View Filing Data

Document and Entity Information - shares	3 Months Ended
Mar. 31, 2012	May 10, 2012
Document And Entity Information
Entity Registrant Name	Genesis Biopharma, Inc
Entity Central Index Key	0001425205
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		78,293,095
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2012

Condensed Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2012	Dec. 31, 2011
ASSETS
Cash and cash equivalents	$ 0	$ 510,217
Deposits and prepaid expenses	34,050	13,864
Total current assets	34,050	524,081
Property and equipment, net of accumulated depreciation of $4,257 and $2,704	26,797	28,349
Intellectual property licenses, net of accumulated amortization of $217,408 and $217,408	0	0
Rent Deposit	16,000	16,000
Total assets	76,847	568,430
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Bank overdraft	17,619	0
Accounts payable	504,252	190,048
Accrued expenses	279,480	221,507
Accrued expenses - National Institute of Health	866,000	0
Convertible promissory notes	5,000,000	5,000,000
Derivative liabilities	10,667,947	7,937,793
Total current liabilities	17,335,298	13,349,348
Commitments and contingencies
Stockholders' Deficiency
Common stock, par value $0.000041666; 1,800,000,000 shares authorized; 78,293,095 and 77,993,591 shares issued and outstanding, respectively	3,262	3,250
Additional paid-in capital	15,887,542	14,592,408
Accumulated deficit	(33,149,255)	(27,376,576)
Total Stockholders' Deficiency	(17,258,451)	(12,780,918)
Total Liabilities and Stockholders' Deficiency	$ 76,847	$ 568,430

Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		54 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
Income Statement [Abstract]
REVENUES	$ 0	$ 0	$ 0
Costs and expenses
Operating expenses (including $1,227,227, $40,302, and $15,835,268 of non-cash share-based compensation costs)	2,250,133	658,250	22,271,271
Research and development	886,000	0	2,813,045
Impairment of intangible asset	0	0	160,036
Total costs and expenses	3,136,133	658,250	25,244,352
LOSS FROM OPERATIONS	(3,136,133)	(658,250)	(25,244,352)
Other income (expense)
Change in fair value of derivative liability	(2,548,074)	93,954	(1,181,266)
Interest expense	(88,472)	0	(239,979)
Amortization of discount on convertible notes	0	0	(5,000,000)
Private placement costs	0	0	(1,483,658)
Total other income (expense)	(2,636,546)	93,954	(7,904,903)
NET LOSS	$ (5,772,679)	$ (564,296)	$ (33,149,255)
NET LOSS PER SHARE, BASIC AND DILUTED	$ 0.07	$ (0.01)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING; BASIC AND DILUTED	78,136,665	71,941,016

Stockholders Equity (Unaudited) - 3 months ended Mar. 31, 2012 - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning Balance Shares at Dec. 31, 2011	77,993,591
Beginning Balance Amount at Dec. 31, 2011	$ 3,250	$ 14,592,408	$ (27,376,576)	$ (12,780,918)
Common stock sold in private placement, shares	250,000
Common stock sold in private placement, amount	$ 10	67,909		67,919
Common stock issued to consultants for services, Shares	49,504
Common stock issued to consultants for services, Amount	$ 2	49,998		50,000
Fair value of vested stock options		1,177,227		1,177,227
Net loss			(5,772,679)	(5,772,679)
Ending Balance Shares at Mar. 31, 2012	78,293,095
Ending Balance Amount at Mar. 31, 2012	$ 3,262	$ 15,887,542	$ (33,148,255)	$ (17,258,451)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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-Name Emerging Issues Task Force (EITF)
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-Appendix A

+ Details

- Definition

Number of shares (or other type of equity) issued during the period as a result of any equity-based compensation plan other than an employee stock ownership plan (ESOP), net of any shares forfeited. Shares issued could result from the issuance of restricted stock, the exercise of stock options, stock issued under employee stock purchase plans, and/or other employee benefit plans.

+ References + Details

- Definition

Value of stock (or other type of equity) issued during the period as a result of any equity-based compensation plan other than an employee stock ownership plan (ESOP), net of stock value of such awards forfeited. Stock issued could result from the issuance of restricted stock, the exercise of stock options, stock issued under employee stock purchase plans, and/or other employee benefit plans.

+ References + Details

Condensed Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		54 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (5,772,679)	$ (564,296)	$ (33,149,255)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,552	18,117	65,629
Impairment of intangible asset	0	0	160,036
Fair value of vested stock options and warrants	1,177,227	40,302	3,085,147
Fair value of derivative liability recorded upon issuance of warrants	0	0	2,563,647
Amortization of discount on convertible notes	(0)	0	5,000,000
Private placement costs	0	0	1,483,658
Change in fair value of derivative liabilities	2,548,073	(93,954)	1,181,265
Common stock issued to officer for services	0	0	8,010,000
Common stock issued for services	50,000	0	548,452
Fair value of common stock transferred to officer and director	0	0	1,742,037
Write off of advances to related party	0	0	50,000
Changes in assets and liabilities:
Deposits, prepaid expenses and other assets	(20,186)	(6,845)	(50,050)
Bank overdraft	17,619		17,619
Accounts payable and accrued expenses	372,177	42,201	783,730
Accounts expenses - National Institute of Health	866,000	0	866,000
Net cash used in operating activities	(760,217)	(564,475)	(7,642,085)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment	0	0	(35,053)
Advances to related party	0	(50,000)	(50,000)
Net cash used in investing activities	0	(50,000)	(85,053)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of convertible notes, net	0	0	4,615,000
Proceeds from the issuance of common stock	250,000	45,000	3,094,000
Due to director	0	0	18,137
Net cash provided by financing activities	250,000	45,000	7,727,137
NET DECREASE IN CASH AND CASH EQUIVALENTS	(510,217)	(569,475)	0
Cash and Cash Equivalents, Beginning Of Year	510,217	1,292,469
CASH AND CASH EQUIVALENTS, End of Year	0	722,994	0
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Derivative liability recorded upon issuance of convertible notes and warrants	182,081	0	5,717,391
Derivative liability recorded as offering cost	0	0	642,296
Common stock issued for intellectual property	0	217,408	217,407
Forgiveness of debt by director, treated as contribution of capital	$ 0	$ 0	$ 18,137

GENERAL ORGANIZATION AND BUSINESS

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

GENERAL ORGANIZATION AND BUSINESS

Genesis Biopharma, Inc. (the Company) was originally incorporated under the laws of the state of Nevada on September 17, 2007. The Company is considered a development stage company, and has had no revenues from operations to date.

The Company’s initial operations included organization, capital formation, target market identification, new product development and marketing plans. The Company has become a biopharmaceutical company engaged in the development and commercialization of drugs and other clinical solutions for underserved diseases, including metastatic cancers and lethal infectious diseases.

On March 15, 2010, the Company (then named Freight Management Corp.) and Genesis Biopharma, Inc., a Nevada corporation and newly formed merger subsidiary wholly owned by the Company (“Merger Sub”), consummated a merger transaction (the “Merger”) whereby Merger Sub merged into the Company, with the Company as the surviving corporation. The Company and Merger Sub filed the Articles of Merger on March 15, 2010 with the Secretary of State of Nevada, along with the Agreement and Plan of Merger entered into by the two parties effective as of March 15, 2010 (the “Merger Agreement”). The Merger Agreement and the Articles of Merger provided for an amendment of the Company’s Articles of Incorporation, which changed the Company’s name to “Genesis Biopharma, Inc.” effective as of March 15, 2010.

Basis of Presentation of Unaudited Condensed Financial Information

The unaudited financial statements of the Company for the three months ended March 31, 2012 and 2011 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2011 was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2011 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2012. These financial statements should be read in conjunction with that report.

Development Stage

We are currently in the development stage. As a development stage company that is currently engaged in the development of therapeutics to fight cancer, we have not yet generated any revenues from our biopharmaceutical business. We currently do not anticipate that we will generate any revenues during 2012 from the sale or licensing of any products. In addition, we have also not generated any revenues from our prior business plans.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not had any revenue and is still considered to be in the development stage. As shown in the accompanying financial statements, the Company has incurred a net loss of $5,772,679 for the three months ended March 31, 2012 and has used $760,217 of cash in its operating activities during the three months ended March 31, 2012. As of March 31, 2011, the Company has a stockholders’ deficiency of $17,258,451 and has a working capital deficiency of $6,633,300 (excluding our derivative liability). The Company has no cash and cash equivalents on hand as of March 31, 2012. In addition, as described in Note 3, the Company has convertible notes of $5 million that were due May 11, 2012 that have subsequently extended to November 30, 2012. The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and to ultimately achieve sustainable revenues and profitable operations. The Company’s financial statements do not include any adjustments that might result from the outcome of these uncertainties. At March 31, 2012, the Company has not yet commenced any revenue-generating operations and is dependent on debt and equity funding to finance its operations.

We currently do not have sufficient capital on hand to fund our anticipated on-going operating expenses, and we do not have any bank credit lines or other sources of capital. Accordingly, we will have to obtain additional debt or equity funding in the near future in order to continue our operations. We have not yet identified, and cannot be sure that we will be able to obtain any additional funding from either of these sources, or that the terms under which we may be able to obtain such funding will be beneficial to us or our stockholders.

Because the Company is currently engaged in research at an early stage, it will likely take a significant amount of time to develop any product or intellectual property capable of generating revenues. As such, the Company’s business is unlikely to generate any sustainable revenues in the next several years, and may never do so. Even if the Company is able to generate revenues in the future through licensing its technologies or through product sales, there can be no assurance that the Company will be able to generate a profit. These factors, coupled with and our inability to meet our obligations from current operations, and the need to raise additional capital to accomplish our objectives, create a substantial doubt about our ability to continue as a going concern.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

Loss per Share

Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. For the three months ended March 31, 2012 and 2011, the calculations of basic and diluted loss per share are the same because inclusion of potential dilutive securities in the computation would have an anti-dilutive effect due to the net losses.

The potentially dilutive securities at March 31, 2012 consist of options to acquire 9,575,000 shares of the Company’s common stock, warrants to acquire 9,930,022 shares of the Company’s common stock, and 4,000,000 shares of common stock issuable upon the conversion of the unsecured convertible promissory notes. The potentially dilutive securities at March 31, 2010 consist of options to acquire 1,400,000 shares of the Company’s common stock and warrants to acquire 1,050,022 shares of the Company’s common stock.

Fair Value Measurements

The Company uses various inputs in determining the fair value of certain assets and liabilities and measures these on a recurring basis. Financial assets and liabilities recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the Financial Accounting Standards Board (the “FASB”) defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets and liabilities:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

Level 3—Unobservable inputs based on the Company's assumptions.

The following table presents liabilities of the Company that are measured and recorded at fair value on the Company’s balance sheets on a recurring basis and their level within the fair value hierarchy.

	March 31, 2012								December 31, 2011
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Derivative liabilities	$	—	$	—	$	10,667,947	$	10,667,947	$	—	$	—	$	7,937,793	$	7,937,793

Derivative financial instruments

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For stock-based derivative financial instruments, the Company uses probability weighted average Black-Scholes-Merton models to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Stock-Based Compensation

The Company periodically issues stock options and warrants to officers, directors and consultants for services rendered. Options vest and expire according to terms established at the grant date.

The Company accounts for share-based payments to employees, officers and directors by measuring the cost of services received in exchange for equity awards based on the grant date fair value of the awards, with the cost recognized as compensation expense in the Company’s financial statements over the vesting period of the awards.

The Company accounts for share-based payments to consultants by determining the value of the stock compensation based upon the measurement date at either (a) the date at which a performance commitment is reached or (b) the date at which the necessary performance to earn the equity instruments is complete. Options granted to outside consultants are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”. ASU No. 2011-4 does not require additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of financial reporting. The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company adopted ASU No. 2011-04 effective January 1, 2012. The updated guidance affects the Company’s fair value disclosures, but will not affect the Company’s results of operations, financial condition or liquidity.

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income”. The ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity, and instead requires consecutive presentation of the statement of net income and other comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. ASU No. 2011-5 is effective for interim and annual periods beginning after December 15, 2011. The Company adopted ASU 2011-05 effective January 1, 2012 and it did not affect the Company’s results of operations, financial condition or liquidity.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, an update to existing guidance on the assessment of goodwill impairment. This update simplifies the assessment of goodwill for impairment by allowing companies to consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two step impairment review process. It also amends the examples of events or circumstances that would be considered in a goodwill impairment evaluation. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company adopted ASU 2011-08 effective January 1, 2012. The adoption of this new accounting guidance will not have a significant effect on our goodwill impairment assessments in the future.

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 will be applied retrospectively and is effective for annual and interim reporting periods beginning on or after January 1, 2013. The Company does not expect adoption of this standard to have a material impact on its results of operations, financial condition, or liquidity.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

COMMON STOCK

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

COMMON STOCK

Issuance of common stock for cash

In February 2012, the Company completed a private placement offering whereby it sold 250,000 shares of its common stock and a five-year warrant to purchase 250,000 shares to a single accredited investor for $250,000. As an added incentive to the buyer the warrant is fully vested, will expire in five years and is exercisable at $1.25 per share. The warrant agreement included an anti-dilution provision that allowed for the automatic reset of the number of warrants issued and exercise price of the warrants upon any future sale of common stock or warrants at or below the current exercise price. The Company considered the current FASB guidance which indicates that any adjustment to the fixed amount (either conversion price or number of shares) of the instrument regardless of the probability or whether or not within the issuer’s control means the instrument is not indexed to the issuer’s own stock. Accordingly, the Company determined that as the strike price of these warrants contain exercise prices that may fluctuate based on the occurrence of future offerings or events, and as such is not a fixed amount. As a result, the Company determined that these warrants are not considered indexed to the Company’s own stock and characterized the fair value of these warrants as an offering cost and derivative liabilities upon issuance. The aggregate value of these warrants issued was $182,081 using the probability weighted average Black-Scholes-Merton option valuation model with the following assumptions; average risk-free interest rate of 1.04%; dividend yield of 0%; average volatility of 89.27%; and an expected life of five years (statutory term). The warrants were accounted for as an offering cost and the entire value was deducted from additional paid-in capital.

On the date of the foregoing sale, the closing sale price of the Company’s common stock was above $1.00 per share and, therefore, such sale would have triggered the foregoing conversion and exercise price adjustments and would have significantly reduced the conversion price of the Convertible Notes and the exercise price of the accompanying warrants and certain other warrants. However, the holders of the Notes and the certain other warrants waived the conversion and exercise price adjustments with respect to the $250,000 sale of common stock and warrants. No assurance can be given that the holders of the Notes will waive any future sale that triggers the conversion and exercise price adjustment provisions.

Issuance of common stock for services

During January, 2012, the Company issued 49,504 shares of common stock to the principals of an investor relations firm in satisfaction of amounts owed of $50,000 under their consulting contract. The share of common stock issued were valued a the market price on the date of issuance.

Stock Options

As of October 14, 2011, the Company’s Board of Directors, based upon the approval and recommendation of the Compensation Committee, approved by unanimous written consent the Company’s 2011 Equity Incentive Plan (the “2011 Plan”) and form of option agreements for grants under the 2011 Plan. Employees, directors, consultants and advisors of the Company are eligible to participate in the 2011 Plan. The 2011 Plan was adopted to encourage selected employees, directors, consultants and advisors to improve operations, increase profitability, accept or continue employment or association with the Company through the participation in the growth in value of the common stock of the Company. The 2011 Plan will be administered by the Board of Directors or the Company’s Compensation Committee and has 18,000,000 shares of common stock reserved for issuance in the form of incentive stock options (available for issuance to employees, and only upon shareholder approval of the 2011 Plan); non-qualified options; common stock; and grant appreciation rights. No person eligible to participate in the 2011 Plan shall be granted options or other awards during a twelve month period that exceeds 5,000,000 shares. No options or stock appreciation rights may be granted after ten years of the adoption of the 2011 Plan by the Board of Directors, nor may any option have a term of more than ten years from the date of grant. The exercise price of non qualified options and the base value of a stock appreciation right shall not be less than the fair market value of the common stock on the date of grant. The exercise price of an incentive stock option shall not be less than the fair market value of the stock covered by the option at the time of grant and in instances where a grantee possesses more than 10% percent of the combined voting power of all classes of stock of the Company, the exercise price shall not be less than 110% percent of the fair market value of the common stock at the time of grant.

On January 19, 2012, the board approved the grant under the 2011 Plan to the chairman of the board of directors of the Company, options to purchase 200,000 shares of common stock with an exercise price of $0.92 per share with these options vesting in equal monthly installments over one year and expiring in 2022. The options were valued at $124,525, using the Black Scholes option pricing model and are being amortized over the vesting period. The following weighted-average assumptions were utilized in valuing the options: strike price of $0.92; term of ten years; volatility of 82.4%; expected dividends 0%; and discount rate of 1.17%.

A summary of the status of stock options at March 31, 2012, and the changes during the three months then ended, is presented in the following table:

			Weighted
		Weighted	Average
	Shares	Average	Remaining	Aggregate
	Under	Exercise	Contractual	Intrinsic
	Option	Price	Life	Value

Outstanding at December 31, 2011	9,275,000	$ 1.09	8.5 years	$ 1,114,063
Granted	300,000	1.00
Exercised	-	-
Expired	-	-

Outstanding at March 31, 2012	9,575,000	$ 1.08	9.0 years	$ 1,332,563

Exercisable at March 31, 2012	3,165,555	$ 0.99	8.0 years	$ 821,642

During the three months ended March 31, 2012 and 2011, the Company recorded compensation costs of $1,177,227, and $40,302, respectively, relating to the vesting of the stock options discussed above. As of March 31, 2012, the aggregate value of unvested options was $7,380,361, which will continue to be amortized as compensation cost as the options vest over terms ranging from 1 to 5 years, as applicable.

On March 1, 2011, the Company entered into an employment agreement with an individual. Pursuant to the terms of the agreement, the Company committed to issue options to purchase 2,500,000 shares of the Company’s common stock at an exercise price of $1.25. The options vest as follows: a) 500,000 shares vested immediately and b) 2,000,000 shares vest in equal monthly installments over the 2-year life of the agreement. Neither the Board of Directors nor the Compensation Committee has actually granted the foregoing options. Accordingly, the Company may be obligated to grant these options, but has not done so yet. Therefore, as the grant of these options has not been approved, they are not included in compensation expense or in number of granted options listed as of and for the year ended December 31, 2011 or as of and for the three months ended March 31, 2012.

Warrants

A summary of the status of stock warrants at March 31, 2012, and the changes during the three months then ended, is presented in the following table:

			Weighted
		Weighted	Average
	Shares	Average	Remaining	Aggregate
	Under	Exercise	Contractual	Intrinsic
	Warrants	Price	Life	Value

Outstanding at December 31, 2011	9,680,022	1.22	4.5 years	-
Issued	250,000	1.25
Issued	-	-
Expired	-	-

Outstanding at March 31, 2012	9,930,022	$ 1.31	5.1 years	$ 157,503

In February 2012, the Company completed a private placement offering whereby it sold 250,000 shares of its common stock and a five-year warrant to purchase 250,000 shares to a single accredited investor for $250,000. In connection, the Company entered into a Securities Purchase Agreement which provided for the issuance and sale of 250,000 shares of the Company’s common stock at a per Share purchase price of $1.00 and a 250,000 five year warrant exercisable at $1.25 per warrant share for a purchase price of $250,000. The warrant contains certain purchase price reset protections in the event the Company issues or sells any Shares or any Share equivalents at less than the Per Warrant Exercise Price. The Per Warrant Exercise Price will be adjusted in the event the Company issues or sells any Shares or equivalents pursuant to which Shares may be acquired at less than the Per Warrant Exercise Price (which is subject to adjustment). In addition, in the event of a reduction in the Per Warrant Exercise Price, the number of Shares that a holder of a Warrant shall be entitled to receive upon exercise shall be adjusted by multiplying the number of Shares that would otherwise be issuable on such exercise by a fraction of which (a) the numerator is the Per Warrant Exercise Price that would otherwise be in effect, and (b) the denominator is the Per Warrant Exercise Price in effect on the date of such exercise. The Warrants also contain a cashless exercise provision and the Offering also provides the purchaser the right of first refusal in connection with any future offerings undertaken by the Company for a term of eighteen months.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

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-Name Regulation S-X (SX)
-Number 210
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-Section 08
-Paragraph d

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-Name Accounting Research Bulletin (ARB)
-Number 43
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-Paragraph 7, 11A
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+ Details

DERIVATIVE LIABILITIES

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

DERIVATIVE LIABILITIES

In June 2008, the FASB issued authoritative guidance on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock. Under the authoritative guidance, effective January 1, 2009, instruments which did not have fixed settlement provisions were deemed to be derivative instruments. The convertible note and warrants issued related to the private placement described in Notes 4 and 5 do not have fixed settlement provisions because their conversion and exercise prices may be lowered if the Company issues securities at lower prices in the future. The conversion feature and warrants have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

The derivative liabilities were valued using probability weighted average Black-Scholes-Merton valuation techniques with the following average assumptions:

	March 31, 2012			Upon Issuance (February 2010)			December 31, 2011

Warrants:
Risk-free interest rate		0.71	%		1.04	%		0.46	%
Expected volatility		97.52	%		89.27	%		86.20	%
Expected life		3.61 years			5.0 years			4.45 years
Expected dividend yield		0.00	%		0.00	%		0.00	%

Fair value of conversion feature	$	934,646		$	—		$	177,258
Fair value of warrants	$	9,733,302		$	182,081		$	7,760,535
Total fair value	$	10,667,948		$	182,081		$	7,937,793

The risk-free interest rate was based on rates established by the Federal Reserve Bank, the Company uses the historical volatility of its common stock in 2012, and the expected life of the instruments is determined by the expiration date of the instrument. The expected dividend yield was based on the fact that the Company has not paid dividends to common shareholders in the past and does not expect to pay dividends to common shareholders in the future.

As of March 31, 2012 and December 31, 2011, the aggregate derivative liability was $10,526,100 and $7,937,793, respectively. For the three months ended March 31, 2012, the Company recorded a loss from the increase in fair value of the derivative liabilities of $2,406,227. For the three months ended March 31, 2011, the Company recorded a gain from the decrease in fair value of the derivative liabilities of $93,954.

- Definition

The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items.

+ References

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+ Details

LICENSE AND COMMITMENTS

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

LICENSE AND COMMITMENTS

National Institutes of Health and the National Cancer Institute

Effective August 5, 2011, the Company signed a Cooperative Research and Development Agreement (CRADA) with the National Institutes of Health and the National Cancer Institute (NCI). Under the terms of the five-year cooperative research and development agreement, the Company will work with Steven A. Rosenberg, M.D., Ph.D., chief of NCI’s Surgery Branch, to develop adoptive cell immunotherapies that are designed to destroy metastatic melanoma cells using a patient’s tumor infiltrating lymphocytes.

Specifically, the CRADA will (i) support the in vitro development of improved methods for the generation and selection of tumor infiltrating lymphocytes with anti-tumor reactivity from patients with metastatic melanoma, (ii) help develop approaches for large-scale production of tumor infiltrating lymphocytes that are in accord with Good Manufacturing Practice (GMP) procedures suitable for use in treating patients with metastatic melanoma, and (iii) conduct clinical trials using these improved methods of generating tumor infiltrating lymphocytes as well as improved adoptive cell therapy preparative regimens for the treatment of metastatic melanoma.

Both the Company and the NCI may provide personnel, services, facilities, equipment or other resources under the agreement. Under the terms of the CRADA, the Company will have an exclusive option to negotiate an exclusive license to any new inventions developed jointly or independently by NCI scientists during the course of the research project. A CRADA is the only mechanism the National Institutes of Health has to promise exclusive intellectual property rights in advance to a collaborator.

The Company will provide funds in the amount of $1,000,000 per year of the CRADA for Dr. Rosenberg to use to acquire technical, statistical, and administrative support for the research activities, as well as to pay for supplies and travel expenses. The Company will provide funds in the amount of $250,000 on a quarterly basis. The first quarterly installment of $250,000 was due within thirty (30) days of the Effective Date of the CRADA and each subsequent installment will be due within thirty (30) days of each quarterly anniversary of the Effective Date. The Company’s last quarterly payment was due on March 5, 2012, the Company made the payment in April 2012. In addition, although the CRADA has a five year term, either party to the CRADA has the right to terminate the CRADA upon 60 days’ notice to the other party. The Company also agreed that Dr. Rosenberg can allocate the funding between the various categories in support of the CRADA research as he sees fit.

During the three months ended March 31, 2012, the Company accrued $250,000 under this agreement which is included in Accrued expenses – National Institute of Health in the accompanying balance sheet and in Research and Development expenses in the accompanying statement of operations. During April 2012 the Company used the funds from the issuance of the Promissory Notes to pay its March 8, 2012 installment payment, see Note 8.

National Institutes of Health

Effective October 5, 2011, the Company entered into a Patent License Agreement (the “License Agreement”) with the National Institutes of Health, an agency of the United States Public Health Service within the Department of Health and Human Services (“NIH”). Pursuant to the License Agreement, NIH granted to the Company a non-exclusive worldwide right and license to develop and manufacture certain proprietary autologous tumor infiltrating lymphocyte adoptive cell therapy products for the treatment of metastatic melanoma, ovarian cancer, breast cancer, and colorectal cancer. The intellectual property subject to the License Agreement is covered by 43 patents and patent applications, consisting of nine issued United States patents, 13 pending patent applications in the United States, and 21 foreign patents and patent applications as counterparts of U.S. patents/patent applications. The Company also has limited rights to sublicense the intellectual property subject to the License Agreement. The License Agreement will expire on a product-by-product basis upon the expiration of the subject patent rights.

The Company has the right to terminate the License Agreement in any country on 60 days notice, and NIH may terminate the agreement if the Company is in material breach, and the breach is not cured within a specified cure period, upon certain bankruptcy and insolvency events, or if the Company fails to comply with or achieve certain benchmarks or development plans as set forth in the License Agreement.

In consideration for the rights granted pursuant to the License Agreement, the Company paid $650,000 of upfront licensing fees and $73,186 of expense reimbursements within 60 days of the effectiveness of the License Agreement which are included in Research and Development expenses in the accompanying statement of operations. In addition, the Company will have to pay royalties of six percent (6%) of net sales (subject to certain annual minimum royalty payments), a percentage of revenues from sublicensing arrangements, and lump sum benchmark royalty payments on the achievement of certain clinical and regulatory milestones for each of the various indications. The Company initially intends to focus on the development of licensed products in the metastatic melanoma field of use. If the Company achieves all benchmarks for metastatic melanoma, up to and including the product’s first commercial sale in the United States, the total amount of such benchmark payments will be $6,050,000. The benchmark payments for the other three indications, if all benchmarks are achieved, will be $6,050,000 for ovarian cancer, $12,100,000 for breast cancer, and $12,100,000 for colorectal cancer. Accordingly, if the Company achieves all benchmarks for all four licensed indications, the aggregate amount of benchmark royalty payments that the Company will have to make to NIH will be $36,300,000.

During the three months ended March 31, 2012 there were no net sales subject to certain annual minimum royalty payments, a percentage of revenues from sublicensing arrangements. In addition there were no benchmarks or milestones achieved that would require payment under the lump sum benchmark royalty payments on the achievement of certain clinical and regulatory milestones for each of the various indications. During the three months ended March 31, 2012 the Company accrued $616,000 of direct expenses incurred by the NIH in performing on the licensing agreement which is included in Accrued expenses – National Institute of Health on the accompanying balance sheet and in research and development in the accompanying statement of operations

Lonza Walkersville, Inc.

On June 21, 2011, the Company entered into a process development and scale-up consulting agreement with Lonza Walkersville, Inc. (“Lonza”) relating to the manufacture of Cōntego. Lonza is a leading international supplier to the pharmaceutical, healthcare and life science industries. Under the terms of the Lonza consulting agreement, Lonza agreed to work with Dr. Rosenberg and his colleagues at the NCI to transfer to Lonza Walkersville, Inc., Lonza’s U.S. production facility, the NCI’s standard operating procedures that are used to manufacture the NCI’s physician-sponsored investigational adoptive cell therapy using tumor infiltrating lymphocytes for the treatment of Stage IV metastatic melanoma. The purpose of the transfer of the standard operating procedures is to assist Lonza Walkersville to develop manufacturing procedures and protocols for the manufacture of Cōntego for clinical trials and for post FDA approval sales. Effective as of November 4, 2011 the Company entered into a Letter of Intent with Lonza Walkersville, Inc. (the “LOI”) whereby Lonza will provide certain process development services as well as to investigate the development and manufacture of Contego™, the Company’s autologous cell therapy using tumor infiltrating lymphocytes for the treatment of Stage IV metastatic melanoma and to explore the manufacture of Contego™ for clinical trials to be performed by the Company. Pursuant to the terms of the LOI, the Company paid a reservation fee to Lonza of $500,000 which was included in Research and Development Costs in the accompany State of Operations for the year ended December 31, 2011. The reservation fee payable to Lonza is non-refundable except in the event that Lonza terminates the LOI.

In December 2011, the Company entered into a five-year Manufacturing Services Agreement with Lonza. Under the Manufacturing Services Agreement, Lonza agreed to manufacture, package, ship and handle quality assurance and quality control of our Contego autologous cell therapy products. All of Lonza services will be provided under separate statements of work that we have agreed to enter into, from time to time, with Lonza. The first statement of work, which we entered into in December 2011, describes the services Lonza must perform in connection with optimizing the manufacturing process for Contego products. The fees and costs of Lonza’s services under the Manufacturing Services Agreement depend on each statement of work. Under the Manufacturing Services Agreement, we shall be the owners of all intellectual property that is developed, conceived, invented or reduced to practice by Lonza, other than intellectual property that is generally applicable to the development or manufacture of chemical or biological products, or intellectual property that improves Lonza’s previously owned intellectual property.

Lonza is currently working against the $500,000 previously paid. There were no additional statements of work agreements entered into with Lonza during the three months ended March 31, 2012.

Condensed Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2012	Dec. 31, 2011
Current assets
Property and equipment, accumulated depreciation	$ 4,257	$ 2,704
Intellectual property licenses, accumulated amortization	$ 217,408	$ 217,408
Stockholder's equity
Common Stock Par Value	$ 0.000041666	$ 0.000041666
Common Stock Shares Authorized	1,800,000,000	1,800,000,000
Common Stock Shares Issued	78,293,095	77,993,591
Common Stock Shares Outstanding	78,293,095	77,993,591