Prospectus Supplement No. 3	Filed Pursuant to Rule 424(b)(3)
To prospectus dated March 27, 2014	Registration Statement No. 333-193172

 

                             

GEOVAX LABS, INC.

 

Up to 4,150,374 Shares of Common Stock

 

 

 

We are supplementing the prospectus dated March 27, 2014 covering the sale of up to 4,150,374 shares of our common stock, $0.001 par value, that may be sold from time to time by the selling stockholders named in the prospectus, to add certain information contained in our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2014, which was filed with the Securities and Exchange Commission on November 12, 2014.

 

This prospectus supplement supplements information contained in the prospectus dated March 27, 2014 and should be read in conjunction therewith, including any previous supplements and amendments thereto, which are to be delivered with this prospectus supplement.

 

This prospectus supplement is not complete without, and may not be delivered or utilized except in connection with, the prospectus dated March 27, 2014, including any previous supplements and amendments thereto.

 

Investing in our common stock involves certain risks. See “Risk Factors” beginning on page 4 of the prospectus dated March 27, 2014 for a discussion of these risks.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement in truthful or complete. Any representation to the contrary is a criminal offense.

 

 

 

 

 

 

 

 

 

 

 

 

 

The date of this Prospectus Supplement is November 17, 2014.

 

 

  

TABLE OF CONTENTS

 

 

			Page
PART I – FINANCIAL INFORMATION
	Item 1	Financial Statements	1
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	8
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	13
	Item 4	Controls and Procedures	13

 

 

 

 

Part 1 -- FINANCIAL INFORMATION

 

Item 1        Financial Statements

 

GEOVAX LABS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

GEOVAX LABS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

GEOVAX LABS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Supplemental disclosure of non-cash investing and financing activities:

During the nine months ended September 30, 2014, an aggregate of 71 shares of Series A Convertible Preferred Stock were converted into 202,857 shares of common stock, and an aggregate of 525 shares of Series B Convertible Preferred Stock were converted into 1,500,000 shares of common stock (see Note 6).

 

See accompanying notes to condensed consolidated financial statements.

 

 

GEOVAX LABS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2014

(unaudited)

 

 

 

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

 

FORWARD LOOKING STATEMENTS

 

In addition to historical information, the information included in this Form 10-Q contains forward-looking statements. Forward-looking statements involve numerous risks and uncertainties, including but not limited to the risk factors set forth under the heading “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2013, and should not be relied upon as predictions of future events. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as ‘‘believes,’’ ‘‘expects,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘seeks,’’ ‘‘approximately,” ‘‘intends,’’ ‘‘plans,’’ ‘‘pro forma,’’ ‘‘estimates,’’ or ‘‘anticipates’’ or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. Such forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and may be incapable of being realized. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

 

●	whether we can raise additional capital as and when we need it;

●	whether we are successful in developing our products;

●	whether we are able to obtain regulatory approvals in the United States and other countries for sale of our products;

●	whether we can compete successfully with others in our market; and

●	whether we are adversely affected in our efforts to raise capital by the volatility and disruption of local and national economic, credit and capital markets and the economy in general.

 

Readers are cautioned not to place undue reliance on forward-looking statements, which reflect our management’s analysis only. We assume no obligation to update forward-looking statements.

 

Overview

 

GeoVax is a clinical-stage biotechnology company developing innovative human vaccines using our novel DNA/MVA platform technology. Our primary focus is to develop vaccines that prevent and fight HIV infections, and we have recently expanded our research and development efforts to include vaccines to prevent Ebola virus infection. We have exclusively licensed from Emory University (“Emory”) certain vaccine technology which was developed in collaboration with the National Institutes of Health (“NIH”) and the Centers for Disease Control and Prevention (“CDC”). GeoVax is incorporated under the laws of the State of Delaware and our principal offices are located in Smyrna, Georgia (metropolitan Atlanta area). Our goal is to build a profitable company by generating income from products we develop and commercialize, either alone or with one or more potential strategic partners.

 

Our most advanced vaccines under development address the clade B subtype of the HIV virus that is most prevalent in the United States and Western Europe. Our preventive clade B HIV vaccine has successfully completed Phase 2a clinical trials and we are currently planning the next stage of human clinical testing. We are also planning clinical trials to evaluate our clade B HIV vaccine as an immunotherapy agent for individuals already infected with HIV. We have begun earlier preclinical studies to develop HIV vaccine candidates for the clade C subtype of HIV prevalent in the developing world. Our Ebola vaccine development efforts have recently been initiated and we expect to begin preclinical animal studies during 2015, with the goal of beginning human clinical testing in 2016.

 

Our activities are subject to significant risks and uncertainties, including our ability to secure the funding necessary to complete our research and development efforts. We have neither received regulatory approval for any of our vaccine candidates, nor do we have any commercialization capabilities; therefore, it is possible that we may never successfully derive significant product revenues from any of our existing or future development programs or product candidates.

 

We expect for the foreseeable future our operations will result in a net loss on a quarterly and annual basis. As of September 30, 2014, we had an accumulated deficit of approximately $28.9 million.

 

 

Critical Accounting Policies and Estimates

 

This discussion and analysis of our financial condition and results of operations is based on the accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates and adjusts the estimates as necessary. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

 

 

Our significant accounting policies are summarized in Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

 

Revenue Recognition

 

We recognize revenue in accordance with the SEC’s Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, as amended by Staff Accounting Bulletin No. 104, Revenue Recognition (SAB 104). SAB 104 provides guidance in applying U.S. generally accepted accounting principles to revenue recognition issues, and specifically addresses revenue recognition for upfront, non-refundable fees received in connection with research collaboration agreements. Our revenue consists solely of grant funding received from the NIH. Revenue from this arrangement is approximately equal to the costs incurred and is recorded as income as the related costs are incurred.

 

Stock-Based Compensation

 

We account for stock-based transactions in which the Company receives services from employees, directors or others in exchange for equity instruments based on the fair value of the award at the grant date. Compensation cost for awards of common stock is estimated based on the price of the underlying common stock on the date of issuance. Compensation cost for stock options or warrants is estimated at the grant date based on each instrument’s fair-value as calculated by the Black-Scholes option pricing model. We recognize stock-based compensation cost as expense ratably on a straight-line basis over the requisite service period for the award.

 

Liquidity and Capital Resources

 

At September 30, 2014, we had cash and cash equivalents of $862,191 and total assets of $1,053,128, as compared to $2,513,861 and $2,839,576, respectively, at December 31, 2013. Working capital totaled $756,158 at September 30, 2014, compared to $2,385,990 at December 31, 2013.

 

Sources and Uses of Cash

 

We have funded our activities to date primarily from government grants and clinical trial assistance, and from sales of our equity securities. We will continue to require substantial funds to continue these activities. We believe that our existing cash resources, combined with the proceeds from the NIH grants discussed below will be sufficient to fund our planned operations into the first quarter of 2015. We will require additional funds to continue our planned operations beyond that date. We are currently seeking sources of non-dilutive capital through government grant programs and clinical trial support, and we also intend to conduct additional offerings of our equity securities. However, additional funding may not be available on favorable terms or at all and if we fail to obtain additional capital when needed, we may be required to delay, scale back, or eliminate some or all of our research and development programs as well as reduce our general and administrative expenses.

 

Cash Flows from Operating Activities

 

Net cash used in operating activities was $1,616,167 for the nine month period ended September 30, 2014 as compared to $872,040 for the comparable period in 2013. Generally, the differences between periods are due to fluctuations in our net losses, offset by non-cash charges such as depreciation and stock-based compensation expense, and by net changes in our assets and liabilities. Our net losses generally fluctuate based on expenditures for our research activities, offset by government grant revenues.

 

The NIH has funded the costs of conducting all of our human clinical trials (Phase 1 and Phase 2a) to date for our preventive HIV vaccines, with GeoVax incurring costs associated with manufacturing the clinical vaccine supplies and other study support. We are actively engaged in discussions with the HIV Vaccine Trials Network (HVTN) and NIH regarding the next stage of our preventive clinical trials. While we believe that HVTN and NIH will continue their support of our HIV vaccine development efforts, the specific path forward is currently uncertain and we cannot be fully assured of the level of support, if any, we will receive from the HVTN or the NIH for additional clinical trials. Our expectations have been that HVTN would advance our DNA/MVA vaccine (GOVX-B11) directly into a Phase 2b efficacy study, but recent discussions have included the concept of adding another component (protein boost) to the vaccine regimen. If so, this will change the nature of the next clinical trial. The HVTN and NIH are continuing to consider future efficacy studies, and members are working to develop collaborative clinical development plans, as well as initiating regulatory planning. The plans for large-scale clinical trials may change as researchers continue to gather information from our earlier studies and are influenced by results from other vaccine trials. Trial start dates are dependent on many factors and are likely to change.

 

 

Earlier in 2014, we completed a Phase 1 clinical trial (GV-TH-01) investigating the therapeutic use of our GOVX-B11 vaccine in HIV-infected patients. We received no federal assistance in conducting this study. Data and observations from this trial have led us to plan an additional clinical trial to investigate our DNA/MVA vaccines as “shock” agents for potential use in a “shock and kill” clinical strategy to seek a cure for HIV infection. Our planning for this trial is fluid, but currently we anticipate a Phase 1b clinical trial testing this concept to begin during 2015. Initiation of this trial, which we expect will cost under $1 million, will be dependent upon our ability to secure the required funding. We plan to seek funding from U.S. government sources to conduct this trial, but we will also consider obtaining funds from issuance of our equity securities or other sources. Success in this trial will be a first step toward commercialization of our vaccines for use as the shock agent in shock and kill protocols for curing HIV infections. Our commercialization strategy will include use of our vaccines in combination with kill agents being developed by others as well as those undergoing development by GeoVax.

 

In addition to clinical trial support from the NIH for our preventive HIV vaccines, our operations have been partially funded by NIH research grants. We record the funding we receive pursuant to these grants as revenue at the time the related expenditures are incurred. As of September 30, 2014, there is an aggregate of approximately $452,000 of unused grant funds available for use during the remainder of 2014 and through July 2015. We intend to pursue additional grants from the federal government but cannot be assured of success. As we progress to the later stages of our vaccine development activities, government financial support may be more difficult to obtain, or may not be available at all. Therefore, it will be necessary for us to look to other sources of funding in order to finance our clinical trials and other vaccine development activities.

 

Cash Flows from Investing Activities

 

Our investing activities consist predominantly of capital expenditures. During the nine months ended September 30, 2014, we incurred $35,503 of capital expenditures, as compared to $86,602 during the comparable period in 2013.

 

Cash Flows from Financing Activities

 

No cash was provided by financing activities for the nine month period ended September 30, 2014, as compared to $1,643,333 for the comparable period in 2013. The cash generated by our financing activities during the nine month period ended September 30, 2013 relates to the exercise of certain stock purchase warrants.

 

Our capital requirements, particularly as they relate to our research and development activities, have been and will continue to be significant. We anticipate incurring additional losses for several years as we expand our clinical programs and proceed into higher cost human clinical trials. Conducting clinical trials for our vaccine candidates in development is a lengthy, time-consuming and expensive process. We will not generate revenues from the sale of our technology or products for at least several years, if at all. For the foreseeable future, we will be dependent on obtaining financing from third parties in order to maintain our operations, including our clinical program. Such capital may not be available on terms acceptable to the Company or at all. If we fail to obtain additional funding when needed, we would be forced to scale back or terminate our operations, or to seek to merge with or to be acquired by another company.

 

We expect that our current working capital combined with the remaining available funds from the NIH grants will be sufficient to support our planned level of operations into the second quarter of 2015. We anticipate raising additional capital during 2014 or early 2015, although there can be no assurance that we will be able to do so. While we believe that we will be successful in obtaining the necessary financing to fund our operations through government grants and clinical trial support, exercise of stock purchase warrants, or other sources, there can be no assurances that such additional funding will be available to us on reasonable terms or at all. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could have a material adverse effect on our business, operating results, financial condition and prospects.

 

We have no off-balance sheet arrangements that are likely or reasonably likely to have a material effect on our financial condition or results of operations.

 

Contractual Obligations

 

As of September 30, 2014, we had noncancellable lease obligations and other firm purchase obligations totaling approximately $243,000, as compared to approximately $206,000 at December 31, 2013. We have no committed lines of credit and no other committed funding or long-term debt. We have employment agreements with our senior management team, each of which may be terminated with 30 days advance notice. There have been no other material changes to the table presented in our Annual Report on Form 10-K for the year ended December 31, 2013.

 

 

Results of Operations

 

Net Loss

 

We recorded a net loss of $514,515 for the three months ended September 30, 2014, as compared to a net loss of $190,148 for the three months ended September 30, 2013. For the nine months ended September 30, 2014, we recorded a net loss of $1,809,970, as compared to a net loss of $1,413,229 for the nine months ended September 30, 2013. Our net losses will typically fluctuate due to the timing of activities and related costs associated with our vaccine research and development activities and our general and administrative costs, as described in more detail below.

 

Grant Revenue

 

During the three and nine month periods ended September 30, 2014 we recorded grant revenue of $322,086 and $659,867, respectively, as compared to $1,004,211 and $2,242,812, respectively, during the comparable periods of 2013. Grant revenues relate to grants from the NIH in support of our HIV vaccine development activities (see discussion under “Liquidity and Capital Resources” above). We record revenue associated with these grants as the related costs and expenses are incurred. The difference in our grant revenues from period to period is directly related to our expenditures for activities supported by the grants, and can fluctuate significantly based on the timing of the related expenditures. There is an aggregate of approximately $452,000 in approved grant funds remaining and available for use as of September 30, 2014, which we anticipate recognizing as revenue during the remainder of 2014 and through July 2015.

 

Research and Development

 

During the three month and nine month periods ended September 30, 2014, we incurred $425,498 and $1,344,560, respectively, of research and development expense as compared to $879,104 and $2,341,291, respectively, during the three month and nine month periods ended September 30, 2013. Research and development expense for the three month and nine month periods of 2014 includes stock-based compensation expense of $7,404 and $24,420, respectively, while the comparable periods of 2013 include stock-based compensation expense of $9,048 and $32,789, respectively (see discussion under “Stock-Based Compensation Expense” below).

 

Our research and development expenses can fluctuate considerably on a period-to-period basis. The overall decrease in research and development expense during the three and nine month periods ended September 30, 2014, as compared to the comparable 2013 periods, can mostly be attributed to lower expenditures related to the activities supported by our grants from the NIH, and lower expenditures associated with a Phase 1 trial of our therapeutic HIV vaccine, which was completed during the first quarter of 2014. We have not received any government support for clinical trials of our therapeutic vaccine. Our research and development costs do not include costs incurred by the HVTN in conducting clinical trials of our preventive HIV vaccines; those costs are funded directly to the HVTN by the NIH.

 

We cannot predict the level of support we may receive from the HVTN, NIH, or other federal agencies (or divisions thereof) for our future clinical trials. We expect that our research and development costs will increase in the future as we progress into the later stage human clinical trials for our HIV vaccines and as we expand our Ebola vaccine development program.

 

Our vaccine candidates still require significant, time-consuming and costly research and development, testing and regulatory clearances. Completion of clinical development will take several years or more, but the length of time generally varies substantially according to the type, complexity, novelty and intended use of a product candidate. The NIH has funded the costs of conducting all of our completed and ongoing human clinical trials to date for our preventive HIV vaccine, with GeoVax incurring costs associated with manufacturing the clinical vaccine supplies and other study support. We are having discussions with the HVTN and NIH with regard to the conduct of an additional trial of our preventive vaccine, and we intend to seek government and/or third party support for future clinical human trials, but there can be no assurance that we will be successful.

 

The duration and the cost of future clinical trials may vary significantly over the life of the project as a result of differences arising during development of the human clinical trial protocols, including, among others:

 

●

the number of patients that ultimately participate in the clinical trial;

●

the duration of patient follow-up that seems appropriate in view of the results;

●

the number of clinical sites included in the clinical trials; and

●

the length of time required to enroll suitable patient subjects.

 

Due to the uncertainty regarding the timing and regulatory approval of clinical trials and pre-clinical studies, our future expenditures are likely to be highly volatile in future periods depending on the outcomes of the trials and studies. From time to time, we will make determinations as to how much funding to direct to these programs in response to their scientific, clinical and regulatory success, anticipated market opportunity and the availability of capital to fund our programs.

 

 

In developing our product candidates, we are subject to a number of risks that are inherent in the development of products based on innovative technologies. For example, it is possible that our vaccines may be ineffective or toxic, or will otherwise fail to receive the necessary regulatory clearances, causing us to delay, extend or terminate our product development efforts. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could cause our research and development expenditures to increase which, in turn, could have a material adverse effect on our results of operations and cash flows. Because of the uncertainties of clinical trials, estimating the completion dates or cost to complete our research and development programs is highly speculative and subjective. As a result of these factors, we are unable to accurately estimate the nature, timing and future costs necessary to complete the development of our product candidates. In addition, we are unable to reasonably estimate the period when material net cash inflows could commence from the sale, licensing or commercialization of such product candidates, if ever.

 

General and Administrative Expense

 

During the three month and nine month periods ended September 30, 2014, we incurred general and administrative costs of $411,814 and $1,128,478, respectively, as compared to $316,452 and $1,345,179, respectively, during the comparable periods in 2013. General and administrative costs include officers’ salaries, legal and accounting costs, patent costs, amortization expense associated with intangible assets, and other general corporate expenses. General and administrative expense for the three month and nine month periods of 2014 include stock-based compensation expense of $106,880 and $141,218, respectively; while the comparable periods of 2013 include stock-based compensation expense of $24,300 and $321,980, respectively (see discussion under “Stock-Based Compensation Expense” below). Excluding stock-based compensation expense, general and administrative expenses during the three and nine month periods ended September 30, 2014 were $304,934 and $987,260, respectively, as compared to $292,152 and $1,023,199, respectively, during the comparable periods in 2013. We expect that our general and administrative costs may increase in the future in support of expanded research and development activities and other general corporate activities.

 

Stock-Based Compensation Expense

 

We recorded stock-based compensation expense of $114,284 and $165,638 during the three month and nine month periods ended September 30, 2014, respectively, as compared to $33,348 and $354,769, respectively, during the comparable periods of 2013. We allocate stock-based compensation expense to research and development expense or general and administrative expense according to the classification of cash compensation paid to the employee, consultant or director to whom the stock compensation was granted. In addition to amounts related to the issuance of stock options to employees and directors, the figures amounts related to common stock issued to consultants. Also, during both 2014 and 2013, we modified the terms of certain warrants issued to investors in previous financing rounds to reduce the exercise prices and extend the expiration dates of such warrants; the amounts recorded as stock-based compensation expense related to these modifications were $39,711 for both the three month and nine month periods ended September 30, 2014, and $-0- and $238,169 for the three month and nine month periods ended September 30, 2013, respectively.

 

For the three month and nine month periods ended September 30, 2014 and 2013, stock-based compensation expense was allocated as follows:

 

		Three Months Ended September 30,								Nine Months Ended September 30,
Expense Allocated to:		2014				2013				2014				2013
General and Administrative Expense		$	106,880			$	24,300			$	141,218			$	321,980
Research and Development Expense			7,404				9,048				24,420				32,789
Total Stock-Based Compensation Expense		$	114,284			$	33,348			$	165,638			$	354,769

 

Other Income

 

Interest income for the three month and nine month periods ended September 30, 2014 was $711 and $3,201, respectively, as compared to $1,197 and $3,429, respectively, for comparable periods of 2013. The variances between periods are primarily attributable to cash available for investment and interest rate fluctuations.

 

 

Item 3        Quantitative and Qualitative Disclosures About Market Risk

 

Our exposure to market risk is limited primarily to interest income sensitivity, which is affected by changes in the general level of United States interest rates, particularly because a significant portion of our investments are in institutional money market funds. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income received without significantly increasing risk. Due to the nature of our short-term investments, we believe that we are not subject to any material market risk exposure.

 

Item 4        Controls and Procedures

 

Evaluation of disclosure controls and procedures

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (Exchange Act), is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to management, including the Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Our management has carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and our Principal Financial and Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15 as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

 

Changes in internal control over financial reporting

 

There was no change in our internal control over financial reporting that occurred during the three months ended September 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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