UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of
Report (Date of earliest event reported): August 17, 2006
PHASE
III MEDICAL, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-10909
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22-2343568
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(State
Or Other
Jurisdiction
Of Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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420
Lexington Avenue, Suite 450
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New
York, New York
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10170
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code:
(212)-584-4814
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
3.02. Unregistered
Sales of Equity Securities.
Phase
III
Medical, Inc. (the “Company”) has made the following unregistered sales of
equity securities:
As
disclosed further in Item 8.01 of this current report, as of August 14, 2006,
the Company issued to nine investors an aggregate of 4,829,538 shares of the
Company’s common stock, $.001 par value (the “Common Stock”) for conversion of
an aggregate amount of $212,500 of convertible promissory notes. The Company
also issued, in connection with such conversions, an aggregate of 965,906 shares
of Common Stock to such investors. The Company also issued warrants to purchase
up to, in the aggregate, 3,541,661 shares of Common Stock, at $.08 per share
and
reduced the exercise price of warrants to purchase an aggregate of 3,541,061
shares of Common Stock from $.12 to $.08 per share.
As
disclosed further in Item 8.01 of this current report, as of August 14, 2006,
the Company issued to two investors an aggregate of 113,636 shares of Common
Stock and reduced the per share exercise price of warrants to purchase up to
833,332 shares of Common Stock from $.12 to $.08 per share, as consideration
for
the investors’ agreement to extend the term of their convertible promissory
notes for four months.
As
disclosed further in Item 8.01 of this current report, as of August 22, 2006,
the Company issued to three investors an aggregate of 198,863 shares of Common
Stock and reduced the per share exercise price of warrants to purchase up to
1,458,331 shares of Common Stock from $.12 to $.08 per share, as consideration
for the investors’ agreement to extend the term of their convertible promissory
notes for four months.
On
August
17, 2006, the Company sold 5,681,818 shares of Common Stock and a warrant to
purchase 2,840,909 shares of Common Stock to a private investor for
$250,000.
On
August
17, 2006, the Company sold 100,000 shares of Common Stock and a warrant to
purchase 50,000 shares of Common Stock to a private investor for
$4,400.
None
of
the above transactions involved a public offering, and the Company believes
that
each transaction was exempt from the registration requirements of the Securities
Act of 1933, as amended, by virtue of Rule 506 of Regulation D and/or Section
4(2) of the Securities Act. The securities granted in these transactions are
restricted and may not be resold unless they are subsequently registered under
the Securities Act or resold pursuant to an applicable exemption
therefrom.
Item
7.01. Regulation
FD Disclosure.
The
Company is furnishing presentation materials, included as Exhibit 99.1 to this
current report and incorporated into this item by reference, which were used
by
the Company at an investor meeting on August 18, 2006 and will be used to
present at future meetings with potential investors.
Item
8.01. Other
Events.
As
previously disclosed, between December 30, 2005, and January 31, 2006, the
Company entered into subscription agreements with a number of accredited
investors and consummated the sale of units consisting of convertible promissory
notes and detachable warrants under Regulation D under the Securities Act of
1933, as amended. Each unit was comprised of comprised of: (a) a nine month
note
in the principal amount of $25,000 bearing 9% simple interest, payable
semi-annually, with the second payment paid upon maturity, convertible into
shares of Common Stock at a conversion price of $.06 per share (the “Note”); and
(b) 416,666 detachable
three
year Warrants,
each for the purchase of one share of Common Stock at an exercise price of
$.12
per share (the “Warrant”).
On
August
1, 2006, the board of directors of the Company approved an offer to holders
of
the units, in which the holders were given the option to either:
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(1)
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Extend
the term of the Note for an additional four months from the maturity
date
in consideration for which:
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(i)
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the
Company would issue to the investor 56,818 shares of unregistered
Common
Stock for each $25,000 in principal amount of the Note;
and
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(ii)
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the
exercise price per Warrant would be reduced from $.12 to $.08;
or
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(2)
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Convert
the Note into shares of Common Stock, in consideration for
which:
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(i)
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the
conversion price per share of Common Stock issuable under the Note
would
be reduced to $.044;
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(ii)
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the
Company would issue to the investor 113,636 shares of Common Stock
for
each $25,000 in principal amount of the
Note;
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| (iii) |
the
exercise price per Warrant would be reduced from $.12 to $.08;
and
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| (iv) |
a
new warrant would be issued to investor, on substantially the
same terms
as the original Warrant, to purchase an additional 416,666 shares
of
Common Stock for each $25,000 in principal amount of the Note, at
an
exercise price of $.08 per share.
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In
addition, each investor would be required to waive any penalties and liquidated
damages accumulated as of the date of the subscription agreement arising from
the Company’s failure to file the Registration Statement, so long as the
Registration Statement is declared effective by the Securities and Exchange
Commission by February 28, 2007.
As
of
August 14, 2006, nine investors have agreed to convert their Notes under option
#2, above, for an aggregate amount of $212,500. The Company issued, as a result
of such conversions, an aggregate of 4,829,538 shares of Common Stock and issued
an aggregate of 965,906 shares of Common Stock. The Company also reduced the
exercise price from $.12 to $.08 per share of warrants to purchase an aggregate
of 3,541,061 shares of Common Stock, and issued warrants to purchase up to,
in
the aggregate, 3,541,661 shares of Common Stock, at $.08 per share.
As
of
August 22, 2006, five investors have agreed to extend the term of their Notes
for four months. As a result of such agreements, the Company issued an aggregate
of 312,499 shares of Common Stock and warrants to purchase up to, in the
aggregate, 2,291,663 shares of Common Stock, at $.08 per share.
Item
9.01. Financial Statements and Exhibits.
| (d) | Exhibits. | |
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Exhibit
99.1
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Presentation to Investors |
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| PHASE III MEDICAL, INC. | |
| By: | /s/ Catherine M. Vaczy |
| Catherine M. Vaczy | |
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Executive
Vice President and
General
Counsel
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Dated:
August 29, 2006
NeoStem
A subsidiary of Phase III Medical, Inc.
FORWARD
LOOKING STATEMENTS • THIS PRESENTATION CONTAINS “FORWARD-LOOKING STATEMENTS”
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES
AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS
OF
PHASE 3, OR INDUSTRY RESULTS, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE
RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. WHEN USED IN THIS CONFIDENTIAL PRESENTATION,
STATEMENTS THAT ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT MAY
BE DEEMED
TO BE FORWARDLOOKING STATEMENTS. ADDITIONALLY, STATEMENTS CONCERNING
THE
COMPANY’S ABILITY TO DEVELOP THE ADULT STEM CELL BUSINESS, THE FUTURE OF
REGENERATIVE MEDICINE AND THE ROLE OF ADULT STEM CELLS IN THAT FUTURE,
THE
FUTURE USE OF ADULT STEM CELLS AS A TREATMENT OPTION AND THE POTENTIAL
REVENUE
GROWTH OF SUCH BUSINESS ARE FORWARD-LOOKING STATEMENTS. THE COMPANY’S ABILITY TO
ENTER THE ADULT STEM CELL ARENA AND FUTURE OPERATING RESULTS ARE DEPENDENT
UPON
MANY FACTORS, INCLUDING THOSE SET FORTH IN THE COMPANY”S SEC FILINGS. RECIPIENTS
OF THIS PRESENTATION ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD
LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE
HEREOF.
Medical
researchers, scientists, institutions, physicians,
pharmaceutical companies, andbiotechnology
companies are racing to develop treatments of many diseases
using stem cells.
NeoStem
is the first company that specializes in the collection, processing, and
long-term storage of adult stem cells for autologous use (Your cells for
Your
use). Two patent applications filed on collection and storage process Multiple
use Unique library being developed important to pharmaceutical
companies There are many Adult Stem Cell Therapies being used today and the
development of new and promising medical treatments are
imminent…
Diseases
Treatable with Stem Cells TODAY Leukemias Lymphoma Multiple Myeloma Radiation
Sickness Autoimmune Diseases Tissue Repair & Burns
Breast
& Ovarian CA Future Diabetes Cardiovascular Dx Spinal Cord Injuries Skin
Rejuvenation Rheumatologic Orthopaedic Stroke
Stem
Cell Origination Controversial Embryo Fetal Tissue
Non-Controversial Umbilical Cord Blood Bone Marrow Adult Peripheral
Blood
Stem
Cells and Pluripotency Stem Cell PRIMATIVE AND THUS UNSPECIALIZED
SELF-RENEWING
CAN DIFFERENTIATE INTO CELLS WITH SPECIFIC FUNCTIONS Ectoderm Mesoderm
Endoderm
Skin Hair Brain Nerves Etc. Cardiac Skeletal Renal Muscle Blood Lung
Gut Thyroid
Pancreas
Autologous
vs. Allogeneic Stem Cells Autologous vs. Allogeneic Stem Cells Possible
None
HIV, Hepatitis etc. from Donor Slower Faster Immune Recon. Slower
Faster
Engraftment Yes No Graft v. Host Yes No Rejection Required Not Required
Tissue
Matching Autologous Autologous Allogeneic Allogeneic
Appeal
to Insurance Companies- $avings ~$4,000/ yr. None Post -Tx Drugs
<50% Not
Applicable Match Avail. Very Low With Storage Minority Avail. $300
- $500 K
~$50,000 Total Cost of Tx >$22,000 ~$6,000 Cost of Cells 90 days (avg.) 1-2
days Time to Tx Long (>30 days) Short (<5 days) Hospitalization Autologous
Autologous Allogeneic Allogeneic
The
Process
NeoStem,
Inc. Comparison of Various Sources of Adult Stem Cells (C)
Typical dosing for a
90 kg patient requiring an allogenic transplant, an autologous
transplant would
require fewer cells but no published data available. (B)
Andreas Zeiher
(Schachinger et al) J. Amer. Coll. Cardiology. 44:1690, 2004
(A) Badiavas &
Falanga Arch. Derm 139:510, 2003 ***Estimate, no known published
data **Whole
Blood *Primarily Buffy Coat 180,000,000 16,000,000 5,000,000
3,750,000
750,000,000 75ml Stem Cells from Cord Blood 180,000,000 16,000,000
5,000,000
5,000,000 1,000,000,000 300ml** Micro Collections of Stem
Cells 180,000,000
16,000,000 5,000,000 4,000,000*** 100ml to 1.2 liters Stem
Cells from Adipose
Tissue 180,000,000 16,000,000 5,000,000 123,100,000 20,900,000,000
300ml*
NeoStem, Inc. Immune Reconstitutio n (C) Cardiac Repair (B)
Diabetic Foot Ulcers
(A) CD34+ Cells TNC Volume Gross Volume Published Dosage
Information Typical
Collection
Intellectual Property NeoStem has two key patent applications describing key aspects of our process. These applications are: Elective Collection and Banking of Autologous Peripheral Blood Stem Cells. Application Number 20040258673, Priority Date April 2003. This patent application addresses the process by which NeoStem prepares and stores stem cells Our methodology to separate the cells and store them in numerous aliquots in order to be used for individual disease-related therapies. This enables the client to maintain sufficient cells in the bank for future use. As a result, each collection results in multiple doses of stem cells.
Intellectual
Property (Cont.) System Capable of Treating and Defining Various Disease
States Using Stem Cells. Application Number 20040265281,
Priority Date April
2003. This patent application addresses the use of stored
stem cells to form the
basis for a data set that will provide statistical information
on the etiology
of disease. The establishment of a broad bank of stem
cells will allow the
Company to capitalize on the information contained within
these cells that can
be sold to pharmaceutical companies to in connection
with pre-clinical research
and discovery - Each client is asked to donate a small
number of cells to this
data bank.
Radiation
Sickness (Hematopoietic Syndrome) At 3.5 Gy 50% will
die within 60 days w/o
intervention Primary cause of death is infection Individuals
exposed to 0.7 -
4.0 grays (Gy) will develop syndrome Rescue through
SC transplant - treatment of
choice Success rate very high when administered within
7-10 days following
exposure Banking SC for autologous use critical to
First Responders, Military,
etc.
Percutaneous
Autologous Bone Marrow Grafting for Nonunions Hernigou
P et al. J Bone &
Joint Surg 87A: 1430, 2005 Fracture Nonunion 1m post
BMSC 2m post MMSC 3m post
BMSC
A
B C D From: Evangelos V. Badiavas and Vincent Falanga
Arch.Dermatol. 139:510,
2003
Chronic
Heart Disease Chronic Heart Disease 5 million
people in U.S. have chronic heart
disease - 550K new diagnoses each year Until
now no effective therapy Adult stem
cells can repair heart muscle American Heart
Association ranks restoration of
failing hearts by adult stem cells among top
10 lifesaving advances of
2004
Potential
Routes of Direct Delivery of Stem Cells to
Heart Potential Routes A. Direct
intramyocardial through the epicardium B. Direct
intramyocardial via the
endocardium C. Intracoronary D. Retroperfusion
via the cardiac veins From:
Mathur, A and Martin, JF Lancet 364: 183, 2004
CATHETER B C D
A
University
of Pittsburgh School of Medicine • 20 patients w/ Severe Chronic Heart Disease
-
NY Heart Assoc Classification III & IV - <35% ejection fraction (55%
normal adult) • 10 patients received By-Pass surgery & Adult Stem Cells
during surgery • 10 patients received By-Pass surgery only
• At six month
follow-up average ejection fractions were:
- 46.1 % Adult Stem Cell Therapy (83%
of normal) - patients cured - 37.2 % w/o
Adult Stem Cell Therapy (67% of normal)
- patients continue to suffer from severe
chronic heart disease
Texas
Heart Institute Post-AMI Trial 14 patients
with an average age of 56 received
the stem cell therapy 7 patients served
as a control group At 4 months, the
treated patients had a sustained improvement
in pumping power and ability to
supply blood to the body FDA Approved Trial
in US March 2004
Measurements of Improvement - 20-30% decrease in infarct size - 11-15% increase in ejection fraction - 51-57% increase in infarction wall velocity - 11% increase in oxygen uptake
Who
should bank their stem cells? • Health conscious individuals • Individuals with
family histories of heart disease or
cancer • Individuals diagnosed with chronic
cancers • Individuals that are exposed to radiation
or harmful toxins because of
their jobs • "First Responders," (firemen, policemen,
military personnel,
Homeland Security personnel, Energy
Department personnel, etc.), who may
be
exposed to lethal levels of radiation
should bank their stem cells in advance
of
possible need.
Comp Table Company Smbl Current Price 52 Week Hi 52 Week Low Market Cap (Mil/B/K) Shares O/S Capital Raised in last 12 Months 2005 Revenues (000) 2005 Net Income/ (Loss) (000) Celgene Corp CELG $44.00 $49.41 $22.59 $16.63B $347.41 $30.99K $0 Geron Corp GERN $7.50 $12.18 $6.00 $489.6 65.3 $94.5 6,158 $ (33,528) $ BioStem, Inc. BTEM $2.71 $7.00 $0.27 $474.8 175.2 $0.0 1,085 $ (940) $ ViaCell Inc VIAC $5.79 $11.51 $4.66 $223.5 38.6 $53.2 44,443 $ (15,663) $ StemCells Inc STEM $2.58 $6.58 $2.56 $200.6 77.7 $35.8 206 $ (11,738) $ Aastrom BioScieASTM $1.50 $3.56 $1.50 $179.0 119.3 $11.3 844 $ (9,579) $ Cytori TherapeuCYTX $8.13 $9.60 $6.65 $125.2 15.4 $4.7 5,634 $ (26,538) $ CryoCell, Inc CCEL $3.05 $4.13 $2.10 $35.5 11.6 $0.0 14,450 $ 1,033 $ Cord Blood AmeCBAI $0.18 $0.87 $0.09 $7.3 40.5 $4.3 2,278 $ (6,126)
Management/Directors/Staff
• Robin Smith, M.D., MBA, Chairman
of the Board and CEO of Phase III,
Chairman
Advisory Board of China Biopharmaceuticals
(OTC BB: CHBP), Chairman of
NYU-Hospital for Joint Diseases
• Mark Weinreb, Director and President
of Phase
III, Former Owner, Bio Health Laboratories
• Larry A. May, Chief Financial
Officer of Phase III, Former Treasurer,
Amgen (NASDAQ: AMGN) • Wayne A. Marasco,
M.D., Ph.D., Phase III Director,
Senior Scientific Advisor, Associate
Professor-
Department of Cancer and Immunology,
Dana-Farber Cancer Institute, Associate
Professor of Medicine, Harvard
Medical School • Denis Rodgerson, Ph.D. Director
of Stem Cell Science of Phase III,
Founder of NeoStem, Former Founder
of
StemCyte, Former Head of Clinical
Chemistry and Toxicology and Clinical
Laboratory Computing, UCLA Medical
Center • George Smith, M.D., Medical Director
Laboratory Operations of Phase
III in California. Among his many
distinguished
career accomplishments, Dr Smith
is cofounder of UCLA Bone Marrow
Transplant
Center • Catherine M. Vaczy, VP & General Counsel of Phase III, Former
VP
and Associate General Counsel,
ImClone (NASDAQ: IMCL) • Abner M. Mhashilka,
PH.D., Director of Stem Cell Banking
and Clinical Applications of Phase
III,
former Group Leader in research,
Process Development and Manufacturing
Athersys,
Inc. • Joseph Zuckerman, M.D., Phase III
Director, Chairman of NYU-Hospital
for
Joint Diseases, Department of Orthopaedic
Surgery
Why
Is This A Unique Opportunity
• Low Money Pre-valuation • Publicly Traded PHSM.OB
• Answer for Religious Rights and
Politicians • Potential Alliances With Known
Companies - Quest - HemaCare
- Cord Blood Companies (ViaCell,
Cord Blood
America, Lifebank USA) • Pending Partnerships - Houston,
San Diego, Connecticut
- Independent Center in NY -
Puerto Rico