NANOVIRICIDES, INC. - Annual Report: 2009 (Form 10-K)

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	NEVADA		76-0674577
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification  No.)

COMMON STOCK, PAR VALUE $.001 PER SHARE		NONE
(Title of Class)		(Name of exchange on which registered)

 

 

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Large accelerated filer        ¨		Accelerated filer        ¨
Non-accelerated filer        ¨		Smaller reporting Company        x

 

PART I
Item 1.		Description of Business
Item 1A		Risk Factors
Item 1B		Unresolved Staff Comments
Item 2.		Properties
Item 3.		Legal Proceedings
Item 4.		Submission of Matters to a Vote of Security Holders
PART II
Item 5.		Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.		Selected Financial Data
Item 7.		Management’s Discussion and Analysis of Plan of Operation
Item 7A		Quantitative and Qualitative Disclosures About Market Risk
Item 8.		Financial Statements and Supplementary Data
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A(T)		Controls and Procedures
Item 9B.		Other Information
PART III
Item 10.		Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(A) of the Exchange Act.
Item 11.		Executive Compensation
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.		Certain Relationships and Related Transactions and Director Independence
Item 14.		Principal Accountant Fees and Services
PART IV
Item 15.		Exhibits, Financial Statement Schedules
		SIGNATURES

 

 

 

1

Each nanoviricide drug is designed as a specifically targeted antiviral agent for a particular type of virus or group of viruses. Often side effects of a drug may be correlated with non-specific interactions with the host cells, tissues, and organs. Most existing anti-viral agents are known to have non-specific effects against both host cells and viral machinery at the same time. Most existing anti-viral agents act inside human cells. It is believed that this intracellular mechanism leads to significant opportunities for non-specific effects against host cells. Nanoviricides, on the other hand, are designed to work directly against virus particles in bodily fluids. The Company believes that this approach may make nanoviricides inherently safer than existing approaches.

2

A nanoviricide is designed to seek and attach to a specific virus particle, engulfing the virus particle in the process, thereby rendering it incapable of infecting new cells, and disabling it completely. This suggested mechanism of action comprises much more than what the current entry and fusion inhibitors are expected to do. The fusion and entry inhibitors do not completely cover the virus particle and likely block only a few sites on the virus particle, which means the virus particle may still be capable of infecting cells using its unblocked attachment sites. In contrast, a nanoviricide is expected to engulf the virus particle completely, because of its larger size and flexible nature, thus disabling it completely. The action of a nanoviricide, if it works as designed, in this regard may be expected to be superior to antibody agents that attack viruses as well. Antibodies, being large, are expected to block relatively greater portions of the virus particle surface compared to small molecule entry inhibitors. However, antibodies depend upon the human immune system responses for clearing up the virus particle. In contrast, nanoviricides are thought to be capable of acting as completely programmed chemical robots that finish their task of destroying the virus particle on their own.

3

A nanoviricide is designed to be capable of encapsulating an active pharmaceutical ingredient (API) in its core, or “belly”. This is expected to reduce toxic effects of the API. Such encapsulating methods are currently being used in anti-cancer therapy and have shown reduced toxicity as well as increased efficacy (see http://nihroadmap.nih.gov/nanomedicine/). Our goal, which we can give no assurance that we will achieve, is for NanoViricides, Inc. to become the premier company developing nanomedicines for anti-viral therapy.

4

A nanoviricide is designed to deliver any encapsulated API directly into the core of the virus particle. This is proposed to result in maximal effect against the anti-viral targets, such as the viral genomic materials. Our goal for this specifically targeted delivery of the API is to minimize toxic effects and also improve efficacy of the API. (see http://www.nci.nih.gov).

 

To date, the Company has developed drug candidates against four virus types/disease areas with strong commercial prospects. These include Influenza, HIV, viral diseases of the external eye, and Herpes Cold Sores and Genital Herpes. The market size for HIV is estimated to be $21billion in 2013. The market for influenza drugs is estimated at about $7billion. The eye drops topical viricide market size is estimated to be in the billions of dollars. In addition, the herpes cold sores and genital herpes market size is in several billion dollars.

 

 

 

 

 

NanoViricides has a fee for service arrangement with KARD. We do not have an exclusive arrangement with KARD; we do not have a contract with KARD; all work performed by KARD must have prior approval by the executive officers of NanoViricides; and we retain all intellectual property resulting from the services by KARD.
 

The Nanoviricides approach depends upon significant scientific input as well as scientific experimentation during various stages of developments. The Company currently does not have the facilities to conduct most of the anti-viral studies. The Company has made and will need to continue to develop additional collaborations in order to minimize capital outlays.
 

 

 
 

1

The Writing Committee of the World Health Organization (WHO) Consultation on Human Influenza A/H5. Avian influenza A (H5N1) infection in humans. N Engl J Med 2005;353:1374-1385.

 

2

Hien TT, Liem NT, Dung NT, et al. Avian influenza A (H5N1) in 10 patients in Vietnam. N Engl J Med 2004;350:1179-1188.

 

3

Chotpitayasunondh T, Ungchusak K, Hanshaoworakul W, et al. Human disease from influenza A (H5N1), Thailand, 2004. Emerg Infect Dis 2005;11:201-209.

 

4

Moscona A. Neuraminidase inhibitors for influenza. N Engl J Med 2005;353:1363-1373.

5

Identification of influenza isolates by hemagglutination inhibition. In: Department of Communicable Disease Surveillance and Response. WHO manual on animal influenza diagnosis and surveillance. Geneva: World Health Organization, 2002:28-36. (WHO/CDS/CSR/NCS/2002.5.)

 

6

de Jong MD, Cam BV, Qui PT, et al. Fatal avian influenza A (H5N1) in a child presenting with diarrhea followed by coma. N Engl J Med 2005;352:686-691.

 

7

Boom R, Sol C, Beld M, Weel J, Goudsmit J, Wertheim-van Dillen P. Improved silica-guanidiniumthiocyanate DNA isolation procedure based on selective binding of bovine alpha-casein to silica particles. J Clin Microbiol 1999;37:615-619.

 

8

Boom R, Sol CJ, Salimans MM, Jansen CL, Wertheim-van Dillen PM, van der Noordaa J. Rapid and simple method for purification of nucleic acids. J Clin Microbiol 1990;28:495-503.

 

9

Chen H, Smith GJ, Zhang SY, et al. Avian flu: H5N1 virus outbreak in migratory waterfowl. Nature 2005;436:191-192.

 

10

Gubareva LV, Kaiser L, Matrosovich MN, Soo-Hoo Y, Hayden FG. Selection of influenza virus mutants in experimentally infected volunteers treated with oseltamivir. J Infect Dis 2001;183:523-531.

 

11

Le QM, Kiso M, Someya K, et al. Avian flu: isolation of drug-resistant H5N1 virus. Nature 2005;437:1108-1108.

 

12

Whitley RJ, Hayden FG, Reisinger KS, et al. Oral oseltamivir treatment of influenza in children. Pediatr Infect Dis J 2001;20:127-133. [Erratum, Pediatr Infect Dis J 2001;20:421.]

 

13

Kiso M, Mitamura K, Sakai-Tagawa Y, et al. Resistant influenza A viruses in children treated with oseltamivir: descriptive study. Lancet 2004;364:759-765.

 

14

Ward P, Small I, Smith J, Suter P, Dutkowski R. Oseltamivir (Tamiflu) and its potential for use in the event of an influenza pandemic. J Antimicrob Chemother 2005;55:Suppl 1:i5-i21.

 

15

Yen HL, Monto AS, Webster RG, Govorkova EA. Virulence may determine the necessary duration and dosage of oseltamivir treatment for highly pathogenic A/Vietnam/1203/04 influenza virus in mice. J Infect Dis 2005;192:665-672.

 

16

Maines TR, Lu XH, Erb SM, et al. Avian influenza (H5N1) viruses isolated from humans in Asia in 2004 exhibit increased virulence in mammals. J Virol 2005;79:11788-11800.

 

 

Table 1. Products in Development
	Project	Virus	Development Stage
1	FluCide™	Influenza (Common), H5N1 Bird Flu, Highly Pathogenic Influenzas, novel H1N1/2009	Preclinical
2	HIVCide™	HIV/AIDS	Preclinical
3	Nanoviricide Eye Drops	Eye Drops for Viral Diseases of the External Eye	Preclinical
4	HerpeCide™	Herpes “Cold Sores” and Genital Herpes, Topical Cream and Gel Formulations	Very Early Preclinical
5	RabiCide™	Rabies	Preclinical
6	Nanoviricide against Ebola/Marburg	Ebola, Marburg Filoviruses	Preclinical
7	Nanoviricide against Dengue Viruses	Dengue	Early R&D
8	HepCCide™	HCV	R&D, project delayed, expect to restart in 2010

 

 

 

TheraCour Pharma, Inc. owns 34,160,000 shares of the Company’s  125,299,457 outstanding shares of common stock as of June 30, 2009. Anil Diwan, the Company’s President and Chairman of the Board and Director, owns approximately seventy percent (70%) of the outstanding capital of TheraCour Pharma., Inc.

Table 2: Intellectual Property, Patents and Pending Patents Licensed by The Company
	Patent or Application	Date of Issue/ Application	US Expiry Date	International	Owners
1	US6,521,736   (Certain specific amphiphilic polymers).	Issued: Feb 18, 2003	Feb 18, 2020	N/A	TheraCour Pharma and Univ. of Massachusetts, Lowell. [Nonexclusive license from TheraCour Pharma].
2	PCT/US06/01820 (SOLUBILIZATION AND TARGETED DELIVERY OF DRUGS WITH SELF-ASSEMBLING AMPHIPHILIC POLYMERS).	Applied: Jan 19, 2006 PCT Application.	Jan 18, 2023 (estimated)	Applications  being filed.	TheraCour Pharma, Inc. [Exclusive License].
3	PCT/US2007/001607 SELF-ASSEMBLING AMPHIPHILIC POLYMERS AS ANTIVIRAL AGENTS	Applied: Jan 22, 2007	Jan 21, 2024 (estimated)	Applications to be filed.	TheraCour Pharma, Inc. [Exclusive License].
4	Provisional US 61/230,457 ANTIVIRAL AMPHIPHILIC POLYMERS	Applied: Jul 31, 2009	Jul 31, 2026 (estimated)	To be Converted to PCT Application	TheraCour Pharma, Inc. [Exclusive License].

 

	•	efficacy;
	•	safety;

	•	tolerability;
	•	acceptance by doctors;

 

	•	patent compliance;
	•	patent protection;

	•	ease of use;
	•	price;

	•	insurance and other reimbursement coverage;
	•	distribution;

	•	marketing; and
	•	adaptability to various modes of dosing.

 

 

 

 

 

 

	•	demonstration and proof of principle in pre-clinical trials that a nanoviricide is safe and effective;
	•	successful development of our first product candidates FluCide, Nanoviricide Eye Drops, HIVCide, HerpeCide or another one of the drug candidates in our pipeline;
	•	our ability to seek and obtain regulatory approvals, including with respect to the indications we are seeking;
	•	the successful commercialization of our product candidates; and
	•	market acceptance of our products.

o	the absence of an operating history;
o	the lack of commercialized products;

 

o	limited experience in dealing with regulatory issues;
o	the lack of manufacturing experience and limited marketing experience;

 

 

o	an expected reliance on third parties for the development and commercialization of our proposed products;
o	a competitive environment characterized by numerous, well-established and well capitalized competitors; and

 

 

o	reliance on key personnel.

 

 

 

 

 

 

We currently do not have sufficient resources to complete the development and commercialization of any of our proposed products. As of June 30, 2009 we have a cash and cash equivalent balance of $1,689,422 which combined with the $3,217,400 obtained through the sale of the Company’s common stock, after the close of the Company’s year end, will be sufficient to fund our operations for the next eighteen months. We expect to incur additional costs of approximately $10~15 million dollars in the upcoming twenty-four months to construct or obtain facilities to support a initial new drug application filing with the FDA in accordance with our business plans.

	•	research and development programs;
	•	preclinical studies and clinical trials; material characterization studies, regulatory processes;

•

establishment of our own laboratory or a search for third party marketing partners to market our products for us.

	•	progress, timing and scope of our research and development programs;
	•	progress, timing and scope of our preclinical studies and clinical trials;

	•	time and cost necessary to obtain regulatory approvals;
	•	time and cost necessary to establish our own marketing capabilities or to seek marketing partners;

	•	time and cost necessary to respond to technological and market developments;
	•	changes made or new developments in our existing collaborative, licensing and

	•	other commercial relationships; and
	•	new collaborative, licensing and other commercial relationships that we may establish.

	•	enter into leases for new facilities and capital equipment;
	•	enter into additional licenses and collaborative agreements; and

•

incur additional expenses associated with being a public company.

 

 

	•	develop products internally or obtain rights to them from others on favorable terms;
	•	complete laboratory testing and human studies;

	•	obtain and maintain necessary intellectual property rights to our products;
	•	successfully complete regulatory review to obtain requisite governmental agency approvals

	•	enter into arrangements with third parties to manufacture our products on our behalf; and
	•	enter into arrangements with third parties to provide sales and marketing functions.

 

 

	•	are found to be unsafe or ineffective in clinical trials;
	•	do not receive necessary approval from the FDA or foreign regulatory agencies;

	•	fail to conform to a changing standard of care for the diseases they seek to treat; or
	•	are less effective or more expensive than current or alternative treatment methods.

 

 

 

	•	The FDA or foreign regulators may interpret data from pre-clinical testing and clinical trials in different ways than we interpret them.
	•	If regulatory approval of a product is granted, the approval may be limited to specific indications or limited with respect to its distribution. In addition, many foreign countries control pricing and coverage under their respective national social security systems.

	•	The FDA or foreign regulators may not approve our manufacturing processes or manufacturing facilities.
	•	The FDA or foreign regulators may change their approval policies or adopt new regulations.

•

Even if regulatory approval for any product is obtained, the marketing license will be subject to continual review, and newly discovered or developed safety or effectiveness data may result in suspension or revocation of the marketing license.

•

If regulatory approval of the product candidate is granted, the marketing of that product would be subject to adverse event reporting requirements and a general prohibition against promoting products for unapproved or “off-label” uses.

	•	In some foreign countries, we may be subject to official release requirements that require each batch of the product we produce to be officially released by regulatory authorities prior to its distribution by us.
	•	We will be subject to continual regulatory review and periodic inspection and approval of manufacturing modifications, including compliance with current GMP regulations.

 

 

 

 

 

 

 

	•	the number and outcome of clinical studies we are planning to conduct; for example, our R&D expenses may increase based on the number of late-stage clinical studies that we may be required to conduct;
	•	the number of drugs entering into pre-clinical development from research; for example, there is no guarantee that internal research efforts will succeed in generating sufficient data for us to make a positive development decision;

•

licensing activities, including the timing and amount of related development funding or milestone payments; for example, we may enter into agreements requiring us to pay a significant up-front fee for the purchase of in-process R&D that we may record as R&D expense.

 

 

 

 

 

 

 

 

 

 

 

 

 

	•	significant time and effort from our management team;
	•	coordination of our marketing and R&D programs with the marketing and R&D priorities of our collaborators; and

•

effective allocation of our resources to multiple projects.

 

 

 

 

 

 

•

Our executive officers or directors or their affiliates may have an economic interest in, or other business relationship with, partner companies that invest in us.

•

Our executive officers or directors or their affiliates have interests in entities that provide products or services to us.

 

•

Our executive officers or directors may have a conflict between our current interests and their personal financial and other interests in another business venture.

 

•

Our executive officers or directors may have conflicting fiduciary duties to us and the other entity.

 

•

The terms of transactions with the other entity may not be subject to arm’s length negotiations and therefore may be on terms less favorable to us than those that could be procured through arm’s length negotiations.

 

 

	•	suspend or prevent us for a set period of time from receiving new contracts or extending existing contracts based on violations or suspected violations of laws or regulations;
	•	terminate our existing contracts;

	•	reduce the scope and value of our existing contracts;
	•	audit and object to our contract-related costs and fees, including allocated indirect costs;

	•	control and potentially prohibit the export of our drug candidates; and
	•	change certain terms and conditions in our contracts.

 

 

 

 

 

 

 

 

 

 

 

 

 

•

pre-clinical study results that may show the product to be less effective than desired (e.g., the study failed to meet its primary objectives) or to have harmful or problematic side effects;

 

•

failure to receive the necessary regulatory approvals or a delay in receiving such approvals. Among other things, such delays may be caused by slow enrollment in clinical studies, length of time to achieve study endpoints, additional time requirements for data analysis or a IND and later NDA, preparation, discussions with the FDA, an FDA request for additional pre-clinical or clinical data or unexpected safety or manufacturing issues;

 

•

manufacturing costs, pricing or reimbursement issues, or other factors that make the product not economical; and

 

•

the proprietary rights of others and their competing products and technologies that may prevent the product from being commercialized.

 

 

•

obtaining financial and investment information from the investor;

•

obtaining a written suitability questionnaire and purchase agreement signed by the investor; and

•

providing the investor a written identification of the shares being offered and the quantity of the shares.

 

	•	progress of our products through the regulatory process;
	•	results of preclinical studies and clinical trials;

	•	announcements of technological innovations or new products by us or our competitors;
	•	government regulatory action affecting our products or our competitors' products in both the United States and foreign countries;

	•	developments or disputes concerning patent or proprietary rights;
	•	general market conditions for emerging growth and pharmaceutical companies;

	•	economic conditions in the United States or abroad;
	•	actual or anticipated fluctuations in our operating results;

	•	broad market fluctuations; and
	•	changes in financial estimates by securities analysts.

 

At June 30, 2009, shareholders of the Company had 80,516,759 shares of restricted stock, or 64.26% of the outstanding common stock. If we were to file a registration statement including all of these shares, and the registration is allowed by the SEC, these shares would be freely tradable upon the effectiveness of the planned registration statement. If investors holding a significant number of freely tradable shares decide to sell them in a short period of time following the effectiveness of a registration statement, such sales could contribute to significant downward pressure on the price of our stock.

 

 

 

As of June 30, 2009, 80,516,759 of 125,299,457 issued and outstanding shares of the Company’s common stock were restricted securities as defined under Rule 144 of the Securities Act of 1933, as amended (the “Act”) and under certain circumstances may be resold without registration pursuant to Rule 144.

 

 

 

 

 

As of June 30, 2009, a total of 125,299,457 of the Company’s common stock (shares) are outstanding and held by approximately 210 shareholders of record. Of this amount, 44,781,880 shares are unrestricted. Approximately 28,356,759 shares are restricted securities held by non-affiliates, and the remaining 52,160,000 shares are restricted securities held by affiliates. These shares may only be sold in accordance with Rule 144. As of June 30, 2009, there were 7,428,150 warrants and 1,875,000  stock options to purchase the Company’s Common Stock outstanding.

 

In June 2009, 805,250 warrants  were converted into common stock in a Warrant Conversion Offering, resulting in the issuance of 2,050,700 common shares. The Company received $1,025,350 upon this conversion. All holders of the Company’s warrants were provided an option to exercise their warrants during the period ending June 30, 2009 at a price of $0.50 and to receive an additional Warrant convertible into one (1) restricted share of the Company’s $ .001 par common stock .   The Warrants may be exercised at any time and expire on August 17, 2012. The Company allocated a relative fair value of $471,661 to these warrants, by using the Black-Scholes option pricing model.

 

In June 2009, the Registrant accepted subscriptions from its warrantholders for an aggregate of $1,025,350 for 2,050,700 shares of common stock and warrants to purchase 2,050,700 shares of common stock.  In a separate offering which also closed on July 7, 2009, the Registrant accepted subscriptions of $75,000 for 150,000 shares of common stock and warrants to purchase an additional 75,000 shares.  The warrants in these offerings are exercisable at the price of $1.00 per share of common stock and expire in 3 years.

 

 

 

On September 30, 2009, the Company consummated subscriptions with certain investors in the aggregate amount of $3,217,400 from the offerings of shares of the Registrant’s common stock and warrants to purchase common stock and the exercise by the Registrant’s warrant holders of their outstanding warrants.  The offerings were commenced in June, 2009, at the Registrant’s then, current stock price levels of approximately $0.50.  The offerings were closed to investors on August 30, 2009, after an extension by the Registrant’s Board of Directors from the original termination date of August 14, 2009.  In the Registrant’s offering of Units comprised of shares of common stock and warrants to purchase common stock, the Registrant accepted subscriptions for $1,337,500 for Units consisting of 2,675,000 shares and Warrants to purchase an additional 1,337,500 shares.  In the offering to its warrant holders, the Registrant raised an aggregate of $1,879,900 for 3,759,800 shares and warrants to purchase 3,759,800 shares.  All of the warrants sold in the offerings are exercisable at the price of $1.00 per share and expire in three years.

 

 

 

 

Table 3: R&D Cost Allocations
		Year Ended June 30, 2009				Year Ended June 30, 2008				For the CumulativePeriod From May 12, 2005 (Inception) through June 30, 2009
All Influenzas: FluCide™, (Note: FluCide-HP, and AviFluCide are now consolidated into a single drug candidate, viz FluCide)			334,733				194,127				2,862,387
EKC-Cide™, other Eye Viral Infections			465,903				545,989				736,103
HIV-Cide™			758,705				888,936				1,198,805
Other (includes Dengue, Ebola, and other projects)			232,593				135,000				1,924,668
Total Research and development			1,791,934				1,764,052				6,721,963

 

Table 4: Drug Development Status
Project	Drug Development of FluCide™ for All Influenzas
Current status	This year, we developed new ligands for FluCide using additional rational drug design and our experience with the old FluCide, FluCide-HP, and AviFluCide. This development has allowed us to consolidate all three programs into one. The new FluCide is designed as a highly effective, pan-Influenza drug. It is expected to be highly effective against  all Influenza A viruses including bird flu H5N1 all clades, Highly Pathogenic Avian Influenzas of all types, subtypes and strains, seasonal Influenzas, as well as the novel 2009/H1N1 epidemic virus. Cell culture testing of this drug candidate is scheduled in CY 2009. Animal studies will follow.
Nature, timing and estimated costs	The Company has budgeted approximately $1,500,000 for the material development, production and testing of this drug. These costs will be paid from our available cash balances. Should management determine the results to be satisfactory, we will need to obtain additional financing to perform material characterization, pharmaco-kinetic, pharmaco-dynamic and toxicology studies, which we have presently budgeted at $2,000,000.
Anticipated completion date	Preclinical stage is expected to be completed in 12-18 months, depending upon financing. An IND could be filed within a few months after the completion of preclinical stage.
Risks and uncertainties associated with completing development on schedule, and the consequences to operations, financial position and liquidity if not completed timely	The Company has not yet raised the financing necessary to complete the preclinical stage and file an IND with the FDA.
Timing of commencement of expected material net cash inflows	If we file an IND in the next 18~24 months , we can expect human clinical trials to be completed at the earliest by 2013. Revenues are expected to occur after FDA approval and marketing of the drug. Revenues may occur earlier if the BARDA authority determines that FluCide should be stockpiled in the USG CDC stockpile of drugs for defense against pandemic influenza. If we are successful in partnering the drug with another pharmaceutical Company, we may see revenues much earlier than FDA approval.

Project	Drug Development of AviFluCide™ for Avian Influenza
Current status	AviFluCide is a specific anti-H5N1 anti-influenza nanoviricide. It is based on an antibody provided to us by the NIHE, Vietnam by which influenza viruses bind to cells. AviFluCide has been tested in cell cultures and has demonstrated better results than oseltamivir. Given the high efficacy demonstrated by FluCide-HP against H5N1, the Company has decided to abandon the development of the more expensive and troublesome antibody-based drug, viz. AviFluCide.
Nature, timing and estimated costs	This year, the Company has consolidated the  AviFluCide (H5N1-only) and FluCide-HP  drug development programs with the new pan-Influenza FluCide drug development. The new FluCide is expected to be highly effective against all High Path Avian Influenzas (HPAI), including H5N1 (all Clades), as well as all other Influenza A viruses, including the novel H1N1/2009 “Swine Flu” virus.
Anticipated completion date	Project completed successfully.
Risks and uncertainties associated with completing development on schedule, and the consequences to operations, financial position and liquidity if not completed timely	The development was terminated due to the high success of the new FluCide. This project demonstrated the technical feasibility of our ADIF™ “Accurate-Drug-In-Field” technology which is well suited for tackling novel and emerging viruses in bio-defense applications.
Timing of commencement of expected material net cash inflows	Project terminated by consolidation into the new FluCide program.

Project	Drug Development of FluCideHP™ for all High Pathogenic Avian Influenzas
Current status	FluCide-HP, was being developed as a highly effective drug against all highly pathogenic avian influenzas with pandemic potential, including H5N1, H7N and H9N. It is a relatively broad-spectrum anti-influenza nanoviricide. It is based on a well-known ligand mechanism by which influenza viruses become highly pathogenic to humans. This mechanism involves the hemagglutinin coat protein region of influenza virus protein called the polybasic site. FluCide-HP has been tested in cell cultures and in mice and has demonstrated superior results compared to oseltamivir.
Nature, timing and estimated costs	This year, the Company has consolidated the  AviFluCide (H5N1-only) and FluCide-HP  drug development with the new pan-Influenza FluCide drug development. The new FluCide is expected to be highly effective against all High Path Avian Influenzas (HPAI), including H5N1 (all Clades), as well as all other Influenza A viruses, including the novel H1N1/2009 “Swine Flu” virus.
Anticipated completion date	Project completed successfully.
Risks and uncertainties associated with completing development on schedule, and the consequences to operations, financial position and liquidity if not completed timely	The development was terminated due to the high success of the new FluCide.
Timing of commencement of expected material net cash inflows	Project terminated by consolidation into the new FluCide program.

 

 

Project	Drug Development of Nanoviricide Eye Drops for all Viral Infections of the External Eye
Current status	This year, we developed new, broad-spectrum. ligands tha t should be capable of enabling nanoviricide binding to herpes simplex viruses, while retaining the features that were previously successful against adenoviral EKC in clinical studies. The resulting nanoviricides have been tested against HSV-1 in cell cultures and a lead drug candidate has been identified. We are developing nanoviricide eye drop solution that should be capable of resolving the broad range of viruses that can cause infections of the external eye resulting in conjunctivitis or keratitis. Majority of these viruses are adenoviruses or HSV.
Nature, timing and estimated costs	The Company has budgeted approximately $750,000 for the material development, production and testing of this drug. These costs will be paid from our available cash balances. Should management determine the results to be satisfactory, we will need to obtain additional financing to perform material characterization, pharmaco-kinetic, pharmaco-dynamic and toxicology studies, which we have presently budgeted at $1,500,000.   The Company has entered a Material Testing Agreement (MTA) with a Big Pharma company for this drug. Should this MTA result in a co-development, licensing agreement, the Company may be able to accelerate this program. The Company may be able to receive revenues in the form of milestone payments. However, the net effect of such an agreement is expected to be a net cost to our development program. There is no guarantee that such a licensing agreement may take place.
Anticipated completion date	Not known
Risks and uncertainties associated with completing development on schedule, and the consequences to operations, financial position and liquidity if not completed timely	The outcome of clinical testing cannot be known at this time, and this poses substantial risk and uncertainty as to whether or when if ever, this drug will become marketable.
Timing of commencement of expected material net cash inflows	It is not known or estimable when net cash inflows from this project will commence if ever, due to the uncertainties associated with the completion of the product, regulatory submissions, approvals and market purchases of this product.

Project	Drug Development of EKCCide™ for Viral EKC
Current status	The Company has broadened this project and expanded it to the program of developing a single broad-spectrum nanoviricide as eye drops that is effective against substantially all viruses that cause diseases of the external eye such as conjunctivitis and keratitis. EKC-Cide is currently in preclinical studies against viral EKC. It is a broad-spectrum anti-viral nanoviricide eye drops solution. It is based on a well-known ligand mechanism by which adenoviruses and herpes-viruses bind to cells. EKC-Cide has been successfully tested in rabbits against adenoviral EKC. The Company is planning additional in-vivo and in-vitro studies with EKCCide against adenoviral EKC as well as Herpes viral keratitis at various institutions and subcontractors during 2009-2010.
Nature, timing and estimated costs	This program is superceded by the Broad-Spectrum Nanoviricide Eye Drops for all viral diseases of the external eye.
Anticipated completion date	Completed successfully this year.
Risks and uncertainties associated with completing development on schedule, and the consequences to operations, financial position and liquidity if not completed timely	The development was consolidated into the broader program for development of a single nanoviricide against substantially all viral diseases of the eye.
Timing of commencement of expected material net cash inflows	The development was consolidated into the broader program for development of a single nanoviricide against substantially all viral diseases of the eye.   The Company has entered a Material Testing Agreement (MTA) with a Major Pharmaceutical company for this drug.  The net effect of such an agreement is expected to be a net cost to our development program. There is no guarantee that a licensing agreement will result from this agreement.

Project	Drug Development of HIVCide™
Current status	HIV-Cide is currently in preclinical studies. It is designed to mimic the site at which all HIV gp120 bind to the CD4 receptor. It is therefore expected to work against all HIV-1 subtypes and strains. HIV-Cide has been successfully tested in SCID-huThy/Liv mouse model and was found to have very high efficacy, equal to that of >25X (2,500%) dosage level of the triple drug HAART combination therapy.  The Company is planning additional in-vivo and in-vitro studies at various institutions and subcontractors during 2009-2010.
Nature, timing and estimated costs	The Company has budgeted approximately $2,000,000 for the material development, production and testing of this drug. These costs will be paid from our available cash balances. Should management determine the results to be satisfactory, we will need to obtain additional financing to perform material characterization, pharmaco-kinetic, pharmaco-dynamic and toxicology studies, which we have presently budgeted at $3,000,000.
Anticipated completion date	Not known
Risks and uncertainties associated with completing development on schedule, and the consequences to operations, financial position and liquidity if not completed timely	The outcome of clinical testing cannot be known at this time, and this poses substantial risk and uncertainty as to whether or when if ever, this drug will become marketable.
Timing of commencement of expected material net cash inflows	It is not known or estimable when net cash inflows from this project will commence if ever, due to the uncertainties associated with the completion of the product, regulatory submissions, approvals and market purchases of this product.

Project	Drug Development of HerpeCide™ for Oral and Genital Herpes ”Cold Sores, “Fever Blisters” and Herpetic Ulcers
Current status	HerpeCide is currently in preclinical studies against oral and genital herpes virus infections. It is being developed as a skin cream and gel formulations, which may result in two separate drugs.  The Company is planning additional in-vivo and in-vitro studies at various institutions and subcontractors during 2009-2010.
Nature, timing and estimated costs	The Company has budgeted approximately $1,000,000 for the material development, production and testing of this drug. These costs will be paid from our available cash balances. Should management determine the results to be satisfactory, we will need to obtain additional financing to perform material characterization, pharmaco-kinetic, pharmaco-dynamic and toxicology studies, which we have presently budgeted at $1,500,000.
Anticipated completion date	Not known
Risks and uncertainties associated with completing development on schedule, and the consequences to operations, financial position and liquidity if not completed timely	The outcome of clinical testing cannot be known at this time, and this poses substantial risk and uncertainty as to whether or when if ever, this drug will become marketable.
Timing of commencement of expected material net cash inflows	It is not known or estimable when net cash inflows from this project will commence if ever, due to the uncertainties associated with the completion of the product, regulatory submissions, approvals and market purchases of this product.

Project	Drug Development of RabiCide™ for Rabies
Current status	RabiCide, is currently in preclinical studies against rabies. It is a broad-spectrum anti-Rabies nanoviricide. It is based on a well-known ligand mechanism by which rabies viruses bind to cells. Rabicide has been successfully tested in mice. The Company is planning additional in-vivo and in-vitro studies with RabiCide at the Vietnam National Institute of Hygiene and Epidemiology (NIHE) and at the CDC during 2009-2010.
Nature, timing and estimated costs	The Company has budgeted approximately $300,000 for the material development, production and testing of this drug. These costs will be paid from our available cash balances. Should management determine the results to be satisfactory, we will need to obtain additional financing to perform material characterization, pharmaco-kinetic, pharmaco-dynamic and toxicology studies which we have presently budgeted at $500,000.
Anticipated completion date	Not known
Risks and uncertainties associated with completing development on schedule, and the consequences to operations, financial position and liquidity if not completed timely	The outcome of clinical testing cannot be known at this time, and this poses substantial risk and uncertainty as to whether or when if ever, this drug will become marketable.
Timing of commencement of expected material net cash inflows	It is not known or estimable when net cash inflows from this project will commence if ever, due to the uncertainties associated with the completion of the product, regulatory submissions, approvals and market purchases of this product.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name	Age	Title
Anil Diwan, PhD.	51	President; Chairman of the Board
Eugene Seymour, MD, MPH	68	Chief Executive Officer; Acting CFO; Director

 

 

 

				Annual Compensation									Long-Term Compensation
Name and Principal Position		Year		Salary			Bonus			Other Annual Compensation			Restricted Stock Award(s) ($)			Securities Underlying Options/SARs (#)		All Other Compensation ($)			Total ($)
Eugene Seymour,		2009		$	250,000		$	-		$	-		$	-		-		$	-		$	250,000
CEO, Director		2008		$	237,500		$	-		$	-		$	2,035		125,000		$	-		$	239,535
		2007		$	200,000		$	-		$	-		$	6,208		125,000		$	-		$	206,208
Anil Diwan,		2009		$	252,000		$	-		$	-		$	-		-		$	-		$	252,000
President, Director		2008		$	243,107		$	-		$	1,500		$	5,009		333,334		$	-		$	248,116
		2007		$	200,000		$	-		$	-		$	17,197		333,333		$			$	217,197
Leo Ehrlich,		2009		$	-		$	-		$	-		$	-		-		$	-		$	-
Former CFO*		2008		$	91,666		$	-		$	-		$	-		-		$	-		$	91,666
		2007		$	150,000		$	-		$	-		$	3,657		125,000		$	-		$	153,657

 

Deferred compensation paid in 2008, accrued in 2007

 

 

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Owner (1)	Percent of Class (2)
TheraCour Pharma, Inc.(3) (4)
135 Wood Street
West Haven, CT 06516	34,160,000	27.26%
Anil Diwan (3) (4)
135 Wood Street
West Haven, CT 06516	11,000,000	8.78%
Eugene Seymour (5)
135 Wood Street
West Haven, Connecticut 06516	8,500,000	6.78%
All Directors and Executive Officers as a Group (2 persons) (6)	53,660,000	39.82%

 

(2)

For each shareholder, the calculation of percentage of beneficial ownership is based upon 125,299,457 shares of Common Stock outstanding as of June 30 2009, and shares of Common Stock subject to options, warrants and/or conversion rights held by the shareholder that are currently exercisable or exercisable within 60 days, which are deemed to be outstanding and to be beneficially owned by the shareholder holding such options, warrants, or conversion rights. The percentage ownership of any shareholder is determined by assuming that the shareholder has exercised all options, warrants and conversion rights to obtain additional securities and that no other shareholder has exercised such rights.

(3)

Anil Diwan, President and Chairman of the Board of Directors. Includes 10,000,000 shares of NanoViricides common stock held by Mr. Diwan and 1,000,000 shares of NanoViricides common stock issuable upon exercise of options held by Mr. Diwan that are currently exercisable or will become exercisable within 60 days.

 

(4)	Anil Diwan, the Company’s President and Chairman, also serves as the CEO and Director of TheraCour Pharma Inc. and owns approximately 70% of the outstanding capital stock of TheraCour.  Anil Diwan has both investment and dispositive power over the Nanoviricides shares held by TheraCour Pharma, Inc.

(5)

Eugene Seymour, Chief Executive Officer and Director.  Includes 8,000,000 shares of NanoViricides common stock held by Dr. Seymour and 500,000 shares of NanoViricides common stock issuable upon exercise of options held by Dr. Seymour that are currently exercisable or will become exercisable within 60 days.

 

(6)	Includes 34,160,000 shares of Common Stock indirectly owned by certain of the Executive Officers and Directors as a group.

 

 

 

•

Dr. Anil Diwan received 1,000,000 options, 333,333 options vested upon execution of the employment agreement. Another 333,333 options vested on January 1, 2007. The remaining 333,334 options vested on January 1, 2009 . The options expire September 26, 2015.

 

•

Dr. Eugene Seymour received 500,000 options, 250,000 options vested upon execution of the employment agreement. Another 125,000 options vested on January 1, 2007. The remaining 125,000 options vested on January 1, 2009 The options expire September 26, 2015.

 

 

 

 

 

 

June 30, 2009:		$  35,000		Li & Company, P.C.
June 30, 2009:		$  77,000		Holtz Rubenstein Reminick LLP
June 30, 2008:		$177,000		Holtz Rubenstein Reminick LLP

 

June 30, 2009:		$ 0		Li & Company, P.C.
June 30, 2009:		$ 0		Holtz Rubenstein Reminick LLP
June 30, 2008:		$ 11,000		Holtz Rubenstein Reminick LLP