Company desires to have the benefit of the Consultant’s knowledge and experience, and the Consultant desires to provide strategic advisory and consulting services to the Company in connection with the wind-down of its regular business operations, all as hereinafter provided in this Agreement.

 

NOW, THEREFORE, in consideration of the promises and mutual agreements hereinafter set forth, the sufficiency of which are hereby acknowledged, the Company and the Consultant hereby agree as follows:

 

1.                  Services.

 

a.                   Services; Performance. Upon the Company’s request, the Consultant shall render to the Company the strategic advisory and consulting services described in Attachment A to this Agreement and any additional consulting services as mutually agreed to by the Consultant and the Company from time to time in writing (collectively, the “Services”). The Consultant shall perform, during such hours as may be reasonably required for satisfactory performance of the Services, such Services in a professional manner and consistent with the highest industry standards. The Consultant shall be available to spend thirty (30) hours during the first 30 days during which this Agreement is in effect in performing the Services, and fifteen (15) hours during the next 30 days during which this Agreement is in effect and each following month during the Consultation Period in performing the Services, but the Company may request that the Consultant spend fewer or more hours in any month during the Consultation Period (if fewer are requested, the Consultant shall not work more hours than requested; if more are requested, the Consultant may choose to work such additional hours or not). The Consultant shall comply with all rules, procedures and standards promulgated from time to time by the Company with respect to the Consultant’s access to and use of the Company’s property, information, equipment and facilities in the course of the Consultant’s provision of Services hereunder.

 

b.                  Non-Exclusive. The parties agree that, at all times during the term of this Agreement, (i) the Company shall be free to obtain consulting and advisory services from any third party, and (ii) the Consultant shall be free to provide consulting and advisory services to any third party, or to be employed by any third party, so long as the provision of such services by the Consultant does not conflict with (x) the Consultant’s provision of Services to the Company as described in Section 1(a), or (y) the Consultant’s continuing obligations to the Company as detailed in the Retention Agreement entered into by the Company and the Consultant to which this Consulting Agreement is attached as Exhibit C (the “Retention Agreement”).

 

2.                  Compensation and Reimbursement.

 

a.                   Consulting Fees. As partial consideration for the performance of Services by the Consultant hereunder, the Company previously paid to the Consultant certain retention amounts pursuant to the Retention Agreement (the “Retention Amounts”). In addition, during the Consultation Period (as defined below), the Company shall also pay to the Consultant an hourly consulting fee in the amount of $400 (the “Consulting Fees”), to be paid as set forth in Section 2(c).

 

 

b.                  Expense Reimbursement. The Company shall reimburse the Consultant for all reasonable out-of-pocket expenses incurred by the Consultant in connection with the performance of the Services under this Agreement, so long as, in the case of any single expenditure over $1,000, it is approved in writing in advance by the Company.

 

c.                   Itemized Statements. At the end of any month in which the Consultant performs Services and incurs expenses in accordance with Section 2(b), the Consultant shall submit to the Company an itemized statement of the Services performed, including the number of hours worked and the project to which the Services relate, and the expenses incurred, including appropriate and reasonable documentation. The Company shall pay the Consultant the amount set forth on such itemized statement within forty-five (45) days after receipt.

 

d.                  No Employee Benefits. The Consultant’s relationship with the Company will be that of an independent contractor, and the Consultant shall not, in connection with this relationship, be entitled to any benefits, coverages or privileges, including without limitation health insurance, social security, unemployment, workers compensation, pension payments, administrative support or office space on the Company’s premises, made available to employees of the Company.

 

3.                  Term and Termination.

 

a.                   Consultation Period. Subject to the terms and conditions hereinafter set forth, the term of this Agreement shall commence immediately following the termination of Consultant’s employment with the Company and shall continue for six (6) months thereafter unless earlier terminated in accordance with the provisions below (such period, the “Consultation Period”). The Consultation Period shall automatically terminate upon the death, physical incapacitation or mental incompetence of the Consultant. This Agreement may further be terminated prior to the six-month anniversary of the Effective Date in the following manner: (i) by the Company at any time upon written notice if the Consultant has materially breached this Agreement or the Retention Agreement, subject to the notice provision and cure period provided for in Section 3(b); (ii) by the Consultant at any time upon written notice if the Company has materially breached this Agreement or the Retention Agreement, subject to the notice provision and cure period provided for in Section 3(b); (iii) at any time upon the mutual written consent of the parties hereto; (iv) by the Company upon not less than ten (10) days’ notice to the Consultant; or (v) after sixty (60) days following the Effective Date, by the Consultant upon not less than ten (10) days’ notice to the Company.

 

b.                  Effects of Termination. In the event of any termination under this Section 3, the Consultant shall be entitled only to the Consulting Fees payable for the month in which termination occurs and expenses (including reimbursements) incurred in accordance with Section 2(a) and (b) prior to the effective date of such termination, and no further payments of any kind will be due under this Agreement. Such payment shall constitute full settlement of any and all claims of the Consultant of every description against the Company. In the event that either party materially breaches the Consulting Agreement, the non-breaching party shall provide written notice of same to the breaching party and provide the breaching party with a period of ten (10) business days to correct such deficiency. If the Consultant fails to correct such deficiency within this time period, the Consultant shall repay to the Company twenty-five percent (25%) of the Initial Retention Payment and the Second Retention Payment received under the Retention Agreement.

 

 

4.                  Independent Contractor. During the Consultation Period, the Consultant shall not be, and shall not be deemed to be, an employee of the Company. The Consultant’s status and relationship with the Company shall be that of an independent contractor and consultant. The Consultant is not authorized to assume or create any obligation or responsibility, express or implied, on behalf of, or in the name of, the Company or to bind the Company in any manner. Nothing herein shall create, expressly or by implication, a partnership, joint venture or other association between the parties. The Consultant shall be solely responsible for payment of all charges and taxes arising from the payments to be made to the Consultant under this Agreement and the Consultant agrees that the Company shall have no obligation or liability with respect to such charges and/or taxes.

 

5.                  Notice. Any notice required or desired to be given shall be governed solely by this paragraph. Notice shall be deemed given only upon (a) mailing of any letter or instrument by overnight delivery with a reputable carrier or by registered mail, return receipt requested, postage prepaid by the sender, or (b) personal delivery.

 

If to the Consultant: Richard Katz ________________________ ________________________

If to the Company: Argos Therapeutics, Inc. 4233 Technology Drive Durham, NC 27704 Attn: Chair of the Board

 

From time to time, either party may, by written notice to the other in accordance with this Section 5, designate another address that shall thereupon become the effective address of such party for the purpose of this Section 5.

 

6.                  Miscellaneous. This Agreement, together with the Retention Agreement and all exhibits and attachments hereto and thereto, constitutes the entire understanding of the parties hereto with respect to the matters contained herein and supersedes all proposals and agreements, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. For the avoidance of doubt, nothing herein supersedes the Retention Agreement (including without limitation the ongoing force and effect of the Consultant’s continuing obligations). This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina without regard to its conflict of laws rules. The headings contained in this Agreement are for the convenience of the parties and are not to be construed as a substantive provision hereof. This Agreement may not be modified or amended except in writing signed or executed by the Consultant and the Company. In the event any provision of this Agreement is held to be unenforceable or invalid, such unenforceability or invalidity shall not affect any other provisions of this Agreement and such other provisions shall remain in full force and effect. If any provision of this Agreement is held to be excessively broad, it shall be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law. This Agreement shall be binding upon, and inure to the benefit of, both parties hereto and their respective successors and assigns, including any corporation with or into which the Company may be merged or which may succeed to its assets or business; provided, however, that the responsibility for actual performance of the Services is the Consultant’s and may not be assigned or delegated by the Consultant to any other person or entity. This Agreement may be executed in counterparts and by facsimile, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

 

[Remainder of page intentionally left blank]

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

 

RICHARD KATZ     /s/ Richard Katz	Argos Therapeutics, Inc.     By: /s/ Jeff Abbey Name: Jeff Abbey __________________________________

 

 

 

 

 

 

 

 

[Signature Page to Consulting Agreement]

 

Attachment A

 

Description of Services

 

·

The Consultant shall provide consulting and advisory services in connection with the Company’s wind-down, including in the following areas:

 

o

Assisting with the termination of the Company’s contracts and other relationships with employees and former employees and with third parties

 

o

Assisting with the winding up of the Company’s physical operations, including the disposition of its equipment and other personal property and the removal of the Company’s property from its leased premises

 

o

Assisting with the preparation of such information, reports, and other documentation as may be necessary in connection with the Company’s wind-down and, to the extent the Company pursues a bankruptcy or similar filing, in connection with such filing

 

o

Assisting with such tax, accounting, legal, and other aspects of the Company’s wind-down, including interfacing with professionals and other consultants retained by the Company

 

 

 

 

 

 

 

1

Exhibit 10.9

 

ARGOS THERAPEUTICS, INC.

 

CONSULTING AGREEMENT

 

This Consulting Agreement (this “Agreement”) is entered into as of August 29, 2018 (the “Effective Date”) by and between Argos Therapeutics, Inc. (the “Company”), and Charles Nicolette (the “Consultant”).

 

WHEREAS, the Consultant has certain knowledge and expertise regarding the Company as a result of having served as its Vice President of Research and Development and Chief Scientific Officer; and

 

WHEREAS, the Company desires to have the benefit of the Consultant’s knowledge and experience, and the Consultant desires to provide strategic advisory and consulting services to the Company in connection with the wind-down of its regular business operations, all as hereinafter provided in this Agreement.

 

NOW, THEREFORE, in consideration of the promises and mutual agreements hereinafter set forth, the sufficiency of which are hereby acknowledged, the Company and the Consultant hereby agree as follows:

 

1.                  Services.

 

a.                   Services; Performance. Upon the Company’s request, the Consultant shall render to the Company the strategic advisory and consulting services described in Attachment A to this Agreement and any additional consulting services as mutually agreed to by the Consultant and the Company from time to time in writing (collectively, the “Services”). The Consultant shall perform, during such hours as may be reasonably required for satisfactory performance of the Services, such Services in a professional manner and consistent with the highest industry standards. The Consultant shall be available to spend thirty (30) hours during the first 30 days during which this Agreement is in effect in performing the Services, and fifteen (15) hours during the next 30 days during which this Agreement is in effect and each following month during the Consultation Period in performing the Services, but the Company may request that the Consultant spend fewer or more hours in any month during the Consultation Period (if fewer are requested, the Consultant shall not work more hours than requested; if more are requested, the Consultant may choose to work such additional hours or not). The Consultant shall comply with all rules, procedures and standards promulgated from time to time by the Company with respect to the Consultant’s access to and use of the Company’s property, information, equipment and facilities in the course of the Consultant’s provision of Services hereunder.

 

b.                  Non-Exclusive. The parties agree that, at all times during the term of this Agreement, (i) the Company shall be free to obtain consulting and advisory services from any third party, and (ii) the Consultant shall be free to provide consulting and advisory services to any third party, or to be employed by any third party, so long as the provision of such services by the Consultant does not conflict with (x) the Consultant’s provision of Services to the Company as described in Section 1(a), or (y) the Consultant’s continuing obligations to the Company as detailed in the Retention Agreement entered into by the Company and the Consultant to which this Consulting Agreement is attached as Exhibit C (the “Retention Agreement”).

 

 

2.                  Compensation and Reimbursement.

 

a.                   Consulting Fees. As partial consideration for the performance of Services by the Consultant hereunder, the Company previously paid to the Consultant certain retention amounts pursuant to the Retention Agreement (the “Retention Amounts”). In addition, during the Consultation Period (as defined below), the Company shall also pay to the Consultant an hourly consulting fee in the amount of $475 (the “Consulting Fees”), to be paid as set forth in Section 2(c).

 

b.                  Expense Reimbursement. The Company shall reimburse the Consultant for all reasonable out-of-pocket expenses incurred by the Consultant in connection with the performance of the Services under this Agreement, so long as, in the case of any single expenditure over $1,000, it is approved in writing in advance by the Company.

 

c.                   Itemized Statements. At the end of any month in which the Consultant performs Services and incurs expenses in accordance with Section 2(b), the Consultant shall submit to the Company an itemized statement of the Services performed, including the number of hours worked and the project to which the Services relate, and the expenses incurred, including appropriate and reasonable documentation. The Company shall pay the Consultant the amount set forth on such itemized statement within forty-five (45) days after receipt.

 

d.                  No Employee Benefits. The Consultant’s relationship with the Company will be that of an independent contractor, and the Consultant shall not, in connection with this relationship, be entitled to any benefits, coverages or privileges, including without limitation health insurance, social security, unemployment, workers compensation, pension payments, administrative support or office space on the Company’s premises, made available to employees of the Company.

 

3.                  Term and Termination.

 

a.                   Consultation Period. Subject to the terms and conditions hereinafter set forth, the term of this Agreement shall commence immediately following the termination of Consultant’s employment with the Company and shall continue for six (6) months thereafter unless earlier terminated in accordance with the provisions below (such period, the “Consultation Period”). The Consultation Period shall automatically terminate upon the death, physical incapacitation or mental incompetence of the Consultant. This Agreement may further be terminated prior to the six-month anniversary of the Effective Date in the following manner: (i) by the Company at any time upon written notice if the Consultant has materially breached this Agreement or the Retention Agreement, subject to the notice provision and cure period provided for in Section 3(b); (ii) by the Consultant at any time upon written notice if the Company has materially breached this Agreement or the Retention Agreement, subject to the notice provision and cure period provided for in Section 3(b); (iii) at any time upon the mutual written consent of the parties hereto; (iv) by the Company upon not less than ten (10) days’ notice to the Consultant; or (v) after sixty (60) days following the Effective Date, by the Consultant upon not less than ten (10) days’ notice to the Company.

 

b.                  Effects of Termination. In the event of any termination under this Section 3, the Consultant shall be entitled only to the Consulting Fees payable for the month in which termination occurs and expenses (including reimbursements) incurred in accordance with Section 2(a) and (b) prior to the effective date of such termination, and no further payments of any kind will be due under this Agreement. Such payment shall constitute full settlement of any and all claims of the Consultant of every description against the Company. In the event that either party materially breaches the Consulting Agreement, the non-breaching party shall provide written notice of same to the breaching party and provide the breaching party with a period of ten (10) business days to correct such deficiency. If the Consultant fails to correct such deficiency within this time period, the Consultant shall repay to the Company twenty-five percent (25%) of the Initial Retention Payment and the Second Retention Payment received under the Retention Agreement.

 

 

4.                  Independent Contractor. During the Consultation Period, the Consultant shall not be, and shall not be deemed to be, an employee of the Company. The Consultant’s status and relationship with the Company shall be that of an independent contractor and consultant. The Consultant is not authorized to assume or create any obligation or responsibility, express or implied, on behalf of, or in the name of, the Company or to bind the Company in any manner. Nothing herein shall create, expressly or by implication, a partnership, joint venture or other association between the parties. The Consultant shall be solely responsible for payment of all charges and taxes arising from the payments to be made to the Consultant under this Agreement and the Consultant agrees that the Company shall have no obligation or liability with respect to such charges and/or taxes.

 

5.                  Notice. Any notice required or desired to be given shall be governed solely by this paragraph. Notice shall be deemed given only upon (a) mailing of any letter or instrument by overnight delivery with a reputable carrier or by registered mail, return receipt requested, postage prepaid by the sender, or (b) personal delivery.

 

If to the Consultant: Charles Nicolette ________________________ ________________________

If to the Company: Argos Therapeutics, Inc. 4233 Technology Drive Durham, NC 27704 Attn: Chair of the Board

 

From time to time, either party may, by written notice to the other in accordance with this Section 5, designate another address that shall thereupon become the effective address of such party for the purpose of this Section 5.

 

6.                  Miscellaneous. This Agreement, together with the Retention Agreement and all exhibits and attachments hereto and thereto, constitutes the entire understanding of the parties hereto with respect to the matters contained herein and supersedes all proposals and agreements, written or oral, and all other communications between the parties relating to the subject matter of this Agreement. For the avoidance of doubt, nothing herein supersedes the Retention Agreement (including without limitation the ongoing force and effect of the Consultant’s continuing obligations). This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina without regard to its conflict of laws rules. The headings contained in this Agreement are for the convenience of the parties and are not to be construed as a substantive provision hereof. This Agreement may not be modified or amended except in writing signed or executed by the Consultant and the Company. In the event any provision of this Agreement is held to be unenforceable or invalid, such unenforceability or invalidity shall not affect any other provisions of this Agreement and such other provisions shall remain in full force and effect. If any provision of this Agreement is held to be excessively broad, it shall be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law. This Agreement shall be binding upon, and inure to the benefit of, both parties hereto and their respective successors and assigns, including any corporation with or into which the Company may be merged or which may succeed to its assets or business; provided, however, that the responsibility for actual performance of the Services is the Consultant’s and may not be assigned or delegated by the Consultant to any other person or entity. This Agreement may be executed in counterparts and by facsimile, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

 

[Remainder of page intentionally left blank]

 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

 

CHARLES NICOLETTE     /s/ Charles Nicolette	Argos Therapeutics, Inc.     By: /s/ Jeff Abbey Name: Jeff Abbey ________________________________

 

 

 

 

 

 

 

 

[Signature Page to Consulting Agreement]

 

Attachment A

 

Description of Services

 

·

The Consultant shall provide consulting and advisory services in connection with the Company’s wind-down, including in the following areas:

 

o

Assisting with the termination of the Company’s contracts and other relationships with employees and former employees and with third parties

 

o

Assisting with the winding up of the Company’s physical operations, including the disposition of its equipment and other personal property and the removal of the Company’s property from its leased premises

 

o

Assisting with the preparation of such information, reports, and other documentation as may be necessary in connection with the Company’s wind-down and, to the extent the Company pursues a bankruptcy or similar filing, in connection with such filing

 

o

Assisting with such tax, accounting, legal, and other aspects of the Company’s wind-down, including interfacing with professionals and other consultants retained by the Company

 

 

 

 

 

 

 

1

Exhibit 31.1

 

CERTIFICATIONS

 

I, Jeffrey D. Abbey, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Argos Therapeutics, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

	By:	/s/ JEFFREY D. ABBEY
Date: November 19, 2018		Jeffrey D. Abbey
		President and Chief Executive Officer
		(Principal Executive Officer)

 

Exhibit 31.2

 

CERTIFICATIONS

 

I, Richard D. Katz, M.D., certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Argos Therapeutics, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

	By:	/s/ RICHARD D. KATZ, M.D.
Date: November 19, 2018		Richard D. Katz, M.D.
		Vice President and Chief Financial Officer
		(Principal Financial Officer)

 

Exhibit 32.1

 

CERTIFICATIONS PURSUANT TO 18 U.S.C. 1350

 

The undersigned, the Chief Executive Officer and the Vice President and Chief Financial Officer of Argos Therapeutics, Inc. (the “Company”), each hereby certifies that, to his knowledge on the date hereof:

 

(a) the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2018 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

	By:	/s/ JEFFREY D. ABBEY
November 19, 2018		Jeffrey D. Abbey
		President and Chief Executive Officer

 

 

	By:	/s/ RICHARD D. KATZ, M.D.
November 19, 2018		Richard D. Katz, M.D.
		Vice President and Chief Financial Officer