UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.)

 

Filed by the Registrant ☒

 

Filed by a Party other than the Registrant  ☐

 

Check the appropriate box:

 

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

 

APPLIED MOLECULAR TRANSPORT INC.

(Name of Registrant as Specified In Its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

 

Fee paid previously with preliminary materials.

 

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 



 

 

 

 

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PROXY STATEMENT OF

APPLIED MOLECULAR TRANSPORT INC.

PROXY STATEMENT OF

CYCLO THERAPEUTICS, INC.

 

MERGER PROPOSEDYOUR VOTE IS VERY IMPORTANT

 

Dear Applied Molecular Transport Inc. Stockholders:

 

As previously announced, the board of directors of Applied Molecular Transport Inc. (“AMTI”) has approved an acquisition of AMTI by Cyclo Therapeutics, Inc. (“Cyclo”). AMTI, Cyclo, and Cameo Merger Sub, Inc., a wholly owned subsidiary of Cyclo (“Merger Sub”), entered into an Agreement and Plan of Merger, dated as of September 21, 2023 (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into AMTI (the “Merger”), with AMTI continuing as a wholly owned subsidiary of Cyclo.

 

At the Effective Time of the Merger, each share of AMTI common stock will be converted into the right to receive a number of shares of Cyclo common stock equal to the Exchange Ratio (as defined in the Merger Agreement) described in more detail in the section entitled “The Merger AgreementMerger Consideration” beginning on page 141 of the accompanying joint proxy statement/prospectus. No fractional shares of Cyclo common stock will be issued in connection with the Merger, and the number of shares of Cyclo common stock to be issued to AMTI stockholders shall rounded up to the nearest whole share. Upon completion of the Merger and based on 22,768,341 shares of Cyclo common stock and 41,848,990 shares of AMTI common stock outstanding as of November 17, 2023 and the anticipated AMTI net cash at closing of approximately $12.4 million, it is expected that Cyclo stockholders will own approximately 75% of the outstanding common stock of the combined company and AMTI stockholders will own approximately 25% of the outstanding common stock of the combined company.

 

Cyclo’s common stock is traded on The Nasdaq Capital Market under the symbol “CYTH” and AMTI’s common stock is traded on The Nasdaq Capital Market under the symbol “AMTI”. Upon completion of the Merger, AMTI’s common stock will cease to trade on The Nasdaq Capital Market.

 

At the special meeting of AMTI stockholders to be held virtually on December 26, 2023 (the “AMTI special meeting”), AMTI stockholders will be asked to vote on (i) a proposal to adopt the Merger Agreement (the “AMTI merger proposal”) (ii) a proposal to approve, on a non-binding, advisory basis, the compensation that may become payable to the named executive officers of AMTI in connection with the consummation of the Merger (the “AMTI advisory compensation proposal”) and (iii) a proposal to approve the adjournment from time to time of the AMTI special meeting, if necessary, to solicit additional proxies if there are insufficient shares of AMTI common stock present in person or represented by proxy at the AMTI special meeting to constitute a quorum at the AMTI special meeting or any adjournment or postponement thereof (the “AMTI adjournment proposal”).

 

Only holders of record of AMTI common stock on November 17, 2023 (including shares of AMTI common stock held through a bank, broker or other nominee that is a stockholder of record of AMTI) are entitled to attend and vote at the AMTI special meeting, or any adjournment or postponement thereof.

 

 

 

We cannot complete the Merger unless the AMTI stockholders approve the AMTI merger proposal.

 

Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the AMTI special meeting, please vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card, (2) calling the toll-free number specified on your proxy card, or (3) signing and returning all proxy cards that you receive in the postage-paid envelope provided, so that your shares may be represented and voted at the AMTI special meeting.

 

In connection with the execution of the Merger Agreement, Cyclo entered into voting agreements (the “Voting Agreements”) with each of AMTI’s directors and officers, collectively owning approximately 11.3% of the outstanding shares of AMTI common stock as of November 17, 2023, pursuant to which AMTI’s directors and officers have agreed, among other things, to vote all of the shares of AMTI common stock beneficially owned by them in favor of the AMTI merger proposal and the AMTI adjournment proposal.

 

The AMTI Board of directors recommends that AMTI stockholders vote FOR the AMTI merger proposal, FOR the AMTI advisory compensation proposal and, if necessary, FOR the AMTI adjournment proposal.

 

The obligations of Cyclo and AMTI to complete the Merger are subject to the satisfaction or waiver of several conditions set forth in the Merger Agreement. More information about Cyclo, AMTI and the Merger is contained in this joint proxy statement/prospectus. You are encouraged to read this entire joint proxy statement/prospectus carefully, including the section entitled Risk Factors beginning on page 25.

 

We look forward to the successful Merger of Cyclo and AMTI.

 

Sincerely,

 

/s/ Shawn Cross

 

Shawn Cross

Chief Executive Officer and Chair of the Board of Directors

Applied Molecular Transport Inc.

 

 

 

 

Dear Stockholders of Cyclo Therapeutics, Inc.:

 

As previously announced, the board of directors of Cyclo Therapeutics, Inc. (“Cyclo”) has approved an acquisition of Applied Molecular Transport Inc. (“AMTI”). Cyclo, AMTI, and Cameo Merger Sub, Inc., a wholly owned subsidiary of Cyclo (“Merger Sub”), entered into an Agreement and Plan of Merger, dated as of September 21, 2023 (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into AMTI (the “Merger”), with AMTI continuing as a wholly owned subsidiary of Cyclo.

 

At the Effective Time of the Merger, each share of AMTI common stock will be converted into the right to receive a number of shares of Cyclo common stock equal to the Exchange Ratio (as defined in the Merger Agreement) described in more detail in the section entitled “The Merger AgreementMerger Consideration” beginning on page 141 of the accompanying joint proxy statement/prospectus. No fractional shares of Cyclo common stock will be issued in connection with the Merger, and the number of shares of Cyclo common stock to be issued to AMTI stockholders shall be rounded up to the nearest whole share. Upon completion of the Merger and based on 22,768,341 shares of Cyclo common stock and 41,848,990 shares of AMTI common stock outstanding as of November 17, 2023 and the anticipated AMTI net cash at closing of approximately $12.4 million, it is expected that Cyclo stockholders will own approximately 75% of the outstanding common stock of the combined company and AMTI stockholders will own approximately 25% of the outstanding common stock of the combined company.

 

To obtain the approval of the Cyclo stockholders required in connection of the Merger, Cyclo will hold a special meeting of its stockholders on December 26, 2023 (the “Cyclo special meeting”) at the offices of Fox Rothschild LLP, 101 Park Avenue, 17th Floor, New York, New York 10178. At the Cyclo special meeting, Cyclo stockholders will be asked to vote on (i) a proposal to approve an amendment to Cyclo’s Articles of Incorporation, as amended (the “Cyclo charter”) increasing the number of authorized shares of Cyclo common stock from 50,000,000 shares to 250,000,000 shares (the “Cyclo charter amendment proposal”), (ii) a proposal to approve the issuance of shares of Cyclo common stock to AMTI stockholders pursuant to the Merger Agreement (the “Cyclo share issuance proposal”) and (iii) a proposal to approve the adjournment from time to time of the Cyclo special meeting, if necessary, to solicit additional proxies if there are insufficient shares of Cyclo common stock present in person or represented by proxy at the Cyclo special meeting to constitute a quorum at the Cyclo special meeting or any adjournment or postponement thereof (the “Cyclo adjournment proposal”).

 

Only holders of record of Cyclo common stock on November 17, 2023 (including shares of Cyclo common stock held through a bank, broker or other nominee that is a stockholder of record of Cyclo) are entitled to attend and vote at the Cyclo special meeting, or any adjournment or postponement thereof.

 

We cannot complete the Merger unless the Cyclo stockholders approve the Cyclo share issuance proposal.

 

Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the Cyclo special meeting in person, please vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card, (2) calling the toll-free number specified on your proxy card, or (3) signing and returning all proxy cards that you receive in the postage-paid envelope provided, so that your shares may be represented and voted at the Cyclo special meeting.

 

The Cyclo board of directors recommends that Cyclo stockholders vote “FOR” the Cyclo charter amendment proposal, “FOR” the Cyclo share issuance proposal and, if necessary, “FOR” the Cyclo adjournment proposal.

 

The obligations of Cyclo and AMTI to complete the Merger are subject to the satisfaction or waiver of several conditions set forth in the Merger Agreement. More information about Cyclo, AMTI and the Merger is contained in this joint proxy statement/prospectus. You are encouraged to read this entire joint proxy statement/prospectus carefully, including the section entitled “Risk Factors” beginning on page 25.

 

We look forward to the successful Merger of Cyclo and AMTI.

 

Sincerely,

 

/s/ N. Scott Fine                                                               

 

N. Scott Fine

Chief Executive Officer

Cyclo Therapeutics, Inc.

 

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

The accompanying joint proxy statement/prospectus is dated November 21, 2023 and is first being mailed to the AMTI stockholders and Cyclo stockholders on or about November 27, 2023.

 

 

 

 

Applied Molecular Transport Inc.

 

c/o The Corporation Trust Company

Corporation Trust Center

1209 Orange Street

Wilmington, DE 19801

(650) 392-0420

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON DECEMBER 26, 2023

 

Virtual Meeting Only No Physical Meeting Location

 

Dear Applied Molecular Transport Inc. Stockholders:

 

We are pleased to invite you to attend the special meeting of Applied Molecular Transport Inc. stockholders, which will be held on December 26, 2023, at 10:00 a.m. (Pacific Time) (the “AMTI special meeting”). The AMTI special meeting will be conducted via live webcast at www.virtualshareholdermeeting.com/AMTI2023SM for the following purposes:

 

 

AMTI Proposal 1: To adopt the Agreement and Plan of Merger, dated September 21, 2023, among Cyclo Therapeutics, Inc., a Nevada corporation (“Cyclo”), Cameo Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Cyclo (“Merger Sub”), and Applied Molecular Transport Inc., a Delaware corporation (“AMTI”), as may be amended from time to time (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into AMTI, with AMTI continuing as the Surviving Corporation (as defined herein) and a wholly owned subsidiary of Cyclo (the “Merger”), and all related transactions contemplated thereby. A copy of the Merger Agreement is attached as Annex A to the joint proxy statement/prospectus accompanying this notice. This proposal is referred to as the “AMTI merger proposal.”

 

 

AMTI Proposal 2: To approve, on a non-binding, advisory basis, the compensation that will or may become payable to the named executive officers of AMTI in connection with the consummation of the Merger. This proposal is referred to as the “AMTI advisory compensation proposal.”

 

 

AMTI Proposal 3: To approve the adjournment from time to time of the AMTI special meeting, if necessary, to solicit additional proxies if there are insufficient shares of AMTI common stock present or represented by proxy at the AMTI special meeting to constitute a quorum at the AMTI special meeting or any adjournment or postponement thereof. This proposal is referred to as the “AMTI adjournment proposal.”

 

AMTI will transact no other business at the AMTI special meeting except such business as may properly be brought before the AMTI special meeting or any adjournment or postponement thereof. Please refer to the attached joint proxy statement/prospectus for further information with respect to the business to be transacted at the AMTI special meeting.

 

In order to virtually attend the AMTI special meeting, as well as vote and submit your questions during the live webcast of the meeting, you will need to register at www.virtualshareholdermeeting.com/AMTI2023SM. Upon entry of your control number and other required information, you will receive further instruction via email, that provides you access to the AMTI special meeting, and allows you to vote and submit questions during the AMTI special meeting. Please be sure to follow the instructions found on your proxy card and/or voting authorization form.

 

The board of directors of AMTI (the “AMTI Board”): (1) determined that the Merger Agreement and all related transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of AMTI and its stockholders; (2) approved the execution and delivery of the Merger Agreement by AMTI, the performance by AMTI of its covenants and other obligations thereunder, and the consummation of the Merger upon the terms and subject to the conditions set forth therein; (3) recommended that the stockholders of AMTI adopt the Merger Agreement and approve the transactions contemplated thereby; and (4) directed that the adoption of the Merger Agreement be submitted for consideration by the stockholders of AMTI at a meeting thereof.

 

 

 

The AMTI Board recommends that AMTI stockholders vote FOR the AMTI merger proposal, FOR the AMTI advisory compensation proposal and, if necessary, FOR the AMTI adjournment proposal.

 

Holders of record of shares of AMTI common stock, at the close of business on November 17, 2023 (the “AMTI record date”), are entitled to notice of, and may vote at, the AMTI special meeting and any adjournment of the AMTI special meeting. A list of AMTI stockholders entitled to vote at the AMTI special meeting will be available for inspection at www.virtualshareholdermeeting.com/AMTI2023SM, at least 10 days prior to the date of the AMTI special meeting and continuing through the date thereof for any purpose germane to the AMTI special meeting.

 

Approval of the AMTI merger proposal requires the affirmative vote of AMTI stockholders representing a majority of the outstanding shares of AMTI common stock entitled to vote thereon. Approval of the AMTI advisory compensation proposal requires the affirmative vote of the voting power of the shares of AMTI common stock present in person or represented by proxy and entitled to vote thereon. Approval of the AMTI adjournment proposal requires the affirmative vote of AMTI stockholders representing a majority of the voting power of the shares of AMTI common stock present in person or represented by proxy and entitled to vote thereon.

 

Your vote is important. Whether or not you expect to virtually attend the AMTI special meeting, you are urged to vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card; (2) calling the toll-free number specified on your proxy card; or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the AMTI special meeting. If your shares are held in street name through a bank, broker, or other nominee, please follow the instructions on the voting instruction card furnished to you by the record holder. Your bank, broker or other nominee may have an earlier deadline by which you must provide instructions as to how to vote your shares of AMTI common stock, so you should read carefully the materials provided to you by your bank, broker, or other nominee. If your shares are registered directly in your name with AMTI’s transfer agent, Equiniti Trust Company, LLC (formerly known as American Stock Transfer & Trust Company, LLC), you are considered, with respect to those shares, to be the stockholder of record. In such case, these proxy materials are being sent directly to you.

 

By Order of the AMTI Board,

 

/s/ Shawn Cross

 

Shawn Cross

Chief Executive Officer and Board Chair

Applied Molecular Transport Inc.

 

We are pleased to invite you to virtually attend the AMTI special meeting, conducted via live webcast, at www.virtualshareholdermeeting.com/AMTI2023SM. You will not be able to attend the special meeting in person. Whether or not you expect to attend the AMTI special meeting, please complete, date, sign and return the proxy card that may be delivered to you or vote over the telephone or the Internet as instructed in these materials, as promptly as possible in order to ensure your representation at the AMTI special meeting. Even if you have voted by proxy, you may still vote if you attend the AMTI special meeting. Please note, however, that if your shares are held of record by a bank, broker or other nominee and you wish to vote at the AMTI special meeting, you may be instructed to obtain a legal proxy form from your bank, broker, or other nominee and to submit a copy in advance of the AMTI special meeting.

 

 

 

 

 

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CYCLO THERAPEUTICS, INC.

 

6714 NW 16th Street, Suite B

Gainesville, FL 32653

(386) 418-8060

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 26, 2023

 

Dear Cyclo Stockholders:

 

We are pleased to invite you to attend the special meeting of Cyclo stockholders, which will be held on December 26, 2023, at 10:00 a.m. (Eastern Time) (the “Cyclo special meeting”) at the offices of Fox Rothschild, LLP located at 101 Park Avenue, 17th Floor, New York, New York 10178. The special meeting will be conducted for the following purposes:

 

 

Cyclo Proposal 1: To approve an amendment to Cyclo’s Articles of Incorporation, as amended (the “Cyclo charter”), increasing the number of authorized shares of Cyclo common stock from 50,000,000 shares to 250,000,000 shares (the “charter amendment”). This proposal is referred to as the “Cyclo charter amendment proposal.”

 

Cyclo Proposal 2: To approve, in accordance with the Nasdaq listing rules, the issuance of shares of Cyclo common stock, par value $0.001 per share (the “share issuance”), to stockholders of Applied Molecular Transport Inc. (“AMTI”) pursuant to the Agreement and Plan of Merger, dated September 21, 2023, among Cyclo, Cameo Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Cyclo (“Merger Sub”), and AMTI, as may be amended from time to time (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into AMTI, with AMTI continuing as the Surviving Corporation (as defined herein) and a wholly owned subsidiary of Cyclo (the “Merger”). This proposal is referred to as the “Cyclo share issuance proposal.”

 

Cyclo Proposal 3: To approve the adjournment from time to time of the Cyclo special meeting, if necessary, to solicit additional proxies if there are insufficient shares of Cyclo common stock present or represented by proxy at the Cyclo special meeting to constitute a quorum at the Cyclo special meeting or any adjournment or postponement thereof. This proposal is referred to as the “Cyclo adjournment proposal.”

 

Cyclo will transact no other business at the Cyclo special meeting except such business as may properly be brought before the Cyclo special meeting or any adjournment or postponement thereof. Please refer to the attached joint proxy statement/prospectus for further information with respect to the business to be transacted at the Cyclo special meeting.

 

Holders of record of shares of Cyclo common stock, at the close of business on November 17, 2023 (the “Cyclo record date”), are entitled to notice of, and may vote at, the Cyclo special meeting and any adjournment of the Cyclo special meeting. A list of Cyclo stockholders entitled to vote at the Cyclo special meeting will be available for inspection at Cyclo’s principal place of business, located at 6714 NW 16th Street, Suite B, Gainesville, FL 32653, at least 10 days prior to the date of the Cyclo special meeting and continuing through the date thereof for any purpose germane to the Cyclo special meeting, between the hours of 9:00 a.m. and 5:00 p.m. (Eastern Time).

 

Approval of the Cyclo charter amendment proposal requires the affirmative vote of a majority of the voting power of the shares of Cyclo common stock outstanding. Approval of the Cyclo share issuance proposal requires the affirmative vote of a majority of the voting power of the shares of Cyclo common stock present or represented by proxy at the Cyclo special meeting and entitled to vote thereon. Approval of the Cyclo adjournment proposal requires the affirmative vote of Cyclo stockholders representing a majority of the voting power of the shares of Cyclo common stock present in person or represented by proxy at the Cyclo special meeting and entitled to vote thereon.

 

 

 

Your vote is important. Whether or not you expect to attend the Cyclo special meeting in person, you are urged to vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card; (2) calling the toll-free number specified on your proxy card; or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the Cyclo special meeting. If your shares are held in street name through a bank, broker, or other nominee, please follow the instructions on the voting instruction card furnished to you by the record holder. Your bank, broker, or other nominee may have an earlier deadline by which you must provide instructions as to how to vote your shares of Cyclo common stock, so you should read carefully the materials provided to you by your bank, broker or other nominee. If your shares are registered directly in your name with Cyclo’s transfer agent, VStock Transfer, LLC, you are considered, with respect to those shares, to be the stockholder of record. In such case, these proxy materials are being sent directly to you.

 

If you wish to attend the special meeting in person, you must pre-register, as described in more detail in this proxy statement. If you have any questions regarding the accompanying proxy statement/prospectus, you may contact Okapi Partners LLC, Cyclo’s proxy solicitor, by emailing info@okapipartners.com or calling toll-free at (855) 305-0857. For banks, brokers, and other nominees, call (212) 297-0720.

 

CYCLOS BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS FAIR TO, IN THE BEST INTERESTS OF, AND ADVISABLE TO CYCLO AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. CYCLOS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CYCLO STOCKHOLDERS VOTE FOR EACH SUCH PROPOSAL.

 

 

By Order of the Cyclo Board,

         

/s/ N. Scott Fine

 

N. Scott Fine

Chief Executive Officer and Director

Cyclo Therapeutics, Inc.

 

We are pleased to invite you to attend the Cyclo special meeting in person. Whether or not you expect to attend the Cyclo special meeting in person, please complete, date, sign and return the proxy card that may be delivered to you or vote over the telephone or the Internet as instructed in these materials, as promptly as possible in order to ensure your representation at the Cyclo special meeting. Even if you have voted by proxy, you may still vote if you attend the Cyclo special meeting. Please note, however, that if your shares are held of record by a bank, broker or other nominee and you wish to vote at the Cyclo special meeting, you may be instructed to obtain a legal proxy form from your bank, broker or other nominee and to submit a copy in advance of the Cyclo special meeting.

 

 

 

 

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

 

This document, which forms part of a registration statement on Form S-4 filed with the SEC (as defined herein) by Cyclo (File No. 333-275371), constitutes a prospectus of Cyclo under Section 5 of the Securities Act (as defined herein), with respect to the shares of Cyclo common stock to be issued to AMTI stockholders pursuant to the Merger Agreement. This document also constitutes a notice of meeting and proxy statement of each of Cyclo and AMTI under Section 14(a) of the Exchange Act (as defined herein).

 

Cyclo has supplied all information contained in this joint proxy statement/prospectus relating to Cyclo and Merger Sub. AMTI has supplied all information contained in this joint proxy statement/prospectus relating to AMTI. Cyclo and AMTI have both contributed information relating to the Merger.

 

You should rely only on the information contained in or incorporated by reference into this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in or incorporated by reference into this joint proxy statement/prospectus. For additional information on the documents incorporated by reference in this joint proxy statement/prospectus, see the sections entitled “Where You Can Find More Information” and “Incorporation of Certain Information by Reference.” This joint proxy statement/prospectus is dated November 21, 2023, and is based on information as of that date or such other date as may be noted. You should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any other date. You should not assume that the information contained in any document incorporated or deemed to be incorporated by reference herein is accurate as of any date other than the date of such document. Any statement contained in a document incorporated or deemed to be incorporated by reference into this joint proxy statement/prospectus will be deemed to be modified or superseded to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference into this joint proxy statement/prospectus modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this joint proxy statement/prospectus. Neither the mailing of this joint proxy statement/prospectus to the Cyclo and AMTI stockholders, respectively, nor the taking of any actions contemplated hereby by Cyclo or AMTI at any time will create any implication to the contrary.

 

DEFINED TERMS

 

Unless otherwise indicated or as the context otherwise requires, all references in this joint proxy statement/prospectus to:

 

 

“AMTI” refers to Applied Molecular Transport Inc.;

 

“AMTI Board” refers to the board of directors of AMTI;

 

“AMTI common stock” refers to the common stock, par value $0.0001 per share, of AMTI;

 

“AMTI special meeting” refers to the special meeting of AMTI stockholders, which will be held on December 26, 2023, at 10:00 a.m. (Pacific Time);
 

“Closing Date” refers to the date on which the consummation of the Merger actually occurs;

 

“Code” refers to the Internal Revenue Code of 1986, as amended;

 

“Cyclo” refers to Cyclo Therapeutics, Inc.;

 

“Cyclo Board” refers to the board of directors of Cyclo;

 

“Cyclo common stock” refers to the common stock, par value $0.0001 per share, of Cyclo;

 

“Cyclo special meeting” refers to the special meeting of Cyclo stockholders, which will be held on December 26, 2023, at 10:00 a.m. (Eastern Time);
 

“DGCL” refers to the General Corporation Law of the State of Delaware;

 

“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

 

“GAAP” refers to generally accepted accounting principles, consistently applied, in the United States;

 

“Merger” refers to the merger of Merger Sub with and into AMTI, with AMTI continuing as the Surviving Corporation;

 

“Merger Consideration” refers to the shares of Cyclo common stock to be issued to AMTI stockholders at the closing of the Merger, calculated with reference to the Exchange Ratio (as defined in the Merger Agreement) and in accordance with certain other terms and conditions in the Merger Agreement;

 

 

 

 

“Merger Sub” refers to Cameo Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Cyclo;

 

“MTS” refers to MTS Health Partners, L.P., financial advisor to AMTI;

 

“Nasdaq” refers to The Nasdaq Capital Market;

 

“NBCA” refers to the Nevada Business Corporation Act;

 

“SEC” refers to the United States Securities and Exchange Commission;

 

“Securities Act” refers to the Securities Act of 1933, as amended; and

 

“Surviving Corporation” refers to AMTI as the surviving corporation following the Merger, and as a wholly owned subsidiary of Cyclo.

 

REFERENCES TO ADDITIONAL INFORMATION

 

This joint proxy statement/prospectus incorporates by reference important business and financial information about Cyclo and AMTI from documents Cyclo and AMTI, respectively, have filed or will file with the SEC that are not included in or delivered with this joint proxy statement/prospectus. For additional information on the documents incorporated by reference in this joint proxy statement/prospectus, see the sections entitled “Where You Can Find More Information” and “Incorporation of Certain Information by Reference.” This information is available to you without charge upon your written or oral request. You can obtain documents incorporated by reference in this joint proxy statement/prospectus by requesting them in writing or by telephone using the following contact information, or free of charge on the SEC website, www.sec.gov.

 

If you would like to request documents from Cyclo or AMTI, please send a request in writing or by telephone to the appropriate company at the following addresses and telephone numbers.

 

Cyclo Therapeutics, Inc.

c/o Okapi Partners LLC

1212 Avenue of the Americas

New York, NY 10036

(855) 305-0857

(212) 297-0720 – banks and brokers

info@okapipartners.com

Applied Molecular Transport Inc.

c/o The Corporation Trust Company

Corporation Trust Center

1209 Orange Street

Wilmington, DE 19801

(650) 493-9300

Attn: Secretary

 

Cyclo stockholders and AMTI stockholders may also consult the websites of Cyclo or AMTI for more information concerning the Merger and other transactions described in the accompanying joint proxy statement/prospectus. The website of Cyclo is https://cyclotherapeutics.com/ and the website of AMTI is https://www.appliedmt.com/. Information included on these websites is not incorporated by reference into the accompanying joint proxy statement/prospectus.

 

If you would like to request any documents, you must do so by December 18, 2023, or the date that is five business days before the date of each respective special meeting, in order to receive them before the special meetings.

 

 

 

 

TABLE OF CONTENT

 

QUESTIONS AND ANSWERS

1

PROSPECTUS SUMMARY

11

COMPARATIVE MARKET PRICE INFORMATION

24

RISK FACTORS

25

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

81

INFORMATION ABOUT THE COMPANIES

83

THE AMTI SPECIAL MEETING

86

AMTI PROPOSAL 1 – ADOPTION OF THE MERGER AGREEMENT

91

AMTI PROPOSAL 2 – APPROVAL OF THE COMPENSATION PAYABLE TO AMTI’S NAMED EXECUTIVE OFFICERS

92

AMTI PROPOSAL 3 – ADJOURNMENT OF THE AMTI SPECIAL MEETING

93

THE CYCLO SPECIAL MEETING

94

CYCLO PROPOSAL 1 – APPROVAL OF THE CYCLO CHARTER AMENDMENT

99

CYCLO PROPOSAL 2 – APPROVAL OF THE SHARE ISSUANCE

101

CYCLO PROPOSAL 3 – ADJOURNMENT OF THE CYCLO SPECIAL MEETING

103

THE MERGER

104

THE MERGER AGREEMENT

140

THE VOTING AGREEMENTS

156

CYCLO EXECUTIVE COMPENSATION

157

COMPARISON OF RIGHTS OF HOLDERS OF CYCLO COMMON STOCK AND AMTI COMMON STOCK

164

PRINCIPAL STOCKHOLDERS OF CYCLO

170

PRINCIPAL STOCKHOLDERS OF AMTI

172

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

174

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

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NO APPRAISAL RIGHTS

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LEGAL MATTERS

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EXPERTS

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HOUSEHOLDING

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FUTURE STOCKHOLDER PROPOSALS

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WHERE YOU CAN FIND MORE INFORMATION

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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

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Annex A – Merger Agreement

Annex B – Voting Agreement

Annex C – Opinion of MTS Securities, LLC

Annex D – Cyclo Charter Amendment

 

 

 

 

QUESTIONS AND ANSWERS

 

The following are brief answers to certain questions that you may have regarding the Merger Agreement, the Merger, the issuance of shares of Cyclo common stock in connection with the Merger, the AMTI special meeting, the Cyclo special meeting and other matters to be considered at the respective special meetings. You are urged to read carefully this entire joint proxy statement/prospectus and additional important information contained in the annexes and exhibits to, and the documents incorporated by reference into, this joint proxy statement/prospectus because the information in this section may not provide all of the information that might be important to you in determining how to vote. See the section entitled Where You Can Find More Information for more information.

 

Q:

What is the proposed transaction?

 

A:

On September 21, 2023, AMTI, Cyclo, and Merger Sub, entered into the Merger Agreement. A copy of the Merger Agreement is attached to this joint proxy statement/prospectus as Annex A.

 

At the Effective Time of the Merger, each share of AMTI common stock (other than certain excluded shares specified in the Merger Agreement) will be converted into the right to receive a number of shares of Cyclo common stock equal to the Exchange Ratio described in more detail in the section entitled “The Merger AgreementMerger Consideration” beginning on page 141 of the accompanying joint proxy statement/prospectus. No fractional shares of Cyclo common stock will be issued in connection with the Merger, and the number of shares of Cyclo common stock to be issued to AMTI stockholders shall be rounded up to the nearest whole share. Upon completion of the Merger and based on 22,768,341 shares of Cyclo common stock and 41,848,990 shares of AMTI common stock outstanding as of November 17, 2023 and AMTI having net cash of approximately $12.4 million at closing, it is expected that Cyclo stockholders and certain other equity holders will own approximately 75% of the outstanding common stock of the combined company and AMTI stockholders and certain other equityholders will own approximately 25% of the outstanding common stock of the combined company.

 

Q:

Why are Cyclo and AMTI proposing the Merger?

 

A:

Each of the AMTI Board and the Cyclo Board believes that the proposed Merger will provide a number of significant potential strategic benefits and opportunities that will be in the best interests of the AMTI stockholders and Cyclo stockholders, respectively. To review the reasons for the proposed Merger in greater detail, see the sections entitled “The MergerRecommendation of the AMTI Board and AMTIs Reasons for the Merger” and “The MergerRecommendation of the Cyclo Board and Cyclos Reasons for the Merger” in this joint proxy statement/prospectus.

 

Q:

Why am I receiving this joint proxy statement/prospectus?

 

A:

Each of AMTI and Cyclo is sending these materials to the AMTI stockholders and Cyclo stockholders, respectively, as of the applicable record date, to help the AMTI stockholders and the Cyclo stockholders decide how to vote their shares of AMTI common stock and/or shares of Cyclo common stock, as the case may be, with respect to the matters to be considered at the AMTI special meeting and the Cyclo special meeting, respectively.

 

1

 

Consummation of the Merger requires certain approvals by both AMTI stockholders and Cyclo stockholders. To obtain these required approvals, AMTI will hold the AMTI special meeting to request that the AMTI stockholders approve, among other things, a proposal to adopt the Merger Agreement (the “AMTI merger proposal”) and a proposal to approve the adjournment from time to time of the AMTI special meeting, if necessary, to solicit additional proxies if there are insufficient shares of AMTI common stock present in person or represented by proxy at the AMTI special meeting to constitute a quorum at the AMTI special meeting or any adjournment or postponement thereof (the “AMTI adjournment proposal”), and Cyclo will hold the Cyclo special meeting to request that the Cyclo stockholders approve, among other things, an amendment to the Cyclo charter (the “Cyclo charter amendment”) increasing the number of authorized shares of Cyclo common stock from 50,000,000 shares to 250,000,000 shares (the “Cyclo charter amendment proposal”), the issuance of shares of Cyclo common stock (the “share issuance”) in connection with the Merger (the “Cyclo share issuance proposal”) and a proposal to approve the adjournment from time to time of the Cyclo special meeting, if necessary, to solicit additional proxies if there are insufficient shares of Cyclo common stock present in person or represented by proxy at the Cyclo special meeting to constitute a quorum at the Cyclo special meeting or any adjournment or postponement thereof (the “Cyclo adjournment proposal”). Further information about the AMTI special meeting, the Cyclo special meeting, the Merger Agreement, the Merger, the Cyclo charter amendment, and the share issuance is contained in this joint proxy statement/prospectus. This joint proxy statement/prospectus constitutes both a joint proxy statement of AMTI and Cyclo and a prospectus of Cyclo with respect to the Cyclo common stock to be issued in connection with the Merger. It is a joint proxy statement because it will be used by both AMTI in soliciting proxies from the AMTI stockholders and by Cyclo in soliciting proxies from the Cyclo stockholders. It is a prospectus because Cyclo, in connection with the Merger, is offering shares of Cyclo common stock in exchange for outstanding shares of AMTI common stock, as described in further detail elsewhere in this joint proxy statement/prospectus.

 

The enclosed proxy materials allow you to submit a proxy by telephone or over the Internet, or by signing and returning the enclosed proxy card in the postage-paid envelope provided, without attending the AMTI special meeting virtually or the Cyclo special meeting in person.

 

Your vote is very important. You are encouraged to submit your proxy as soon as possible by telephone or over the Internet, or by signing and returning the enclosed proxy card in the postage-paid envelope provided, even if you do plan to attend the AMTI special meeting virtually or the Cyclo special meeting in person.

 

Q:

Who is soliciting my proxy?

 

A:

Proxies in the form enclosed with this joint proxy statement/prospectus are being solicited from AMTI stockholders by the AMTI Board, officers, and employees and from Cyclo stockholders by the Cyclo Board, officers, and employees. No additional compensation will be paid to the directors, officers, and employees of AMTI or Cyclo in connection with such solicitation services.

 

In addition, Cyclo has engaged Okapi Partners LLC to assist in the solicitation of proxies for the Cyclo special meeting. Cyclo estimates it will pay Okapi Partners LLC a fee of approximately $9,500, plus costs and expenses. Cyclo has agreed to indemnify Okapi against various liabilities and expense that related to or arise out of its solicitation of proxies (subject to certain exceptions).

 

Q:

When and where will the meetings be held?

 

A:

The AMTI special meeting will be held virtually via the Internet on December 26, 2023 beginning at 10:00 a.m. (Pacific Time). There will not be a physical meeting location for the AMTI special meeting. You will be able to attend the AMTI special meeting by visiting www.virtualshareholdermeeting.com/AMTI2023SM and vote your shares electronically. If you plan to attend the AMTI special meeting, you will need the 16-digit control number included on your proxy card or voting instruction form that accompanies your proxy materials.

 

The Cyclo special meeting will be held on December 26, 2023 beginning at 10:00 a.m. (Eastern Time) at the offices of Fox Rothschild LLP, 101 Park Avenue, 17th Floor, New York, New York 10178. If you wish to attend the Cyclo special meeting in person, you must register in advance by contacting Okapi Partners LLC, Cyclo’s proxy solicitor, no later than at noon (Eastern Time) on December 22, 2023. You may contact Okapi Partners LLC, by emailing info@okapipartners.com or calling toll-free at (855) 305-0857, or for banks, brokers, and other nominees, collect at (212) 297-0720.

 

When contacting Okapi Partners LLC, please provide your name, the name under which you hold common stock of record or evidence of your beneficial ownership of common stock. As noted above, if you own common stock in street name you must obtain a “legal proxy” from the bank or brokerage firm that holds your shares in order to vote your shares at the special meeting. On the day of the special meeting, each stockholder will be required to present a valid picture identification such as a driver’s license or passport and evidence of your beneficial ownership of Cyclo common stock.

 

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Q:

What will AMTI stockholders receive in the Merger?

 

A:

In connection with the closing of the Merger, AMTI stockholders will have the right to receive, for each share of AMTI common stock held by such stockholder, a number of shares of Cyclo common stock equal to the Exchange Ratio, as described in more detail in the section entitled “The Merger AgreementMerger Consideration” beginning on page 141 of the accompanying joint proxy statement/prospectus. No fractional shares of Cyclo common stock will be issued in connection with the Merger and the number of shares of Cyclo common stock to be issued to AMTI stockholders shall be rounded up to the nearest whole share. Upon completion of the Merger and based on 22,768,341 shares of Cyclo common stock and 41,848,990 shares of AMTI common stock outstanding as of November 17, 2023, it is expected that Cyclo stockholders and certain other equity holders will own approximately 75% of the outstanding common stock of the combined company and AMTI stockholders and certain other equityholders will own approximately 25% of the outstanding common stock of the combined company.

 

Cyclo stockholders will continue to own their existing shares of Cyclo common stock. Cyclo common stock is currently traded on Nasdaq under the symbol “CYTH,” and AMTI common stock is currently traded on Nasdaq under the symbol “AMTI.” You are encouraged to obtain current market quotations of Cyclo common stock and AMTI common stock before voting.

 

Q:

After applying the Exchange Ratio, how will fractional shares be handled?

 

A:

No fractional shares of Cyclo common stock will be issued in connection with the Merger and the number of shares of Cyclo common stock to be issued to AMTI stockholders shall be rounded up to the nearest whole share.

 

Q:

How does the Exchange Ratio affect the ownership of Cyclo after completion of the Merger?

 

A:

The Exchange Ratio will determine the relative ownership percentages of the current Cyclo stockholders and the current AMTI stockholders in the combined company. The Exchange Ratio will adjust based on AMTI’s net cash and number of issued and outstanding shares at the closing of the Merger. Upon completion of the Merger and based on 22,768,341 shares of Cyclo common stock and 41,848,990 shares of AMTI common stock outstanding as of November 17, 2023 and the anticipated amount of AMTI’s net cash at closing of the Merger of approximately $12.4 million, it is expected that Cyclo stockholders and certain other equity holders will own approximately 75% of the outstanding common stock of the combined company and AMTI stockholders and certain other equityholders will own approximately 25% of the outstanding common stock of the combined company.

 

Q:

Who is entitled to vote?

 

A:

AMTI: AMTI has fixed the close of business on November 17, 2023 as the record date for determining the AMTI stockholders who are entitled to notice of and to vote at the AMTI special meeting. If you were a holder of record of AMTI common stock as of the close of business on November 17, 2023, you are entitled to receive notice of and to vote at the AMTI special meeting and any adjournments thereof.

 

Cyclo: Cyclo has fixed the close of business on November 17, 2023 as the record date for determining the Cyclo stockholders who are entitled to notice of and to vote at the Cyclo special meeting. If you were a holder of record of Cyclo common stock as of the close of business on November 17, 2023, you are entitled to receive notice of and to vote at the Cyclo special meeting and any adjournments thereof.

 

Q:

How do I vote?

 

A:

If you are a stockholder of record of AMTI as of the record date for the AMTI special meeting, or a stockholder of record of Cyclo as of the record date for the Cyclo special meeting, you may submit your proxy before your respective company’s special meeting in one of the following ways:

 

 

1.

visit the website shown on your proxy card to submit your proxy via the Internet;

 

 

2.

call the toll-free number for telephone proxy submission shown on your proxy card; or

 

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3.

complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope provided.

 

You may also cast your vote virtually at AMTI’s special meeting or in person at Cyclo’s special meeting held at the offices Fox Rothschild, LLP, 101 Park Avenue, New York, New York 10178.

 

If your shares are held in “street name,” through a bank, broker, or other nominee, that institution will send you separate instructions describing the procedure for voting your shares. Please follow the voting instructions provided by your bank, broker, or other nominee. “Street name” stockholders or stockholders who wish to vote virtually at AMTI’s special meeting or in person at Cyclo’s special meeting will need to obtain a “legal proxy” from their bank, broker, or other nominee.

 

Q:

What is the voting deadline?

 

A:

If you are an AMTI or Cyclo stockholder, any deadline for submitting a proxy using the Internet or the telephone will be provided on the proxy card or voting instruction form you receive. If you received your special meeting materials by mail, you may complete, sign and date the proxy card or voting instruction card and return it in the prepaid envelope. For detailed information, see the sections entitled “The AMTI Special Meeting” and “The Cyclo Special Meeting,” respectively.

 

Q:

What vote is required to approve each proposal at the AMTI special meeting?

 

A:

AMTI merger proposal. Approval of the AMTI merger proposal requires the affirmative vote of AMTI stockholders representing a majority of the outstanding shares of AMTI common stock entitled to vote thereon. Failure to vote at the AMTI special meeting or vote by proxy at the AMTI special meeting, abstentions, and broker non-votes (if any) will have the same effect as a vote against the AMTI merger proposal. Shares of AMTI common stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon.

 

AMTI advisory compensation proposal. Approval of the AMTI advisory compensation proposal requires the affirmative vote of AMTI stockholders representing a majority of the voting power of the shares of AMTI common stock present in person or represented by proxy and entitled to vote thereon. For the AMTI advisory compensation proposal, abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the proposal. Shares of AMTI common stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon.

 

AMTI adjournment proposal. Approval of the AMTI adjournment proposal requires the affirmative vote of AMTI stockholders representing a majority of the voting power of the shares of AMTI common stock present in person or represented by proxy and entitled to vote thereon. For the AMTI adjournment proposal, abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the proposal. Shares of AMTI common stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon.

 

Q:

How does the AMTI Board recommend that AMTI stockholders vote?

 

A:

At a meeting of the AMTI Board on September 20, 2023, the AMTI Board: (1) determined that the Merger Agreement and all related transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of AMTI and its stockholders; (2) approved the execution and delivery of the Merger Agreement by AMTI, the performance by AMTI of its covenants and other obligations thereunder, and the consummation of the Merger upon the terms and subject to the conditions set forth therein; (3) recommended that the stockholders of AMTI adopt the Merger Agreement and approve the transactions contemplated thereby; and (4) directed that the adoption of the Merger Agreement be submitted for consideration by the stockholders of AMTI at a meeting thereof. The AMTI Board recommends that AMTI stockholders vote “FOR” the AMTI merger proposal, “FOR” the AMTI advisory compensation proposal, and, if necessary, “FOR” the AMTI adjournment proposal.

 

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Q:

How many votes do AMTI stockholders have?

 

A:

You are entitled to one vote for each share of AMTI common stock that you owned as of the AMTI record date. As of the AMTI record date, there were 41,848,990 issued and outstanding shares of AMTI common stock and AMTI’s directors, executive officers, and their respective affiliates, as a group, beneficially held and were entitled to vote 4,723,405 shares of AMTI common stock, representing 11.3% of the voting power of the outstanding shares of AMTI common stock. As described above, approval of the AMTI merger proposal requires the affirmative vote of AMTI stockholders representing a majority (over 50%) of the outstanding shares of AMTI common stock entitled to vote thereon. The AMTI advisory compensation proposal requires the affirmative vote of AMTI stockholders representing a majority (over 50%) of the voting power of the shares of AMTI common stock present in person or represented by proxy and entitled to vote thereon. The AMTI adjournment proposal requires the affirmative vote of AMTI stockholders representing a majority (over 50%) of the voting power of the shares of AMTI common stock present in person or represented by proxy and entitled to vote thereon.

 

In connection with the execution of the Merger Agreement, Cyclo entered into Voting Agreements with each of AMTI’s directors and officers (in each case, solely in their respective capacities as AMTI stockholders, the “AMTI Supporting Holders”), collectively owning approximately 11.3% of the outstanding shares of AMTI common stock as of November 17, 2023, pursuant to which the AMTI Supporting Holders have agreed, among other things, to vote all of the shares of AMTI common stock beneficially owned by them in favor of the AMTI merger proposal and the AMTI adjournment proposal.

 

Q:

What vote is required to approve each proposal at the Cyclo special meeting?

 

A:

Cyclo charter amendment proposal. Approval of the Cyclo charter amendment proposal requires the affirmative vote of Cyclo stockholders representing a majority of the voting power of the shares of Cyclo common stock outstanding. For the Cyclo charter amendment proposal, abstentions and broker non-votes will have the same effect as a vote against the proposal. If you do not attend the Cyclo special meeting in person or by proxy and fail to vote, it will have the same effect as a vote against the proposal. Shares of Cyclo common stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon.

 

Cyclo share issuance proposal. Approval of the Cyclo share issuance proposal requires the affirmative vote of Cyclo stockholders representing a majority of the voting power of the shares of Cyclo common stock present in person or represented by proxy at the Cyclo special meeting and entitled to vote thereon. For the Cyclo share issuance proposal, abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the proposal. If you do not attend the Cyclo special meeting in person or by proxy and fail to vote, there will be no effect on the outcome of the Cyclo share issuance proposal. Shares of Cyclo common stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon.

 

Cyclo adjournment proposal. Approval of the Cyclo adjournment proposal requires the affirmative vote of Cyclo stockholders representing a majority of the voting power of the shares of Cyclo common stock present in person or represented by proxy at the Cyclo special meeting and entitled to vote thereon. For the Cyclo adjournment proposal, abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the proposal. If you do not attend the Cyclo special meeting in person or by proxy and fail to vote, there will be no effect on the outcome of the Cyclo adjournment proposal. Shares of Cyclo common stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon.

 

Q:

How does the Cyclo Board recommend that Cyclo stockholders vote?

 

A:

The Cyclo Board recommends that the stockholders vote for (i) the approval of the charter amendment proposal, (ii) the approval of the share issuance proposal and (iii) in favor of the adjournment proposal.

 

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Q:

How many votes do Cyclo stockholders have?

 

A:

You are entitled to one vote for each share of Cyclo common stock that you owned as of the Cyclo record date. As of the Cyclo record date, there were issued and outstanding 22,768,341 shares of Cyclo common stock and Cyclo’s directors, executive officers, and their respective affiliates, as a group, beneficially held and were entitled to vote 15,788,294 shares of Cyclo common stock, representing 61.26% of the voting power of the outstanding shares of Cyclo common stock. As described above, approval of the Cyclo charter amendment proposal requires the affirmative vote of Cyclo stockholders representing a majority (over 50%) of the voting power of the shares of Cyclo common stock outstanding. The Cyclo share issuance proposal and Cyclo adjournment proposal each require the affirmative vote of Cyclo stockholders representing a majority (over 50%) of the voting power of the shares of Cyclo common stock present in person or represented by proxy at the Cyclo special meeting and entitled to vote thereon.

 

Q:

What will happen if I fail to vote or I abstain from voting?

 

A:

AMTI: Failure to vote at the AMTI special meeting or by proxy at the AMTI special meeting, abstentions, and broker non-votes (if any) will have the same effect as a vote against the AMTI merger proposal. For the AMTI advisory compensation proposal and the AMTI adjournment proposal, abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the proposal. Shares of AMTI common stock represented by properly executed, timely received, and unrevoked proxies will be voted in accordance with the instructions indicated thereon.

 

Cyclo: Abstentions will have the same effect as a vote against each of the Cyclo share issuance proposal and the Cyclo adjournment proposal, and broker non-votes will have no effect on the outcome of either proposal. If you do not attend the Cyclo special meeting in person or by proxy and fail to vote, there will be no effect on the outcome of either proposal. Abstentions, broker non-votes, and failure to vote will each have the same effect as a vote against the Cyclo charter amendment proposal. Shares of Cyclo common stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon.

 

Q:

What are broker non-votes?

 

A:

A broker non-vote occurs when a bank, broker, trustee or other nominee is not permitted to vote on a “non-routine” matter without instructions from the beneficial owner of the shares and the beneficial owner fails to provide the bank, broker, trustee or other nominee with such instructions. Broker non-votes only count toward a quorum if at least one proposal is presented with respect to which the bank, broker, trustee or other nominee has discretionary authority. It is expected that all proposals to be voted on at the AMTI special meeting and Cyclo special meeting will be “non-routine” matters, and, as such, broker non-votes, if any, will not be counted as present and entitled to vote for purposes of determining a quorum at each special meeting. Broker non-votes, if any, will have the same effect as a vote against the AMTI merger proposal, will have no effect on the outcome of either the AMTI advisory compensation proposal or the AMTI adjournment proposal, will have the same effect as a vote against the Cyclo charter amendment proposal, and will have no effect on the outcome of either the Cyclo share issuance proposal or the Cyclo adjournment proposal.

 

Q:

What constitutes a quorum?

 

A:

AMTI: The holders of a majority of the AMTI common stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum. Shares of AMTI common stock represented at the AMTI special meeting by attendance via the virtual special meeting website or by proxy and entitled to vote, but not voted, including shares for which a stockholder directs an abstention from voting, will be counted for the purposes of determining a quorum. However, because all of the proposals for consideration at the AMTI special meeting are considered non-routine matters, shares held in street name will not be counted as present for the purpose of determining the existence of a quorum unless the stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals before the AMTI special meeting.

 

Cyclo: The holders of one-third of the voting power of Cyclo, present in person or represented by proxy, shall constitute a quorum. Shares of Cyclo common stock represented at the Cyclo special meeting by attendance in person at special meeting or by proxy and entitled to vote, but not voted, including shares for which a stockholder directs an abstention from voting, will be counted for the purposes of determining a quorum. However, because all of the proposals for consideration at the Cyclo special meeting are considered non-routine matters, shares held in street name will not be counted as present for the purpose of determining the existence of a quorum unless the stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals before the Cyclo special meeting.

 

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Q:

What is the difference between a stockholder of record and a street name holder?

 

A:

If your shares are registered directly in your name, you are considered the stockholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust company or other nominee, then the broker, bank, trust company or other nominee is considered to be the stockholder of record with respect to those shares, while you are considered the beneficial owner of those shares. In the latter case, your shares are said to be held in “street name.”

 

Q:

If I am a beneficial owner of shares held in street name, how do I vote?

 

A:

If you are not a stockholder of record but instead hold your shares in a stock brokerage account, or if your shares are held by a bank, trust company or other nominee (that is, in street name), you must provide the record holder of your shares with instructions on how to vote your shares. If you are an AMTI or Cyclo stockholder but not a stockholder of record and you do not instruct your broker on how to vote your shares, your broker may not vote your shares, which will have the same effect as a vote against the AMTI merger proposal and the Cyclo charter amendment proposal and will have no effect on the outcome of the AMTI advisory compensation proposal, the Cyclo share issuance proposal, or the AMTI or Cyclo adjournment proposals, respectively.

 

Please follow the voting instructions provided by your broker or nominee. Please note that you may not vote shares held in street name by returning a proxy card directly to AMTI or Cyclo, respectively, or by voting at your special meeting. Further, brokers who hold shares of AMTI or Cyclo common stock on behalf of their customers may not give a proxy to AMTI or Cyclo, respectively, to vote those shares without specific instructions from their customers.

 

Q:

What will happen if I return my proxy card without indicating how to vote?

 

A:

AMTI: If you are an AMTI stockholder of record and you sign and return your proxy card without indicating how to vote on any particular proposal, the shares of AMTI common stock represented by your proxy will be counted as present for purposes of determining the presence of a quorum for the AMTI special meeting and will be voted “FOR” that proposal.

 

Cyclo: If you are a Cyclo stockholder of record and you sign and return your proxy card without indicating how to vote on any particular proposal, the shares of Cyclo common stock represented by your proxy will be counted as present for purposes of determining the presence of a quorum for the Cyclo special meeting and will be voted “FOR” that proposal.

 

Q:

Can I change my vote after I have returned a proxy or voting instruction card?

 

A:

Yes. You can change your vote at any time before your proxy is voted at the respective special meeting. You can do this in the following ways:

 

 

you can send a signed notice of revocation;

 

 

you can grant a new, valid proxy bearing a later date;

 

 

you can vote again by telephone or the Internet at a later time; or

 

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if you are a holder of record, by voting at the applicable special meeting, which will automatically cancel any proxy previously given, or you may revoke your proxy by attending the applicable special meeting, but your attendance alone will not revoke any proxy that you have previously given.

 

If you choose either of the first two methods, you must provide your notice of revocation or your new proxy to the secretary of AMTI or Cyclo, respectively, prior to your shares being voted. If your shares are held in street name by your broker or nominee, you should contact them to change your vote.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

Please vote each proxy card and voting instruction card that you receive. You may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, stockholders who hold shares in more than one brokerage account will receive a separate voting instruction card for each brokerage account in which shares are held. If shares are held in more than one name, stockholders will receive more than one proxy or voting instruction card. Please vote each proxy and voting instruction card you receive.

 

Q:

Is there a list of stockholders entitled to vote at each special meeting?

 

A:

AMTI: The names of stockholders of record entitled to vote at the AMTI special meeting will be available at the AMTI special meeting and for 10 days prior to the AMTI special meeting for any purpose germane to the special meeting at www.virtualshareholdermeeting.com/AMTI2023SM.

 

Cyclo: The names of stockholders of record entitled to vote at the Cyclo special meeting will be available at Cyclo’s principal place of business, located at 6714 NW 16th Street, Suite B, Gainesville, FL 32653, at least 10 days prior to the date of the Cyclo special meeting and continuing through the date of the Cyclo Special Meeting between the hours of 9:00 a.m. and 5:00 p.m. (Eastern Time). 

 

Q:

What happens if I sell my shares of AMTI or Cyclo common stock before the AMTI or Cyclo special meeting, respectively?

 

A:

The AMTI and Cyclo record dates are earlier than the date of the respective special meetings. If you transfer your shares of AMTI or Cyclo common stock after the AMTI or Cyclo record date but before the AMTI or Cyclo special meeting, respectively, you will retain your right to vote at said special meeting. AMTI stockholders who make such a sale will have transferred the right to receive the Merger Consideration in the Merger. In order to receive the Merger Consideration, you must hold your shares of AMTI common stock through the Effective Time of the Merger.

 

Q:

What will happen to my AMTI stock options, restricted stock units and/or performance stock units at the time of the Merger?

 

A:

Treatment of Stock Options. Each option to purchase shares of AMTI common stock (each, an “AMTI Option”) that is outstanding immediately prior to the Effective Time and has an exercise price per share that is equal to or less than $0.40 will be automatically assumed and converted as of the Effective Time into an option to acquire, on the same terms and conditions as were applicable under such AMTI Option, except to the extent such terms or conditions are rendered inoperative by the transactions contemplated in the Merger Agreement, the number of shares of Cyclo common stock determined by multiplying the number of shares of AMTI common stock subject to such AMTI Option immediately prior to the Effective Time by the Exchange Ratio (rounded down to the nearest whole share), with an exercise price per share equal to the exercise price per share of such AMTI Option as of immediately prior to the Effective Time, divided by the Exchange Ratio (rounded up to the nearest whole cent). Each AMTI Option that is outstanding immediately prior to the Effective Time and has an exercise price per share that is greater than $0.40 will be automatically cancelled and extinguished for no consideration.

 

Treatment of Restricted Stock Unit Awards and Performance Stock Unit Awards. Each award of restricted stock units of AMTI (each, an “AMTI RSU Award”) and each award of performance stock units of AMTI (each, an “AMTI PSU Award”) will be fully settled prior to the Effective Time, including any payment or satisfaction of all tax liabilities associated with such settlement, by AMTI.

 

8

 

Q:

How will the rights of AMTI stockholders change after the Merger?

 

A:

AMTI stockholders will receive shares of Cyclo common stock in connection with the Merger and will no longer be stockholders of AMTI following the Merger. Their rights as holders of Cyclo common stock will be governed by the amended and restated certificate of incorporation of Cyclo and Cyclo’s bylaws. For additional information on stockholder rights, see the section entitled “Comparison of Rights of Holders of Cyclo Common Stock and AMTI Common Stock.”

 

The rights of Cyclo stockholders will remain the same as prior to the Merger.

 

Q:

What are the material U.S. federal income tax consequences of the Merger to U.S. holders of AMTI common stock?

 

A:

The consideration received by a U.S. Holder (as defined under the section entitled “Material U.S. Federal Income Tax Consequences”) pursuant to the Merger is intended to be treated as taxable stock consideration for AMTI common stock in a transaction to which Section 1001 of the Internal Revenue Code of 1986, as amended (the “Code”), applies. AMTI stockholders are urged to consult their tax advisors to understand fully the consequences to them of the transactions in their specific circumstances. For more information, see the section entitled “Material U.S. Federal Income Tax Consequences.”

 

Q:

Are there any risks that I should consider in deciding how to vote?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” of this joint proxy statement/prospectus.

 

Q:

What happens if the Merger is not completed?

 

A:

If the Merger is not completed for any reason, AMTI stockholders will not receive the Merger Consideration issuable under the Merger Agreement. Instead, Cyclo and AMTI will remain separate companies. In specified circumstances, either Cyclo or AMTI may be required to pay to the other party a termination fee, as described below under “The Merger AgreementTermination Fees.”

 

Q:

When do you expect the Merger to be completed?

 

A:

Cyclo and AMTI intend to complete the Merger as soon as reasonably practicable and currently anticipate the closing of the Merger to occur in the last quarter of 2023 (in the event AMTI stockholders adopt the Merger Agreement and Cyclo stockholders approve the share issuance), following the satisfaction of all the conditions to completion of the Merger. However, the Merger is subject to the satisfaction or waiver of certain conditions and it is possible that factors outside the control of Cyclo and AMTI could result in the Merger being completed at a later time or not at all. There can be no assurances as to when or if the Merger will close. See the section entitled “The Merger AgreementConditions to the Completion of the Merger” for more information.

 

Q:

What do I need to do now?

 

A:

You should carefully read and consider the information contained in and incorporated by reference into this joint proxy statement/prospectus, including its annexes. Even if you plan to attend the AMTI special meeting virtually or the Cyclo special meeting, in person, after carefully reading and considering the information contained in this joint proxy statement/prospectus, please vote promptly to ensure that your shares are represented at the applicable special meeting.

 

Q:

Do I need to do anything with my AMTI common stock held in book entry form now?

 

A:

No. As soon as reasonably practicable after the Merger is completed, the Surviving Corporation will instruct Cyclo’s exchange agent, VStock Transfer, LLC (the “exchange agent”) to provide an agent’s message in customary form to the record holder of AMTI common stock represented by book entry. Upon receipt of such “agent’s message,” the holder of such book entry shares shall be entitled to receive in exchange therefor the number of whole shares of Cyclo common stock, if any, pursuant to the Exchange Ratio. Until surrendered pursuant to the Merger Agreement, each AMTI book entry share shall be deemed after the Effective Time to represent only the right to receive upon such surrender the applicable Merger Consideration. The shares of Cyclo common stock you receive in the Merger will be issued in book-entry form.

 

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Q:

Are stockholders entitled to appraisal rights?

 

A:

Under Delaware law, AMTI stockholders are not entitled to appraisal rights in connection with the AMTI merger proposal.

 

Under Nevada law, Cyclo stockholders are not entitled to appraisal rights in connection with the issuance of shares of Cyclo common stock in the Merger pursuant to the terms of the Merger Agreement.

 

Q:

How can I contact Cyclos or AMTIs transfer agent?

 

A:

You may contact Cyclo’s transfer agent by writing to 18 Lafayette Place, Woodmere, NY 11598, or by telephoning (212) 828-8436. You may contact AMTI’s transfer agent by writing to 6201 15th Avenue, Brooklyn, New York 11219, or by telephoning (800) 937-5449.

 

Q:

Who should I contact if I have any questions about the proxy materials or about voting?

 

A:

If you have any questions about the proxy materials or if you need assistance submitting your proxy or voting your shares or need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should, if you are an AMTI stockholder, contact AMTI by telephone at (650) 392-0420 or by email at corporate.secretary@appliedmt.com.

 

If you have any questions about the proxy materials or if you need assistance submitting your proxy or voting your shares or need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should, if you are a Cyclo stockholder, contact Cyclo’s proxy solicitor at:

 

 

Okapi Partners LLC

1212 Avenue of the Americas, 17th Floor

New York, NY 10036

Banks and Brokerage Firms Please Call (212) 297-0720

Shareholders and All Others Call Toll-Free: (855) 305-0857                  

Email: info@okapipartners.com

 

Q:

Who is the exchange agent in the Merger?

 

A:

VStock Transfer, LLC will be the exchange agent for the Merger.

 

Q:

Where can I find more information about Cyclo and AMTI?

 

A:

You can find more information about Cyclo and AMTI from the various sources described under “Where You Can Find More Information.”

 

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PROSPECTUS SUMMARY

 

This summary highlights selected information described in more detail elsewhere in this joint proxy statement/prospectus and the documents incorporated herein by reference and may not contain all of the information that is important to you. To more fully understand the Merger and the other matters to be voted on by AMTI stockholders and Cyclo stockholders at the AMTI special meeting and Cyclo special meeting, respectively, and to obtain a more complete description of the terms of the Merger Agreement, you should carefully read this entire joint proxy statement/prospectus, including the annexes hereto, and the documents to which AMTI and Cyclo refer you. You should also read and consider the important business and financial information about AMTI and Cyclo in the documents incorporated by reference into this joint proxy statement/prospectus described under Incorporation of Certain Information by Reference, as well as the additional information described under Where You Can Find More Information. AMTI and Cyclo have included page references parenthetically to direct you to a more complete description of the topics presented in this summary.

 

Defined terms used in this summary but not previously defined in this joint proxy statement/prospectus shall have the meanings set forth in The Merger and The Merger Agreement sections of this joint proxy statement/prospectus.

 

The Companies (see page 83)

 

Applied Molecular Transport Inc.

 

AMTI is a clinical-stage biopharmaceutical company that has a proprietary technology platform that enables the design of novel biologic product candidates in patient-friendly oral dosage forms. AMTI has decided to discontinue research activities.

 

In March 2023, AMTI announced that it had commenced a process to explore strategic alternatives that resulted in AMTI entering into the Merger Agreement with Cyclo on September 21, 2023. In addition, AMTI is actively seeking to sell, assign, license, or otherwise dispose of, in one or more transactions, some or all of the assets that relate to AMTI’s platform technology at any time prior to, or concurrently with, the closing of the Merger.

 

AMTI was incorporated in the State of Delaware in November 2016. AMTI operates under a fully-remote model and does not have a principal executive office.

 

Cyclo Therapeutics, Inc.

 

Cyclo is a clinical stage biotechnology company that develops cyclodextrin-based products for the treatment of neurodegenerative diseases. Cyclo filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) in 2014 for its lead drug candidate, Trappsol® Cyclo™ (hydroxypropyl beta cyclodextrin) as a treatment for Niemann-Pick Type C disease (“NPC”). NPC is a rare and fatal autosomal recessive genetic disease resulting in disrupted cholesterol metabolism that impacts the brain, lungs, liver, spleen, and other organs. In 2015, Cyclo launched an International Clinical Program for Trappsol® Cyclo™ as a treatment for NPC. In 2016, Cyclo filed an Investigational New Drug application (“IND”) with the FDA, which described its Phase I clinical plans for a randomized, double blind, parallel group study at a single clinical site in the U.S. The Phase I study evaluated the safety and pharmacokinetics of Trappsol® Cyclo™ along with markers of cholesterol metabolism and markers of NPC during a 12-week treatment period of intravenous administration of Trappsol® Cyclo™ every two weeks to participants 18 years of age and older. The IND was approved by the FDA in September 2016, and in January 2017 the FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in September 2017, and in May 2020 Cyclo announced Top Line data showing a favorable safety and tolerability profile for Trappsol® Cyclo™ in this study.

 

Cyclo has also completed a Phase I/II clinical study approved by European regulatory bodies with clinical trial centers in the United Kingdom (“UK”), Sweden, and in Israel. The Phase I/II study evaluated the safety, tolerability, and efficacy of Trappsol® Cyclo™ through a range of clinical outcomes, including neurologic, respiratory, and measurements of cholesterol metabolism and markers of NPC. Consistent with the 12-week phase 1 study (single US site), the European/Israel study administered Trappsol® Cyclo™ intravenously to NPC patients every two weeks in a double-blind, randomized trial, but differs in that the study period was for 48 weeks (24 doses). In March of 2021, Cyclo announced that 100% of patients who completed the trial (9 out of 12) improved or remained stable, and 89% met the efficacy outcome measure of improvement in at least two domains of the 17-domain NPC severity scale.

 

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Additionally, in February 2020, Cyclo had a face-to-face “Type C” meeting with the FDA with respect to the initiation of its pivotal Phase III clinical trial of Trappsol® Cyclo™ based on the clinical data obtained to date. At that meeting, Cyclo also discussed with the FDA submitting a New Drug Application (“NDA”) under Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act for the treatment of NPC in pediatric and adult patients with Trappsol® Cyclo™. A similar request was submitted to the European Medicines Agency (“EMA”) in February 2020, seeking scientific advice and protocol assistance from the EMA for proceeding with a Phase III clinical trial in Europe. In October 2020, Cyclo received a “Study May Proceed” notification from the FDA with respect to the proposed Phase III clinical trial, and in June of 2021, Cyclo commenced enrollment in TransportNPC, a pivotal Phase III study of Trappsol® Cyclo™ for the treatment of NPC.

 

Preliminary data from Cyclo’s completed clinical studies suggest that Trappsol® Cyclo™ clears toxic deposits of cholesterol and other lipids from cells, has a consistent pharmacokinetic profile peripherally, and crosses the blood-brain-barrier in individuals suffering from NPC, and results in neurological and neurocognitive benefits and other clinical improvements in NPC patients. The full significance of these findings will be determined as part of the final analysis of data derived from Cyclo’s clinical trials (both completed and ongoing).

 

On May 17, 2010, the FDA designated Trappsol® Cyclo™ as an orphan drug for the treatment of NPC, which would provide Cyclo with the exclusive right to sell Trappsol® Cyclo™ for the treatment of NPC for seven years following FDA drug approval. In April 2015, Cyclo also obtained Orphan Drug Designation for Trappsol® Cyclo™ in Europe, which will provide Cyclo with 10 years of market exclusivity following regulatory approval, which period will be extended to 12 years upon acceptance by the EMA’s Pediatric Committee of Cyclo’s pediatric investigation plan (“PIP”) demonstrating that Trappsol® Cyclo™ addresses the pediatric population. On January 12, 2017, Cyclo received Fast Track Designation from the FDA, and on December 1, 2017, the FDA designated NPC a Rare Pediatric Disease.

 

Cyclo is also exploring the use of cyclodextrins in the treatment of Alzheimer’s disease. In January 2018, the FDA authorized a single patient IND expanded access program using Trappsol® Cyclo™ for the treatment of Alzheimer’s disease. After 18 months of treatment in this geriatric patient with late-onset disease, the disease was stabilized and the drug was well tolerated. The patient also exhibited signs of improvement with less volatility and shorter latency in word-finding. Cyclo prepared a synopsis for an early stage protocol using Trappsol® Cyclo™ intravenously to treat Alzheimer’s disease that was presented to the FDA in January of 2021. Cyclo received feedback from the FDA on this synopsis in April 2021 and incorporated the feedback into an IND for a Phase II study for the treatment of Alzheimer’s disease with of Trappsol® Cyclo™ that Cyclo submitted to the FDA in November 2021. In December of 2021, Cyclo received IND clearance from the FDA, allowing it to proceed with its Phase II study of Trappsol® Cyclo™ for the treatment of Alzheimer’s disease. U.S. sites for the study were activated during the second half of 2022, with patient dosing beginning in the first quarter of 2023.

 

Cyclo filed an international patent application in October 2019 under the Patent Cooperation Treaty directed to the treatment of Alzheimer’s disease with cyclodextrins and is pursuing national and regional stage applications based on this international application. The terms of any patents resulting from these national or regional stage applications would be expected to expire in 2039 if all the requisite maintenance fees are paid.

 

Cyclo also continues to operate its legacy fine chemical business, consisting of the sale of cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs. However, Cyclo’s core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin- based biopharmaceuticals for the treatment of disease from a business that had been primarily reselling basic cyclodextrin products.

 

The principal executive offices of Cyclo are located at 6714 NW 16th Street, Suite B, Gainesville, Florida 32653. Its telephone number is (386) 418-8060, and its website is www.cyclotherapeutics.com. Information on this Internet web site is not incorporated by reference into or otherwise part of this joint proxy statement/prospectus.

 

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Cameo Merger Sub, Inc.

 

Merger Sub is a direct, wholly owned subsidiary of Cyclo and was formed solely for the purpose of carrying out the Merger. Merger Sub has not conducted any business operations other than in connection with the transactions contemplated by the Merger Agreement. Upon consummation of the Merger, Merger Sub will cease to exist, with AMTI surviving the Merger as a direct wholly owned subsidiary of Cyclo.

 

The principal executive offices of Merger Sub are located at 6714 NW 16th Street, Suite B, Gainesville, Florida 32653. Its telephone number is (386) 418-8060.

 

The Merger and Voting Agreements (See Pages 104, 156)

 

The AMTI Board and the Cyclo Board have each approved the Merger Agreement, pursuant to which Merger Sub, a direct wholly owned subsidiary of Cyclo, will merge with and into AMTI, with AMTI surviving the Merger. As a result of the Merger, AMTI will become a direct wholly owned subsidiary of Cyclo. Upon completion of the Merger and based on 22,768,341 shares of Cyclo common stock and 41,848,990 shares of AMTI common stock outstanding as of November 17, 2023 and the expected AMTI net cash at closing of approximately $12.4 million, it is expected that Cyclo stockholders will own approximately 75% of the outstanding common stock of the combined company and AMTI stockholders will own approximately 25% of the outstanding common stock of the combined company.

 

At the AMTI special meeting to be held at 10:00 a.m. (Pacific Time), on December 26, 2023, via the Internet at www.virtualshareholdermeeting.com/AMTI2023SM, AMTI stockholders will be asked to consider and vote upon the AMTI merger proposal, the AMTI advisory compensation proposal, and the AMTI adjournment proposal. In connection with the execution of the Merger Agreement, Cyclo entered into Voting Agreements with each of AMTI’s directors and officers (in each case, solely in their respective capacities as AMTI stockholders, the “AMTI Supporting Holders”), collectively owning approximately 11.3% of the outstanding shares of AMTI common stock as of November 17, 2023, pursuant to which AMTI’s directors and officers have agreed, among other things, to vote all of the shares of AMTI common stock beneficially owned by them in favor of the AMTI merger proposal and the AMTI adjournment proposal.

 

At the Cyclo special meeting to be held at 10:00 a.m. (Eastern Time), on December 26, 2023, at the offices of Fox Rothschild, LLP, 101 Park Avenue, New York, New York 10178, Cyclo stockholders will be asked to consider and vote upon the Cyclo charter amendment proposal, the Cyclo share issuance proposal and the Cyclo adjournment proposal.

 

AMTI and Cyclo stockholders are receiving this joint proxy statement/prospectus in connection with AMTI’s and Cyclo’s solicitation of proxies for the AMTI special meeting and the Cyclo special meeting, respectively.

 

The Merger Agreement (See Page 140)

 

A copy of the Merger Agreement is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference herein in its entirety. Cyclo and AMTI encourage you to read the entire Merger Agreement carefully because it is the principal document governing the Merger.

 

Merger Consideration (See Page 141)

 

At the Effective Time, each share of AMTI common stock that is issued and outstanding immediately prior to the Effective Time (other than: (i) treasury shares, and (ii) any shares of AMTI common stock held directly by Cyclo or Merger Sub) will automatically be converted into the right to receive a number of shares of Cyclo’s common stock, equal to the Exchange Ratio. No fractional shares of Cyclo common stock will be issued in connection with the Merger and the number of shares of Cyclo common stock to be issued to AMTI stockholders will be rounded up to the nearest whole share. The Exchange Ratio and shares of Cyclo common stock to be issued to AMTI stockholders in connection with the Merger will be subject to adjustment for stock splits and similar events as provided in the Merger Agreement.

 

13

 

The Exchange Ratio was initially estimated to be 0.174 shares of Cyclo common stock for each share of AMTI common stock, but the actual Exchange Ratio will depend upon AMTI’s net cash and the number of shares of AMTI common stock outstanding at the closing of the Merger. Upon completion of the Merger and based on 22,768,341 shares of Cyclo common stock and 41,848,990 shares of AMTI common stock outstanding as of November 17, 2023 and the anticipated AMTI net cash at closing of approximately $12.4 million, it is expected that Cyclo stockholders will own approximately 75% of the outstanding common stock of the combined company and AMTI stockholders will own approximately 25% of the outstanding common stock of the combined company.

 

Risk Factors (See Page 25)

 

In evaluating the Merger and the proposals to be considered and voted on at the AMTI special meeting and the Cyclo special meeting, you should carefully review and consider the risk factors summarized below and set forth in the section entitled “Risk Factors.” The occurrence of one or more of the events or circumstances summarized below or in the section entitled “Risk Factors,” alone or in combination with other events or circumstances, may have a material adverse effect on (i) the ability of Cyclo and AMTI to complete the Merger and (ii) the business, cash flows, financial condition and results of operations of Cyclo following consummation of the Merger. You should also consider the risks associated with the businesses of Cyclo and AMTI summarized below and in the documents incorporated by reference into this joint proxy statement/prospectus because these risks will also affect the combined company. The risks associated with the business of Cyclo can be found in Cyclo’s Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, as updated from time to time by Cyclo’s subsequent filings with the SEC. The risks associated with the business of AMTI can be found in the section entitled “Risk FactorsRisk Factors Related to AMTI” and in AMTI’s Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, as updated from time to time by AMTI’s subsequent filings with the SEC.

 

The following is only a summary of principal risks that are related to the Merger, the businesses of Cyclo and AMTI and the business of Cyclo following the Merger. Such risks are discussed in more detail in the section entitled “Risk Factors” and you should read the section entitled “Risk Factors” carefully and in its entirety. Some of these risks include, but are not limited to, the following:

 

Risk Factors Related to the Merger

 

 

The failure to complete the Merger in a timely manner, or at all, may adversely affect the business and financial results of Cyclo and AMTI and their respective stock prices.

 

The tax treatment of the Merger is complex.

 

The Exchange Ratio will be determined in accordance with a formula and is not yet knowable. The actual Exchange Ratio could be materially different than currently anticipated.

 

Failure to complete the Merger may result in Cyclo or AMTI paying reimbursement of expenses to the other party or in the case of AMTI a termination fee to Cyclo, which could harm the common stock price and the future business and operations of each company.

 

Uncertainty about the Merger may adversely affect the respective business and stock price of Cyclo and AMTI, whether or not the Merger is completed.

 

While the Merger is pending, AMTI and Cyclo are each subject to contractual restrictions that could harm their respective business, operating results and stock prices.

 

The Merger Agreement limits AMTI’s ability to pursue alternative transactions which could deter a third party from proposing an alternative transaction.

 

The Merger will involve substantial costs incurred by each of AMTI and Cyclo.

 

The fairness opinion obtained by the AMTI Board from its financial advisor will not be updated to reflect changes in circumstances between signing the Merger Agreement and the completion of the Merger.

 

Certain directors and executive officers of AMTI may have interests in the Merger that are or were different from, or in conflict with or in addition to, those of AMTI’s stockholders generally.

 

Holders of AMTI common stock will not be entitled to appraisal rights in the Merger.

 

Cyclo or AMTI may waive one or more of the closing conditions to the Merger without re-soliciting their respective stockholders.

 

After the Merger, AMTI stockholders will have a significantly lower ownership and voting interest in Cyclo than they currently have in AMTI and will exercise less influence over management and policies of the combined company.

 

AMTI and Cyclo may be targets of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Merger from being completed.

 

14

 

Risk Factors Related to Cyclo Following the Merger

 

 

AMTI’s net cash available at closing may be substantially less than anticipated, and Cyclo may fail to realize the benefits expected from the Merger, which could adversely affect its stock price.

 

The acquisition of AMTI may result in significant charges or other liabilities that could adversely affect the financial results of the combined company.

 

The unaudited pro forma combined condensed financial statements for Cyclo included in this joint proxy statement/prospectus is preliminary, and the actual financial position and operations of Cyclo after the Merger may differ materially from the unaudited pro forma condensed combined financial statements included in this joint proxy statement/prospectus.

 

Cyclo’s future results will suffer if it does not effectively manage its cash expenditures following the Merger.

 

The market price of Cyclo common stock after completion of the Merger will continue to fluctuate, and may be affected by factors different from those affecting shares of AMTI common stock currently.

 

Risk Factors Related to AMTI

 

On March 27, 2023, AMTI announced the commencement of a process to explore strategic alternatives and engaged MTS as AMTI’s strategic financial advisor. AMTI also decided to discontinue research activities and focus on completing and closing out clinical trials. Then, on September 21, 2023, AMTI entered into the Merger Agreement with Cyclo. AMTI’s current operations include ongoing business development activities. As such, certain of the risks listed below may not currently apply to AMTI while its operations are focused on exploring strategic alternatives, maintaining and prosecuting its extensive intellectual property portfolio, and continuing business development activities. However, if AMTI advances development of its programs or assumes responsibility for a third party’s preclinical or clinical programs, research and development activities, manufacturing and other operations following a strategic transaction or otherwise, or if AMTI pursues some combination of the foregoing activities, many, if not all, of these risk factors will apply to it.

 

 

AMTI’s decision to discontinue its research and development efforts may not result in the anticipated savings and could disrupt its business.

 

AMTI’s ability to consummate a strategic transaction of any kind depends on AMTI’s ability to retain its employees required to consummate a strategic transaction as previously announced.

 

If AMTI is unable to successfully complete a strategic transaction, AMTI may be forced to curtail or cease operations altogether.

 

AMTI’s preclinical studies and clinical trials have failed to demonstrate evidence of the safety and efficacy of AMTI’s product candidates, which could prevent, delay, or limit the scope of regulatory approval and commercialization.

 

There has been substantial doubt as to AMTI’s ability to continue as a going concern. If AMTI does not maintain sufficient funding, AMTI may have to curtail or cease operations.

 

AMTI will need to obtain substantial additional capital to finance AMTI’s operations.

 

AMTI could be delisted from Nasdaq.

 

AMTI was early in its development efforts, has a limited operating history, and no products approved for commercial sale.

 

AMTI has incurred significant net losses in each period since inception, and AMTI expects to continue to incur net losses for the foreseeable future.

 

Raising additional capital may cause dilution to AMTI’s existing stockholders, restrict AMTI’s operations or require AMTI to relinquish rights to its technologies or product candidates.

 

AMTI may not be successful in its efforts to use and expand its technology platform to build a pipeline of oral biologic product candidates.

 

COVID-19 or other future public health crises could adversely impact AMTI’s business, including any future clinical trials and preclinical studies.

 

Research and development related to novel biological therapeutics is inherently risky and AMTI’s business is heavily dependent on the successful development of its product candidates.

 

15

 

 

AMTI may encounter delays in its preclinical studies or clinical trials, or may not be able to conduct or complete its preclinical studies or clinical trials on the timelines it expects.

 

AMTI has conducted clinical trials for AMT-101 and AMT-126 outside of the United States, and geopolitical events such as the conflict between Russia and Ukraine has delayed the completion of certain of AMTI’s clinical trials and increased costs associated with such clinical trials.

 

AMTI may be unable to obtain U.S. or foreign regulatory approval for AMTI’s product candidates and, as a result, may be unable to commercialize its product candidates.

 

Preliminary data from AMTI’s clinical trials that AMTI announces or publishes from time to time may change as additional patient data becomes available and is subject to verification procedures that could result in material changes in the final data or clinical conclusions.

 

AMTI’s success depends on AMTI’s ability to protect its intellectual property as well as operate without infringing on the rights of third parties.

 

AMTI is highly dependent on its key personnel and if AMTI is not successful in attracting, motivating, and retaining highly qualified personnel, AMTI may not be able to successfully implement its business strategy or execute a strategic transaction.

 

AMTI may in the future engage in strategic transactions, acquisitions, collaborations, or partnerships, which may increase AMTI’s capital requirements, dilute AMTI’s stockholders, cause AMTI to incur debt or assume contingent liabilities, require AMTI to relinquish rights to certain of its technologies or products that AMTI would otherwise seek to develop or commercialize itself, and subject AMTI to other risks.

 

The manufacturing of AMTI’s product candidates is complex. AMTI and AMTI’s third-party manufacturers may encounter difficulties in production. If AMTI encounters any such difficulties, AMTI’s ability to supply AMTI’s product candidates for clinical trials or, if approved, for commercial sale, could be delayed or halted entirely.

 

Information About the AMTI Special Meeting (See Page 86)

 

The AMTI special meeting will be held via live webcast on December 26, 2023, starting at 10:00 a.m. (Pacific Time). There will be no physical meeting location. In order to attend the AMTI special meeting, as well as vote and submit your questions during the live webcast of the meeting, you will need to visit www.virtualshareholdermeeting.com/AMTI2023SM. Please be sure to follow the instructions found on your proxy card and/or voting authorization form. At the AMTI special meeting, AMTI stockholders will be asked to consider and vote upon the following proposals:

 

 

the AMTI merger proposal;

 

 

the AMTI advisory compensation proposal; and

 

 

the AMTI adjournment proposal.

 

Only holders of record of shares of AMTI common stock at the close of business on the AMTI record date will be entitled to notice of, and to vote at, the AMTI special meeting and any postponements or adjournments thereof. Holders of AMTI common stock at the close of business on the AMTI record date may cast one vote for each share of AMTI common stock that the holder owned as of the AMTI record date, including (i) shares held directly in the name of the holder of record and (ii) shares held on behalf of the holder as the beneficial owner in street name through a bank, broker, or other nominee. On the AMTI record date, there were outstanding a total of 41,848,990 shares of AMTI common stock entitled to vote at the AMTI special meeting. Holders of AMTI common stock at the close of business on the AMTI record date may cast one vote for each share of AMTI common stock that the holder owned as of the AMTI record date, including (i) shares held directly in the name of the holder of record and (ii) shares held on behalf of the holder as the beneficial owner in street name through a bank, broker, or other nominee.

 

Completion of the Merger is conditioned on the approval of the AMTI merger proposal. Approval of the AMTI merger proposal requires the affirmative vote of AMTI stockholders representing a majority of the outstanding shares of AMTI common stock entitled to vote thereon. The holders of a majority of the AMTI common stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum. Shares of AMTI common stock represented at the AMTI special meeting by attendance via the virtual special meeting website or by proxy and entitled to vote, but not voted, including shares for which a stockholder directs an abstention from voting, will be counted for the purposes of determining a quorum. However, because all of the proposals for consideration at the AMTI special meeting are considered non-routine matters, shares held in street name will not be counted as present for the purpose of determining the existence of a quorum unless the stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals before the AMTI special meeting.

 

16

 

Recommendation of AMTI Board and AMTIs Reasons for the Merger (See Page 117)

 

At a meeting of the AMTI Board held on September 20, 2023, the AMTI Board (i) determined that the Merger Agreement and all related transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of AMTI and its stockholders; (ii) approved the execution, delivery and performance of the Merger Agreement by AMTI, the performance by AMTI of its covenants and other obligations thereunder, and the consummation of the Merger upon the terms and subject to the conditions set forth therein; (iii) recommended that the stockholders of AMTI adopt the Merger Agreement and approve the transactions contemplated thereby; and (iv) directed that the adoption of the Merger Agreement be submitted for consideration by the stockholders of AMTI at a meeting thereof.

 

Opinion of Financial Advisor to AMTI (See Page 124)

 

AMTI retained MTS as its financial advisor in connection with the Merger. MTS Securities, LLC, a wholly owned subsidiary of MTS (“MTS Securities”) rendered its written opinion to the AMTI Board on September 20, 2023 that, based upon the factors discussed in the written opinion, as of the date of the written opinion, the Exchange Ratio was fair, from a financial point of view, to the holders of AMTI common stock (other than the excluded shares). The full text of MTS Securities’ written opinion, dated September 20, 2023, is attached as Annex C to this joint proxy statement/prospectus and is incorporated by reference in this joint proxy statement/prospectus in its entirety. The description of MTS Securities’ opinion set forth below is qualified in its entirety by reference to the full text of MTS Securities’ opinion. MTS Securities opinion was directed to the AMTI Board, in its capacity as such, and addressed only the fairness from a financial point of view of the Exchange Ratio pursuant to the Merger Agreement to the holders of shares of AMTI common stock as of the date of such opinion. It does not address any other aspects or implications of the Merger or in any manner address the prices at which the Cyclo common stock would trade following consummation of the Merger or at any time, and was not intended to and did not express any opinion or recommendation as to how the stockholders of AMTI should vote at the stockholders meetings to be held in connection with the Merger.

 

For additional details about the opinion that the AMTI Board received from MTS Securities, see Annex C and the section entitled “The MergerOpinion of Financial Advisor to AMTI.”

 

Information About the Cyclo Special Meeting (See Page 94)

 

The Cyclo special meeting will be held at 10:00 a.m. (Eastern Time), on December 26, 2023 at the offices of Fox Rothschild, LLP, 101 Park Avenue, New York, New York 10178. At the Cyclo special meeting, Cyclo stockholders will be asked to consider and vote upon the following proposals:

 

 

the Cyclo charter amendment proposal;

 

 

the Cyclo share issuance proposal; and

 

 

the Cyclo adjournment proposal.

 

Only holders of record of shares of Cyclo common stock at the close of business on the Cyclo record date will be entitled to notice of, and to vote at, the Cyclo special meeting and any postponements or adjournments thereof. Holders of Cyclo common stock at the close of business on the Cyclo record date may cast one vote for each share of Cyclo common stock so held, including (i) shares held directly in the name of the holder of record and (ii) shares held on behalf of the holder as the beneficial owner in street name through a bank, broker, or other nominee. On the Cyclo record date, there were a total of shares of Cyclo common stock outstanding and entitled to vote at the Cyclo special meeting. As of the Cyclo record date, there were 22,768,341 outstanding shares of Cyclo common stock and Cyclo’s directors, executive officers, and their respective affiliates, as a group, beneficially held and were entitled to vote 15,788,294 shares of Cyclo common stock, representing 61.26% of the voting power of the outstanding shares of Cyclo common stock.

 

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Completion of the Merger is conditioned on the approval of the Cyclo share issuance proposal. Approval of the Cyclo charter amendment proposal requires the affirmative vote of Cyclo stockholders representing a majority of the voting power of the shares of Cyclo common stock outstanding. Approval of the Cyclo share issuance proposal requires the affirmative vote of Cyclo stockholders representing a majority of the voting power of the shares of Cyclo common stock present in person or represented by proxy at the Cyclo special meeting and entitled to vote thereon. Approval of the Cyclo adjournment proposal requires the affirmative vote of Cyclo stockholders representing a majority of the voting power of the shares of Cyclo common stock present in person or represented by proxy at the Cyclo special meeting and entitled to vote thereon. The holders of one-third of the voting power of Cyclo, present in person or represented by proxy, shall constitute a quorum. Shares of Cyclo common stock represented at the Cyclo special meeting in person or by proxy and entitled to vote, but not voted, including shares for which a stockholder directs an abstention from voting, will be counted for the purposes of determining a quorum. However, because all of the proposals for consideration at the Cyclo special meeting are considered non-routine matters, shares held in street name will not be counted as present for the purpose of determining the existence of a quorum unless the stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals before the Cyclo special meeting.

 

Recommendation of Cyclo Board and Cyclos Reasons for the Merger (See Page 120)

 

At meetings of the Cyclo Board held on September 19, 2023 and November 1, 2023, the Cyclo Board (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger and the share issuance proposal contemplated thereby, are advisable, fair to and in the best interests of Cyclo and its stockholders; (2) approved the execution and delivery of the Merger Agreement by Cyclo, the performance by Cyclo of its covenants and other obligations thereunder, and the consummation of the Merger upon the terms and subject to the conditions set forth therein; and (3) directed that the share issuance be submitted for consideration by the stockholders of Cyclo at a meeting thereof. At a meeting of the Cyclo Board held on November 1, 2023, the Cyclo Board determined that the charter amendment proposal is advisable, fair to and in the best interests of Cyclo and its stockholders and recommended that the charter amendment be submitted for consideration by the stockholders of Cyclo at meeting thereof.

 

In evaluating the Merger Agreement and the Merger, the Cyclo Board held numerous meetings and consulted with management and financial, accounting and legal advisors and considered a number of positive factors in favor of and potentially against the Merger. For the factors considered by the Cyclo Board in reaching its decision, see the section entitled “The MergerRecommendation of the Cyclo Board and Cyclos Reasons for the Merger.”

 

The Cyclo Board recommends that Cyclo stockholders vote FOR the Cyclo charter amendment proposal, FOR the Cyclo share issuance proposal and FOR the Cyclo adjournment proposal.

 

Treatment of AMTI Equity Awards (See Page 142)

 

Treatment of Stock Options. Each AMTI Option that is outstanding immediately prior to the Effective Time and has an exercise price per share that is equal to or less than $0.40 will be automatically assumed and converted as of the Effective Time into an option to acquire, on the same terms and conditions as were applicable under such AMTI Option, except to the extent such terms or conditions are rendered inoperative by the transactions contemplated by the Merger Agreement, the number of shares of Cyclo common stock determined by multiplying the number of shares of AMTI common stock subject to such AMTI Option immediately prior to the Effective Time by the Exchange Ratio (rounded down to the nearest whole share), with an exercise price per share equal to the exercise price per share of such AMTI Option as of immediately prior to the Effective Time, divided by the Exchange Ratio (rounded up to the nearest whole cent). Each AMTI Option that is outstanding immediately prior to the Effective Time and has an exercise price per share that is greater than $0.40 will be automatically cancelled and extinguished for no consideration.

 

         Treatment of Restricted Stock Unit Awards and Performance Stock Unit Awards. Each AMTI RSU Award and AMTI PSU Award will be fully settled prior to the Effective Time, including any payment or satisfaction of all tax liabilities associated with such settlement, by AMTI.

 

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Interests of AMTIs Directors and Executive Officers in the Merger (See Page 135)

 

Certain AMTI Board members and executive officers may be deemed to have interests in the Merger that are in addition to, or different from, the interests of other AMTI stockholders generally. These potential interests include:

 

 

in connection with the closing of the Merger, Cyclo has agreed to expand the Cyclo Board from nine to ten directors and to appoint Shawn Cross to the Cyclo Board;

 

 

continued indemnification in favor of the current and former directors and officers of AMTI, as well as certain obligations related to maintenance of directors’ and officers’ liability insurance;

 

 

in connection with the Merger, each AMTI Option, AMTI RSU and AMTI PSU will receive the treatment described in the section entitled “The Merger AgreementTreatment of AMTI Equity Awards” of this joint proxy statement/prospectus;

 

 

each outstanding award of AMTI RSUs will fully vest on the earlier of (i) December 1, 2023 and (ii) the date that a registration statement on Form S-4 related to the Merger is deemed effective by the SEC, subject to the applicable grantee’s continued service through such date;

 

 

each outstanding award of AMTI PSUs will fully vest on the date that a registration statement on Form S-4 related to the Merger is deemed effective by the SEC, subject to the applicable grantee’s continued service through such date;

 

 

Shawn Cross and Brandon Hants will be eligible to receive severance benefits and accelerated vesting of equity awards in accordance with the Senior Executive Change in Control and Severance Policy (the “AMTI Executive Severance Policy”) if there is a CIC Qualified Termination (as defined below) under the AMTI Executive Severance Policy;

 

 

certain additional AMTI employees will be eligible to receive severance benefits and accelerated vesting of equity awards in connection with the Merger;

 

 

Brandon Hants has been granted 50,000 AMTI Options, effective as of the day that is one business day prior to, and contingent upon, the closing of the Merger; and

 

 

at the closing of the Merger, the unvested options held by AMTI’s non-employee directors will accelerate vesting, subject to the applicable non-employee director’s continued service as a non-employee director through such date.

 

For additional details about these interests, see the section entitled “The MergerInterests of AMTIs Directors and Executive Officers in the Merger.”

 

Interests of Cyclos Directors and Executive Officers in the Merger (See Page 138)

 

Certain Cyclo Board members and executive officers may be deemed to have interests in the Merger that are in addition to, or different from, the interests of other Cyclo stockholders generally. The Cyclo Board was aware of these interests and considered them, among other matters, in approving the Merger and the Merger Agreement and in making the recommendation that Cyclo stockholders approve the share issuance in connection with the Merger. These potential interests include:

 

 

Cyclo’s directors are expected to continue to serve on the board of directors of the combined company after the Effective Time of the Merger and will continue to be eligible to be compensated pursuant to the Cyclo non-employee director compensation policy.

 

 

Cyclo’s executive officers are expected to continue to serve in their respective positions as executive officers of the combined companies.

 

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For additional details about these interests, see the section entitled “The MergerInterests of Cyclos Directors and Executive Officers in the Merger.”

 

Principal Stockholders of AMTI (See Page 172)

 

The following table sets forth certain information with respect to the beneficial ownership of AMTI common stock as of November 17, 2023, based on 41,848,990 shares of AMTI common stock outstanding as of such date.

 

5% Holders

Number of Shares Beneficially

Owned

Beneficial Ownership (%)

Entities affiliated with EPIQ Capital Group, LLC

One Lombard Street, Suite 200

San Francisco, CA 94111

8,264,240

19.7%

Entities affiliated with Founders Fund

One Letterman Drive

Building D, Suite 500

San Francisco, CA 94129

4,438,222

10.6%

Tahir Mahmood, Ph.D.

c/o The Corporation Trust Company

Corporation Trust Center

1209 Orange Street

Wilmington, DE 19801

4,211,877(1)

10.0%

Randall Mrsny, Ph.D.

c/o University of Bath

Department of Life Sciences

Centre for Therapeutic Innovation

Claverton Down, Bath, BA2 7AY, U.K.

3,607,839

8.6%

 

(1)

Excludes 443,055 AMTI PSUs that vest upon the effectiveness of the registration statement on Form S-4.

 

Principal Stockholders of Cyclo (See Page 170)

 

The following table sets forth certain information with respect to the beneficial ownership of Cyclo common stock as of November 17, 2023, based on 22,768,341 shares of Cyclo common stock outstanding as of such date.

 

5% Holders

Number of Shares Beneficially

Owned

Beneficial Ownership (%)

Rafael Holdings, Inc.

520 Broad Street

Newark N.J. 07102

12,780,543

48.19%

Armistice Capital Master Fund Ltd.

c/o Armistice Capital, LLC

510 Madison Avenue, 7th Floor

New York, NY 10022

2,144,805

8.61%

N. Scott Fine

6714 NW 16th Street, Suite B

Gainesville, Florida 32653

1,183,844

5.10%

 

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Ownership of the Combined Company (See Page 138)

 

The following table sets forth certain information with respect to the beneficial ownership of the combined company as of November 17, 2023, based on 30,768,341 shares of Cyclo common stock outstanding following the Merger.

 

5% Holders

Number of Shares Beneficially

Owned

Beneficial Ownership (%)

Rafael Holdings, Inc.

520 Broad Street

Newark N.J. 07102

12,780,543

37.02%

Armistice Capital Master Fund Ltd.

c/o Armistice Capital, LLC

510 Madison Avenue, 7th Floor

New York, NY 10022

2,144,805

6.52%

Entities affiliated with EPIQ Capital Group, LLC

One Lombard Street, Suite 200

San Francisco, CA 94111

1,437,978

4.67%

 

Reasonable Best Efforts; Regulatory Approvals (See Pages 150 and 138)

 

Each of Cyclo, Merger Sub and AMTI has agreed to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things reasonably necessary, proper, or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and the transactions related thereto.

 

Neither Cyclo nor AMTI is aware of any material regulatory approvals or actions that are required for completion of the Merger. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained. For more information, see the section entitled “The Merger AgreementRegulatory Approvals.”

 

Accounting Treatment of the Merger (See Page 139)

 

The Merger is being accounted for as an in-substance recapitalization of Cyclo, as the assets and liabilities being acquired consist almost entirely of cash and cash equivalents and nominal assets. For more information on the accounting treatment see the section entitled “The MergerAccounting Treatment.”

 

Material U.S. Federal Income Tax Consequences of the Merger (See Page 174)

 

The consideration received by a U.S. Holder (as defined under the section entitled “Material U.S. Federal Income Tax Consequences”) pursuant to the Merger is intended to be treated as taxable stock consideration for AMTI common stock in a transaction to which Section 1001 of the Code applies.

 

The U.S. Holder generally will recognize a gain or loss equal to the difference, if any, between (i) the fair market value of the shares of Cyclo common stock received in the Merger and (ii) such U.S. Holder’s adjusted tax basis in its shares of AMTI common stock exchanged pursuant to the Merger. Such gain or loss will be long-term capital gain or loss if the U.S. Holder’s holding period in such shares exceeds one year at the time of the Merger.

 

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Please carefully review the information under the section entitled “Material U.S. Federal Income Tax Consequences” below for a more detailed summary of the U.S. federal income tax consequences of the Merger. The tax consequences of the transactions to each AMTI stockholder may depend on such holder’s particular facts and circumstances. AMTI stockholders are urged to consult their tax advisors to understand fully the consequences to them of the transactions in their specific circumstances.

 

Comparison of the Rights of Holders of Cyclo Common Stock and AMTI Common Stock (See Page 164)

 

Upon completion of the Merger, AMTI stockholders will become stockholders of Cyclo and their rights will be governed by Nevada law and the governing corporate documents of Cyclo. AMTI stockholders will have, in some respects, different rights once they become Cyclo stockholders due to differences between Delaware and Nevada law and between the governing corporate documents of each of the entities. These differences are described in detail in “Comparison of Rights of Holders of Cyclo Common Stock and AMTI Common Stock.”

 

Listing of Cyclo Common Stock; Delisting and Deregistration of AMTI Common Stock (See Page 139)

 

Cyclo’s common stock is currently traded on Nasdaq under the symbol “CYTH.” It is a closing condition that the shares of Cyclo’s common stock to be issued in the Merger pursuant to the Merger Agreement are approved for listing on Nasdaq. In addition, following the consummation of the Merger, AMTI common stock will be delisted from Nasdaq, deregistered under the Exchange Act and cease to be publicly traded, and AMTI will no longer be required to file periodic reports with the SEC with respect to AMTI common stock.

 

On May 14, 2023, Cyclo received a letter from the Listing Qualifications Staff (“Nasdaq Staff”) stating that Cyclo was not in compliance with Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Rule”) because its stockholders’ equity of $(438,876) as of March 31, 2023, as reported in Cyclo’s Quarterly Report on Form 10-Q filed with the SEC on May 12, 2023, was below the minimum requirement of $2.5 million.

 

Pursuant to Nasdaq’s Listing Rules, Cyclo submitted to Nasdaq a plan to regain compliance with the Stockholders’ Equity Rule (a “Compliance Plan”). On August 1, 2023, Nasdaq notified Cyclo that based on its review of the Compliance Plan, Cyclo has been granted an extension to regain compliance with the Rule. As of August 1, 2023, Cyclo completed a private placement of its securities in which it raised $5 million. Based on the completion of this private offering, Cyclo believed its stockholders equity exceeded $2.5 million as of August 1, 2023 and it had regained compliance with the Stockholders’ Equity Rule.

 

Pursuant to Nasdaq Listing Rules, Cyclo must evidence compliance with the Stockholders’ Equity Rule upon the filing of its Quarterly Report on Form 10-Q for the period ended September 30, 2023, which is due on or before November 14, 2023. If Cyclo is unable to evidence compliance with the Stockholders’ Equity Rule as of November 14, 2023, it may receive a delisting notice from the Nasdaq Staff. Cyclo believes that it will be in compliance with the Stockholders’ Equity Rule when it closes the Merger, because the anticipated AMTI net cash on the Closing Date is estimated to be approximately $12.4 million.

 

On August 10, 2023, AMTI received a letter from the Nasdaq Staff indicating that, in accordance with Nasdaq Listing Rule 5100, the Nasdaq Staff believes AMTI is a “public shell” and that the continued listing of AMTI’s securities is no longer warranted. AMTI disagrees with the Nasdaq Staff’s determination and submitted an appeal of the Nasdaq Staff’s determination to Nasdaq’s Hearings Panel (“Nasdaq Panel”) on August 17, 2023, which stayed any delisting action by the Nasdaq Staff pending the Nasdaq Panel’s decision. A Nasdaq Panel hearing occurred on October 19, 2023, and on October 23, 2023, the Nasdaq Panel granted AMTI’s request for continued listing on Nasdaq, subject to completion of the Merger on or before February 6, 2024.

 

No Appraisal Rights in Connection with the Merger (See Page 185)

 

Under Delaware law, AMTI stockholders are not entitled to appraisal rights in connection with the Merger or any other transaction contemplated by the Merger Agreement.

 

Under Nevada law, Cyclo stockholders are not entitled to appraisal rights in connection with the issuance of shares of Cyclo common stock in the Merger pursuant to the terms of the Merger Agreement.

 

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No Solicitation of Acquisition Proposals (See Page 147)

 

The Merger Agreement contains “non-solicitation” provisions, pursuant to which, subject to specified exceptions, AMTI has agreed that neither it nor its Representatives (as defined in the Merger Agreement) will, directly or indirectly (i) solicit, initiate or facilitate or knowingly encourage, any inquiries or the making of any proposal, indication of interest or offer that would reasonably be expected to lead to, any AMTI Takeover Proposal (as defined herein), (ii) enter into any letter of intent, agreement in principle, acquisition agreement, option agreement or other similar statement of intention or agreement with respect to any AMTI Takeover Proposal, or (iii) engage or participate in any discussions or negotiations with, or, with the intent to assist or facilitate such Person to make an AMTI Takeover Proposal, furnish any nonpublic information (whether orally or in writing) or access to the business, properties, assets, books or records of AMTI to, or otherwise cooperate in any way with, any Person (or any Representative of a Person) that has made, is seeking to make, has informed AMTI of any intention to make, or has publicly announced an intention to make, any proposal that constitutes, or would reasonably be expected to lead to, any AMTI Takeover Proposal, in connection with, or for the purpose of knowingly encouraging or facilitating, an AMTI Takeover Proposal; provided, that, AMTI may contact the Person that has made an offer, proposal or indication of interest solely for the purpose of informing such Person about the terms and conditions of the non-solicitation provisions.

 

Termination of the Merger Agreement (See Page 153)

 

Either Cyclo or AMTI may terminate the Merger Agreement under certain circumstances, which would prevent the merger from being consummated.

 

Termination Fees (See Page 154)

 

If the Merger Agreement is terminated under specified circumstances, AMTI will be required to pay Cyclo a termination fee of $600,000 or the reimbursement of expenses up to $400,000. If the Merger Agreement is terminated due to failure of Cyclo to obtain the vote of its stockholders to the share issuance, Cyclo will be required to reimburse AMTI expenses of up to $450,000.

 

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COMPARATIVE MARKET PRICE INFORMATION

 

Cyclo common stock is listed on Nasdaq under the symbol “CYTH”. AMTI common stock is listed on Nasdaq under the symbol “AMTI”. The following table presents the closing prices of Cyclo common stock and AMTI common stock on September 20, 2023, the last practicable trading day before the public announcement of the Merger Agreement, and November 17, 2023, the last practicable trading day prior to the mailing of this joint proxy statement/prospectus. The table also shows the equivalent per share value of the Merger Consideration for a share of AMTI common stock on the relevant date. Equivalent per share amounts for AMTI common stock are calculated by multiplying per share information for Cyclo common stock by the Exchange Ratio, rounded up to the nearest whole cent.

 

Date

Cyclo Closing Price

AMTI Closing Price

Equivalent Value Per

Share of AMTI

Common Stock

       

September 20, 2023

$1.60

$0.21

$0.28

       

November 17, 2023

$1.40

$0.17

$0.24

 

 

The above table shows only historical comparisons. These comparisons may not provide meaningful information to AMTI stockholders in determining whether to approve the adoption of the Merger Agreement. Because the Exchange Ratio will not be adjusted for changes in the market price of Cyclo common stock, the market value of the shares of Cyclo common stock that holders of AMTI common stock will be entitled to receive at the Effective Time of the Merger may vary significantly from the market value of the shares of Cyclo common stock that holders of AMTI common stock would have received if the Merger were completed on the dates shown in the table above.

 

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RISK FACTORS

 

In addition to the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed under the section entitled Cautionary Statement Regarding Forward-Looking Statements of this joint proxy statement/prospectus, AMTI stockholders should carefully consider the following risks in deciding whether to vote for the approval of the AMTI Proposals (as defined below), and Cyclo stockholders should carefully consider the following risks in deciding whether to vote for the approval of the Cyclo Proposals. Descriptions of some of these risks can be found in the Annual Report for AMTI on Form 10-K for the year ended December 31, 2022 and the Annual Report for Cyclo on Form 10-K for the period ended December 31, 2022, as such risks may be updated or supplemented in each companys subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, and other filings with the SEC from time to time. You should carefully read this entire joint proxy statement/prospectus and its annexes and exhibits and the other documents incorporated by reference into this joint proxy statement/prospectus. See also the section entitled Where You Can Find More Information of this joint proxy statement/prospectus for more information.

 

Risk Factors Related to the Merger

 

The failure to complete the Merger in a timely manner, or at all, may adversely affect the business and financial results of Cyclo and AMTI and their respective stock prices.

 

Each of Cyclo’s and AMTI’s obligations to consummate the Merger are subject to the satisfaction or waiver of certain conditions, including, among other things, (1) the adoption of the Merger Agreement by the AMTI stockholders, (2) the approval of the share issuance by the Cyclo stockholders, (3) approval for listing on Nasdaq of the shares of Cyclo common stock to be issued in connection with the Merger, (4) the effectiveness of the registration statement, of which this joint proxy statement/prospectus forms a part, and (5) the absence of an order or other legal restraint preventing the Merger. Each party’s obligation to consummate the Merger is also subject to other specified customary conditions, including certain representations and warranties of the other party being true and correct as of the Closing Date of the Merger, generally subject to an overall material adverse effect qualification, and the performance in all material respects by the other party of its obligations under the Merger Agreement required to be performed on or prior to the Closing Date of the Merger.

 

The tax treatment of the Merger is complex.

 

The Merger is intended to be a taxable transaction for federal income tax purposes, in which case U.S. holders of AMTI common stock will generally recognize taxable gain or loss equal to the difference between (i) the fair market value of the shares of Cyclo common stock received by such holder in the Merger and (ii) such holder’s adjusted tax basis in such shares of AMTI common stock, even though only Cyclo common stock is being received pursuant to the Merger. The fair market value of Cyclo common stock may fluctuate through the Closing Date of the Merger, which may increase the amount of tax a holder may owe or result in a taxable gain. It is also possible that the IRS may assert that the Merger is treated as a tax-free reorganization under Section 368(a) of the Code, which could result in a different tax treatment, including that holders would not be eligible to recognize loss on the exchange of AMTI common stock. Please see the information under the section entitled “Material U.S. Federal Income Tax Consequences” below for a more detailed summary of the U.S. federal income tax consequences of the Merger.

 

The Exchange Ratio will be determined in accordance with a formula and is not yet knowable. The actual Exchange Ratio could be materially different than currently anticipated.

 

At the Effective Time of the Merger, outstanding shares of AMTI common stock will be converted into shares of Cyclo’s common stock at the Exchange Ratio. As of the date of the execution of the Merger Agreement, the Exchange Ratio was estimated to be 0.174 shares of Cyclo common stock for each share of AMTI common stock, but the actual Exchange Ratio will depend on AMTI’s net cash and the number of shares of AMTI common stock outstanding at the closing of the Merger. Accordingly, the Exchange Ratio could be significantly higher or lower than the initial estimated Exchange Ratio. This will impact the value of the deal to the Cyclo stockholders and the number of shares issued to the Cyclo and AMTI stockholders. Based upon the initially estimated Exchange Ratio, following the Merger, (i) Cyclo stockholders immediately before the Merger are expected to own approximately 75% of the aggregate number of outstanding shares of Cyclo common stock following the Merger and (ii) AMTI stockholders immediately before the Merger are expected to own approximately 25% of the aggregate number of outstanding shares of Cyclo common stock following the Merger, subject to certain assumptions (including as to the amount of AMTI net cash at closing and outstanding shares of AMTI common stock at the closing, which could be materially different). Assuming the exercise of all Cyclo outstanding warrants, without giving effect to any beneficial ownership limitations applicable thereto, then (i) Cyclo stockholders immediately before the Merger would own approximately 75% of the aggregate number of outstanding shares of Cyclo common stock following the Merger and (ii) AMTI stockholders immediately before the Merger would own approximately 25% of the aggregate number of outstanding shares of Cyclo common stock following the Merger, subject to certain assumptions (including as to the amount of AMTI net cash and outstanding shares at closing, which could be materially different). The foregoing percentages do not give effect to the exercise or conversion of outstanding stock options other than as set forth above.

 

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Uncertainty about the Merger may adversely affect the respective business and stock price of Cyclo and AMTI, whether or not the Merger is completed.

 

Each of Cyclo and AMTI are subject to risks in connection with the announcement and pendency of the Merger, including the pendency and outcome of any legal proceedings against Cyclo and AMTI, their respective directors and others relating to the Merger and the risks from possibly foregoing opportunities Cyclo and AMTI might otherwise pursue absent the proposed Merger. Furthermore, uncertainties about the Merger may cause current and prospective employees of Cyclo and AMTI to experience uncertainty about their future with their respective companies. These uncertainties may impair Cyclo’s and AMTI’s ability to retain, recruit or motivate key management and other personnel.

 

In addition, in response to the announcement of the proposed Merger, Cyclo’s and AMTI’s existing or prospective suppliers or collaboration partners may:

 

 

delay, defer or cease providing goods or services to Cyclo and AMTI;

 

 

delay or defer other decisions concerning Cyclo and AMTI, or refuse to extend credit terms to Cyclo and AMTI;

 

 

cease further joint development activities; or

 

 

otherwise seek to change the terms on which they do business with Cyclo and AMTI.

 

While Cyclo and AMTI are attempting to address these risks, their respective existing and prospective customers, suppliers or collaboration partners may be reluctant to purchase Cyclo’s and AMTI’s products, supply Cyclo and AMTI with goods and services or continue collaborations due to the potential uncertainty about the direction of Cyclo and AMTI product offerings and the support and service of Cyclo’s and AMTI’s products after the completion of the Merger.

 

While the Merger is pending, AMTI and Cyclo are subject to contractual restrictions that could harm their respective businesses, operating results, and stock price.

 

The Merger Agreement includes restrictions on the conduct of AMTI and Cyclo prior to the completion of the Merger, generally requiring AMTI and Cyclo to conduct their respective businesses in the ordinary course, consistent with past practice, and restricting each from taking certain specified actions absent prior written consent from the other party. See the section entitled “The Merger AgreementConduct of Business Prior to the Mergers Completion” in this joint proxy statement/prospectus. AMTI and Cyclo may each find that these and other obligations in the Merger Agreement may delay or prevent them from or limit their ability to respond effectively to competitive pressures, industry developments and future business opportunities that may arise during such period, even if the management of AMTI or Cyclo or the Boards of AMIT or Cyclo think they may be advisable. The Merger Agreement also contains restrictions on the conduct of Cyclo’s business prior to the completion of the Merger, prohibiting the ability of Cyclo to acquire another business or restructure, reorganize or completely or partially liquidate absent AMTI’s prior written consent. These restrictions could adversely impact the business, operating results and stock price and the perceived acquisition value of AMIT and Cyclo, regardless of whether the Merger is completed.

 

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The Merger Agreement limits AMTIs ability to pursue alternative transactions which could deter a third party from proposing an alternative transaction.

 

The Merger Agreement contains provisions that, subject to certain exceptions, limit, among other things, AMTI’s ability to solicit, initiate or facilitate or knowingly encourage any inquiries or the making of any proposal, indication of interest or offer that would reasonably be expected to lead to any takeover proposal. See the sections entitled “The Merger AgreementNo Solicitation of Acquisition Proposals and The Merger AgreementChange of Recommendation” in this joint proxy statement/prospectus. It is possible that these or other provisions in the Merger Agreement might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of the outstanding shares of AMTI common stock from considering or proposing an acquisition or might result in a potential competing acquirer proposing to pay a lower per share price to acquire AMTI common stock than it might otherwise have proposed to pay.

 

The Merger will involve substantial costs.

 

Cyclo and AMTI have incurred and expect to continue to incur substantial costs and expenses relating to the Merger and the issuance of Cyclo common stock in connection with the Merger, including, as applicable, fees and expenses payable to financial advisors, other professional fees and expenses, insurance premium costs, SEC filing fees, printing and mailing costs and other transaction-related costs, fees and expenses. Cyclo may also incur significant costs relating to the acquisition of AMTI with any ongoing liabilities of AMTI that remain in the business after the Merger is completed. Cyclo continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in connection with the Merger. In addition, if the Merger is not completed, Cyclo and AMTI will have incurred substantial expenses for which no ultimate benefit will have been received by either company.

 

The fairness opinion obtained by the AMTI Board from its financial advisor will not be updated to reflect changes in circumstances between signing the Merger Agreement and the completion of the Merger.

 

The AMTI Board has not obtained an updated fairness opinion as of the date of this joint proxy statement/prospectus from MTS Securities, a wholly owned subsidiary of its financial advisor. Changes in the operations and prospects of Cyclo or AMTI, general market and economic conditions, and other factors that may be beyond the control of Cyclo and AMTI and on which the fairness opinion was based, may alter the value of Cyclo or AMTI or the price of Cyclo common stock or AMTI common stock by the time the Merger is completed.

 

The fairness opinion does not speak as of the time the Merger will be completed or as of any date other than the date of such opinion. AMTI does not anticipate asking MTS Securities to update its fairness opinion. The fairness opinion of MTS Securities is included as Annex C to this joint proxy statement/prospectus. For a description of the fairness opinion that the AMTI Board received from MTS Securities and a summary of the material financial analyses it provided to the AMTI Board in connection with rendering such opinion, see the section entitled “The MergerOpinion of Financial Advisor to AMTI” in this joint proxy statement/prospectus.

 

For a description of the factors considered by the AMTI Board in determining to approve the Merger, see the section entitled “The MergerRecommendation of the AMTI Board and AMTIs Reasons for the Merger” in this joint proxy statement/prospectus.

 

Certain directors and executive officers of AMTI and Cyclo may have interests in the Merger that are or were different from, or in conflict with or in addition to, those of AMTIs or Cyclos respective stockholders generally.

 

In considering whether to approve the proposals at the AMTI and Cyclo special meetings, AMTI and Cyclo stockholders, respectively, should recognize that directors and officers of AMTI and Cyclo, respectively, have interests in the Merger that may differ from, or that are in addition to, their interests as stockholders of AMTI and Cyclo, respectively. For example, in connection with the closing of the Merger, Cyclo has agreed to expand the Cyclo Board from nine to ten directors and to appoint Shawn Cross to the Cyclo Board. The AMTI Board and the Cyclo Board were each aware of these interests at the time they approved the Merger Agreement. These interests may cause AMTI’s or Cyclo’s directors and officers to view the Merger differently from how you may view it as a stockholder. For a description of the factors considered by the AMTI Board in determining to approve the Merger, see the section entitled “The MergerInterests of AMTIs Directors and Executive Officers in the Merger” in this joint proxy statement/prospectus. For a description of the factors considered by the Cyclo Board in determining to approve the Merger, see the section entitled “The MergerInterests of Cyclos Directors and Executive Officers in the Merger” in this joint proxy statement/prospectus.

 

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As of the AMTI record date, AMTI’s directors, executive officers, and their respective affiliates, as a group, beneficially held and were entitled to vote 4,723,405 shares of AMTI common stock, representing 11.3% of the voting power of the outstanding shares of AMTI common stock. AMTI’s directors and executive officers have agreed, pursuant to their respective Voting Agreements with Cyclo, to vote all of their respective shares of AMTI common stock “FOR” the AMTI merger proposal and “FOR” the AMTI adjournment proposal.

 

Holders of AMTI common stock will not be entitled to appraisal rights in the Merger.

 

Appraisal rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction.

 

Under Section 262(b) of the DGCL, stockholders do not have appraisal rights if the shares of stock they hold, as of the record date for determination of stockholders entitled to vote at the meeting of stockholders to act upon a merger, are either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders, unless the stockholders are required by the terms of the merger agreement to receive in exchange for their shares in the merger anything other than shares of stock of the surviving or resulting corporation (or depositary receipts in respect thereof), or of any other corporation that is publicly listed or held by more than 2,000 holders of record, cash in lieu of fractional shares or fractional depositary receipts described above or any combination of the foregoing. Because AMTI stockholders will receive only shares of Cyclo common stock, which will be listed on Nasdaq, AMTI stockholders will not have any appraisal rights. See the section entitled “No Appraisal Rights” in this joint proxy statement/prospectus.

 

Cyclo or AMTI may waive one or more of the closing conditions to the Merger without re-soliciting approval from their respective stockholders.

 

To the extent permitted by law, Cyclo or AMTI may determine to waive, in whole or part, one or more of the conditions to their respective obligations to consummate the Merger. AMTI and Cyclo expect to evaluate the materiality of any waiver and its effect on AMTI or Cyclo stockholders in light of the facts and circumstances at the time to determine whether any amendment of this joint proxy statement/prospectus or any re-solicitation of proxies is required in light of such waiver. Any determination as to whether to waive any condition to the consummation of the Merger, and as to whether to re-solicit the stockholders’ approval and/or amend this joint proxy statement/prospectus as a result of such waiver, will be made by Cyclo and AMTI at the time of such waiver based on the facts and circumstances as they exist at that time.

 

After the Merger, AMTI stockholders will have a significantly lower ownership and voting interest in Cyclo than they currently have in AMTI and will exercise less influence over management and policies of the combined company.

 

Upon completion of the Merger and based on 22,768,341 shares of Cyclo common stock and 41,848,990 shares of AMTI common stock outstanding as of November 17, 2023, and anticipated net cash at closing of approximately $12.4 million, after giving effect to the exchange ratio, it is expected that Cyclo stockholders will own approximately 75% of the outstanding common stock of the combined company and AMTI stockholders will own approximately 25% of the outstanding common stock of the combined company. Consequently, former AMTI stockholders will have less influence over the management and policies of the combined company than they currently have over the management and policies of AMTI.

 

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AMTI and Cyclo may be targets of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Merger from being completed.

 

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against these claims could result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Cyclo’s and AMTI’s respective liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, then that injunction may delay or prevent the Merger from being completed, or from being completed within the expected timeframe, which may adversely affect Cyclo’s and AMTI’s respective business, financial position and results of operations.

 

Risk Factors Related to Cyclo Following the Merger

 

Failure to complete the merger may result in either AMTI or Cyclo paying fees to the other party, which could harm the common stock price of AMTI and Cyclo and future business and operations of each company.

 

If the merger is not completed, Cyclo and AMTI are subject to the following risks:

 

 

if the Merger Agreement is terminated under specified circumstances, AMTI will be required to pay Cyclo a termination fee of $600,000;

 

if the Merger Agreement is terminated due to failure of AMTI to obtain stockholder approval of the Merger, AMTI will be required to reimburse Cyclo for the fees and expenses of the Merger transaction up to $400,000;

 

if the Merger Agreement is terminated due to failure of Cyclo to obtain stockholder approval of the share issuance, Cyclo will be required to reimburse AMTI for the fees and expenses of the Merger transaction up to $450,000;

 

the price of Cyclo and AMTI common stock may decline and could fluctuate significantly; and

 

each of Cyclo and AMTI may be required to pay certain costs related to the Merger, such as financial advisor, legal and accounting fees, whether or not the Merger is consummated.

 

If the Merger Agreement is terminated and the board of directors of Cyclo or AMTI determine to seek another business combination, there can be no assurance that either Cyclo or AMTI will be able to find a partner with whom a business combination would yield greater benefits than the benefits to be provided under the Merger Agreement.

 

Cyclo and AMTI stockholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the merger as compared to their current ownership and voting interests in the respective companies.

 

After the completion of the Merger, the current stockholders of Cyclo and AMTI will own a smaller percentage of the combined company than their ownership of their respective companies prior to the Merger. Based upon the initially estimated Exchange Ratio, following the Merger, AMTI and Cyclo stockholders immediately before the Merger are expected to own approximately 25% and 75%, respectively, of the aggregate number of outstanding shares of the combined companies total issued and outstanding shares, subject to certain assumptions regarding AMTI net cash and outstanding shares at the closing of the Merger. The executive officers of Cyclo are expected to continue to serve as the executive officers of the combined company following the completion of the Merger.

 

Cyclo has suffered recent losses and Cyclos future profitability is uncertain.

 

Cyclo has incurred net losses of approximately $15.5 million and $14.3 million for the years ended December 31, 2022 and December 31, 2021, respectively. Cyclo’s recent losses have predominantly resulted from research and development expenses from its Trappsol® Cyclo™ product and other general operating expenses, including personnel costs. Cyclo believes its expenses will continue to increase as it conducts clinical trials and continues to seek regulatory approval for the use of Trappsol® Cyclo™ in the treatment of NPC and Alzheimer’s disease. As a result, Cyclo expects its operating losses to continue until such time, if ever, that product sales, licensing fees, royalties and other sources generate sufficient revenue to fund its operations. Cyclo cannot predict when, if ever, it might achieve profitability and cannot be certain that it will be able to sustain profitability, if achieved.

 

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Even with the cash raised in the Merger, the combined company will need additional capital to fund its operations as planned.

 

For the year ended December 31, 2022, Cyclo’s operations used approximately $15.1 million in cash. At September 30, 2023, Cyclo had a cash balance of approximately $1.8 million and current liabilities of approximately $6.6 million. Although Cyclo will raise approximately $12.4 million in the Merger, it will need additional capital to maintain its operations, continue its research and development programs, conduct clinical trials, seek regulatory approvals, manufacture and market Cyclo’s product and maintain its listing on Nasdaq. Cyclo will seek such additional funds through public or private equity or debt financings and other sources. Cyclo cannot be certain that adequate additional funding will be available to it on acceptable terms, if at all. If Cyclo cannot raise the additional funds required for its anticipated operations, it may be required to reduce the scope of or eliminate its research and development programs, delay its clinical trials and the ability to seek regulatory approvals, downsize its general and administrative infrastructure, or seek alternative measures to avoid insolvency. If Cyclo raises additional funds through future offerings of shares of its common stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in Cyclo, which could be substantial. Future offerings also could have a material and adverse effect on the price of Cyclo’s common stock. 

 

The report of Cyclos independent registered public accounting firm expresses substantial doubt about Cyclos ability to continue as a going concern.

 

Cyclo’s auditors, WithumSmith+Brown, PC, have indicated in their report on Cyclo’s consolidated financial statements for the fiscal year ended December 31, 2022, that conditions exist that raise substantial doubt about its ability to continue as a going concern due to its recurring losses from operations and significant accumulated deficit. In addition, Cyclo continues to experience negative cash flows from operations. A “going concern” opinion could impair Cyclo’s ability to finance its operations through the sale of equity. Cyclo’s ability to continue as a going concern will depend upon the availability of equity financing which represents the primary source of cash flows that will permit it to meet its financial obligations as they come due and continue Cyclo’s research and development efforts.

 

The acquisition of AMTI may result in significant charges or other liabilities that could adversely affect the financial results of the combined company.

 

The financial results of the combined company may be adversely affected by cash expenses and non-cash accounting charges incurred in connection with any of AMTI’s liabilities which are acquired in the Merger. The amount and timing of these possible charges are not yet known. Further, Cyclo’s failure to identify or accurately assess the magnitude of certain liabilities it is assuming in the Merger could result in unexpected litigation or regulatory exposure, unfavorable accounting charges, unexpected increases in taxes due, a loss of anticipated tax benefits or other adverse effects on Cyclo’s business, operating results or financial condition. The price of Cyclo common stock following the Merger could decline to the extent the combined company’s financial results are materially affected by any of these events.

 

The unaudited pro forma combined condensed financial statements for Cyclo included in this joint proxy statement/prospectus is preliminary, and the actual financial position and operations of Cyclo after the Merger may differ materially from the unaudited pro forma combined condensed financial statements included in this joint proxy statement/prospectus.

 

The unaudited pro forma combined condensed financial statements for Cyclo included in this joint proxy statement/prospectus is presented for illustrative purposes only and is based on assumptions and estimates considered appropriate by Cyclo’s management; however, it does not necessarily reflect what the combined condensed company’s financial condition or results of operations would have been had the Merger been completed on the dates assumed. Cyclo’s actual results and financial position after the Merger may differ materially and adversely from the unaudited pro forma combined condensed financial statements included in this joint proxy statement/prospectus. The unaudited pro forma combined condensed financial statements reflect adjustments, which are preliminary and may be revised. The purchase price allocation reflected in this document is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of AMTI as of the date of the completion of the Merger. For more information see the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” in this joint proxy statement/prospectus.

 

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The market price of Cyclo common stock after completion of the Merger will continue to fluctuate, and may be affected by factors different from those affecting shares of AMTI common stock currently.

 

Upon completion of the Merger, holders of AMTI common stock will become holders of Cyclo common stock. The business of Cyclo differs from that of AMTI in important respects, and, accordingly, the results of operations of Cyclo after the Merger, as well as the market price of Cyclo common stock, may be affected by factors different from those currently affecting the results of operations of AMTI. Moreover, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, Cyclo common stock, regardless of Cyclo’s actual operating performance. For further information on the businesses of Cyclo and AMTI and certain factors to consider in connection with those businesses, see the documents incorporated by reference into or included in this joint proxy statement/prospectus and referred to under the sections entitled “Where You Can Find More Information” and “Incorporation of Certain Information by Reference” in this joint proxy statement/prospectus.

 

Cyclos failure to meet the continued listing requirements of Nasdaq could result in a delisting of its securities.

 

If Cyclo fails to satisfy the continued listing requirements of Nasdaq, such as the minimum stockholders’ equity requirement or the minimum closing bid price requirement, Nasdaq may take steps to de-list its securities. Such a delisting would likely have a negative effect on the price of its common stock and would impair stockholder’s ability to sell or purchase its common stock when they wish to do so. In the event of a de-listing, Cyclo’s common stock, Cyclo would take actions to restore its compliance with Nasdaq’s listing requirements, but it can provide no assurance that any such action taken by it would allow its common stock to become listed again, stabilize the market price or improve the liquidity of its securities, prevent its common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.

 

On May 15, 2023, Cyclo received a letter from Nasdaq stating that it was not in compliance with Stockholders’ Equity Rule because its stockholders’ equity of $(438,876) as of March 31, 2023, as reported in Cyclo’s Quarterly Report on Form 10-Q filed with the SEC on May 12, 2023, was below the minimum requirement of $2.5 million. Pursuant to Nasdaq’s Listing Rules, Cyclo submitted to Nasdaq a Compliance Plan. On August 1, 2023, Nasdaq notified Cyclo that based on its review of the Compliance Plan, Cyclo has been granted an extension to regain compliance with the Stockholders’ Equity Rule.

 

Pursuant to Nasdaq Rules, Nasdaq has informed Cyclo that it will continue to monitor Cyclo’s ongoing compliance with the Stockholders’ Equity Rule and, if at the time of its next periodic report which is due on or before November 14, 2023, Cyclo does not evidence compliance, it may be subject to delisting.

 

Cyclo’s business is and will be subject to the risks described above. In addition, Cyclo is also currently subject to the additional risks described in Cyclo’s Annual Report on Form 10-K for the year ended December 31, 2022, as updated by any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and are incorporated by reference into this joint proxy statement/prospectus. See the sections entitled “Where You Can Find More Information” and “Incorporation of Certain Information by Reference” in this joint proxy statement/prospectus for more information.

 

Risk Factors Related to AMTI

 

On March 27, 2023, AMTI announced the commencement of a process to explore strategic alternatives and engaged MTS as AMTI’s strategic financial advisor. AMTI also decided to discontinue research activities and focus on completing and closing out clinical trials. Then, on September 21, 2023, AMTI entered into the Merger Agreement with Cyclo. AMTI’s current operations include ongoing business development activities. As such, certain of the risks listed below may not currently apply to AMTI while its operations are focused on exploring strategic alternatives, maintaining and prosecuting its extensive intellectual property portfolio, and continuing business development activities. However, if AMTI advances development of its programs or assumes responsibility for a third party’s preclinical or clinical programs, research and development activities, manufacturing and other operations following a strategic transaction or otherwise, or if AMTI pursues some combination of the foregoing activities, many, if not all, of these risk factors will apply to it.

 

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Risks Related to AMTIs Business, Financial Condition, and Capital Requirements

 

AMTIs preclinical studies and clinical trials have failed to demonstrate evidence of the safety and efficacy of its product candidates, which could prevent, delay, or limit the scope of regulatory approval and commercialization.

 

Before obtaining regulatory approvals for the commercial sale of any of AMTI’s product candidates, AMTI must demonstrate thorough, lengthy, complex, and expensive preclinical studies and clinical trials that its product candidates are both safe and effective for use in each target indication. Each product candidate must demonstrate an adequate risk versus benefit profile in its intended patient population and for its intended use.

 

Preclinical studies and clinical testing are expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the preclinical studies or clinical trial process. The results of preclinical studies of AMTI’s product candidates may not be predictive of the results of early-stage or later-stage clinical trials, and results of early clinical trials of AMTI’s product candidates may not be predictive of the results of later-stage clinical trials. The results of clinical trials in one set of patients or disease indications may not be predictive of those obtained in another. In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including variability in the purity or potency of different batches of the same product candidate, changes in clinical trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the dosing regimen, and other aspects of the clinical trial protocols and the rate of dropout among clinical trial participants. Open-label extension studies may also extend the timing and cost of a clinical development program substantially. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical trials. For example, AMTI’s lead product candidate, AMT-101, failed to meet its primary efficacy endpoints in AMTI’s Phase 2 LOMBARD clinical trial and AMTI’s Phase 2 MARKET clinical trial. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unacceptable safety issues, notwithstanding promising results in earlier clinical trials. Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization.

 

AMTI has limited experience in designing and executing clinical trials and may be unable to design and execute a clinical trial to support marketing approval. Additionally, any safety concerns observed in any one of AMTI’s clinical trials in its targeted indications could limit the prospects for regulatory approval of its product candidates in those and other indications, which could have a material adverse effect on AMTI’s business, financial condition, and results of operations.

 

In addition, even if such clinical trials are successfully completed, AMTI cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as AMTI does, and more clinical trials could be required before AMTI submits its product candidates for approval. To the extent that the results of the clinical trials are not satisfactory to the FDA or foreign regulatory authorities to advance a product candidate to the next phase of clinical development or for support of a marketing application, AMTI may be required to expend significant resources, which may not be available to it, to conduct additional clinical trials in support of potential approval of its product candidates. Even if regulatory approval is secured for any of AMTI’s product candidates, the terms of such approval may limit the scope and use of such product candidates, which may also limit its commercial potential.

 

There has been substantial doubt as to AMTIs ability to continue as a going concern. If AMTI does not maintain sufficient funding or does not successfully consummate the Merger or any other strategic transaction, AMTI may have to curtail or cease operations.

 

In AMTI’s Annual Report on Form 10-K filed on March 9, 2023, AMTI indicated that there was substantial doubt as to its ability to continue as a going concern. Following AMTI’s recent reductions in workforce and discontinuing of product development activities, and terminating substantially all of its operating leases, AMTI has subsequently determined that it will have sufficient cash and cash equivalents to meet its obligations for a period of at least 12 months from November 9, 2023, which is the date AMTI filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, and therefore, AMTI has concluded there is no longer substantial doubt about its ability to continue as a going concern. However, AMTI’s financial condition could be materially adversely impacted if it is unable to successfully execute the Merger or any other strategic transaction. Depending on the results of AMTI’s future operations, there may again be substantial doubt as to AMTI’s ability to continue as a going concern. If AMTI is unable to continue as a going concern, it may have to cease operations and liquidate its assets. AMTI may receive less than the value at which those assets are carried on its condensed financial statements, and it is likely that investors will lose all or a part of their investment.

 

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AMTI will need to obtain substantial additional capital to finance its operations. A failure to obtain this necessary capital when needed on acceptable terms, or at all, could force AMTI to delay, limit, reduce, or terminate AMTIs research and drug development programs, future commercialization efforts, product development, or other operations.

 

Developing biologic therapeutics, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive, and uncertain process that takes years to complete. AMTI’s operations have required substantial amounts of cash since inception, and AMTI expects to continue to incur expenses in connection with its ongoing activities and operating losses for the foreseeable future. To date, AMTI has financed its operations primarily through the sale of equity securities. Developing AMTI’s product candidates and conducting clinical trials for the treatment of autoimmune, inflammatory, metabolic, and other diseases will require substantial amounts of capital. AMTI will also require a significant amount of capital to commercialize any approved products. Even if one or more of the product candidates that AMTI develops is approved for commercial sale, AMTI anticipates incurring significant costs associated with sales, marketing, manufacturing, and distribution activities. Furthermore, other unanticipated costs may also arise.

 

On March 11, 2022, AMTI filed a final shelf registration statement on Form S-3 which allows AMTI to undertake various offerings. In addition, on January 27, 2022, AMTI entered into a Sales Agreement (the “Sales Agreement”) with SVB Securities LLC and JMP Securities LLC, as AMTI’s sales agents (“Agents”), pursuant to which AMTI may offer and sell from time to time through the Agents up to $150.0 million in shares of its common stock through an “at-the-market” program (“ATM facility”). For so long as AMTI’s non-affiliate public float does not exceed $75 million, the amount of securities that AMTI may sell pursuant to registration statements on Form S-3 will be limited to the equivalent of one-third of AMTI’s public float, which will limit AMTI’s ability to raise capital. As of September 30, 2023, AMTI had not yet sold any shares of common stock under the ATM facility and does not currently intend to do so. AMTI will require additional capital for the further development and, if approved, commercialization of its product candidates. AMTI’s future funding requirements will depend on many factors, including but not limited to:

 

 

the initiation, scope, rate of progress, results and cost of AMTI’s preclinical studies, clinical trials, and other related activities for AMTI’s product candidates;

 

 

the costs associated with manufacturing AMTI’s products, including re-establishing AMTI’s own manufacturing facilities and establishing commercial supplies and sales, marketing, and distribution capabilities which could be impacted by increasing inflation;

 

 

the timing and cost of capital expenditures to support AMTI’s research, development, and manufacturing efforts;

 

 

the number and characteristics of other product candidates that AMTI pursues;

 

 

the costs, timing, and outcome of seeking and obtaining FDA and non-U.S. regulatory approvals;

 

 

AMTI’s ability to maintain, expand, and defend the scope of its intellectual property portfolio, including the amount and timing of any payments AMTI may be required to make in connection with the licensing, filing, defense, and enforcement of any patents or other intellectual property rights;

 

 

the timing, receipt, and amount of sales from AMTI’s potential products;

 

 

AMTI’s need and ability to hire additional management, scientific, technical, business, and medical personnel;

 

 

the effect of competing products that may limit market penetration of AMTI’s products;

 

 

the economic and other terms, timing, and success of any collaboration, licensing, or other arrangements into which AMTI may enter in the future, including any product development or other operation obligations AMTI may have under these agreements and the timing of receipt of any milestone or royalty payments under these agreements;

 

 

the compliance and administrative costs associated with being a public company; and

 

 

the extent to which AMTI divests, acquires, or invests in businesses, products, or technologies, although AMTI currently has no commitments or agreements establishing any of these types of transactions.

 

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To the extent that AMTI raises additional capital through the sale of equity or convertible debt securities or to the extent that AMTI may issue equity securities in connection with a strategic transaction, the ownership interest of AMTI’s stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing, if available, may involve agreements that include the issuance of warrants or covenants limiting or restricting AMTI’s ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If AMTI raises funds through collaborations, strategic alliances, licensing arrangements with strategic partners, or asset sales, AMTI may have to relinquish valuable rights to its technologies, intellectual property, future revenue streams, research programs, product candidates, and infrastructure, or grant licenses on terms that may not be favorable to AMTI. In addition, AMTI may seek additional capital due to favorable market conditions or strategic considerations even if AMTI believes it has sufficient funds for its current or future operating plans.

 

Additional capital may not be available when AMTI needs it, on terms acceptable to it or at all and will be dependent on, among other factors, the successful execution of a strategic transaction. AMTI has no committed source of additional capital and recently, capital markets have been particularly volatile and AMTI’s stock price has declined. If adequate capital is not available to AMTI on a timely basis or on acceptable terms, AMTI may be required to significantly delay, scale back, or discontinue its research and development programs or the commercialization of any product candidates, if approved, or be unable to continue or expand its operations, or otherwise capitalize on its business opportunities, as desired, which could materially affect AMTI’s business, financial condition, results of operations, and prospects, and cause the price of AMTI’s common stock to decline.

 

AMTI will be delisted from Nasdaq, unless the Merger is completed on or before February 6, 2024, which would seriously harm the liquidity of AMTIs stock and AMTIs ability to raise capital.

 

AMTI’s common stock is listed on Nasdaq. In order to maintain AMTI’s listing, AMTI must meet minimum financial and other requirements, including a requirement for continued business operations so that AMTI is not characterized as a “public shell company.”

 

On August 10, 2023, AMTI received a letter from the Nasdaq Staff indicating that, in accordance with Nasdaq Listing Rule 5100, the Nasdaq Staff believes AMTI is a “public shell” and that the continued listing of AMTI’s securities is no longer warranted. AMTI appealed the Nasdaq Staff’s determination and, on October 23, 2023, AMTI received written notice from the Nasdaq Panel that it had granted AMTI’s request for continued listing on Nasdaq, subject to the completion of the Merger on or before February 6, 2024. If AMTI and Cyclo do not complete the Merger on or before February 6, 2024, AMTI’s securities will be delisted from Nasdaq, which would harm the liquidity of AMTI’s stock and AMTI’s ability to raise capital. There can be no assurance that the Merger will be completed on or before February 6, 2024. Failure to complete the Merger on or before February 6, 2024 will result in AMTI’s securities being delisted from Nasdaq.

 

AMTI was early in its development efforts, has a limited operating history and has no products approved for commercial sale, which makes it difficult to evaluate AMTIs current business and predict AMTIs future success and viability.

 

AMTI is an early clinical-stage biopharmaceutical company with a limited operating history upon which you can evaluate its business and prospects.

 

AMTI has no products approved for commercial sale and has not generated any revenue from product sales. AMTI was developing a novel technology platform which is an unproven and highly uncertain undertaking and involves a substantial degree of risk. While AMTI has conducted a number of Phase 2 clinical trials for AMT-101 and have conducted a Phase 1a clinical trial of AMT-126, AMTI has not initiated clinical trials for any of its other product candidates. To date, AMTI has not obtained marketing approval for any product candidates, manufactured a commercial scale product or arranged for a third-party to do so on its behalf, or conducted sales and marketing activities necessary for successful product commercialization. AMTI’s limited operating history as a company makes any assessment of its future success and viability subject to significant uncertainty.

 

AMTI will incur expenses and encounter difficulties, complications, delays, and other known and unknown factors and risks frequently experienced by clinical-stage biopharmaceutical companies in rapidly evolving fields, and AMTI has not yet demonstrated an ability to successfully overcome such risks and difficulties. AMTI also may need to transition from a company with a research and development focus to a company capable of supporting commercial activities. AMTI has not yet demonstrated an ability to successfully overcome such risks and difficulties, or to make such a transition. If AMTI does not adequately address these risks and difficulties or successfully make such a transition, AMTI’s business will suffer.

 

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AMTI has incurred significant net losses in each period since inception, and AMTI expects to continue to incur net losses for the foreseeable future.

 

AMTI has incurred net losses in each reporting period since its inception, including net losses of $126.3 million and $100.3 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, AMTI had an accumulated deficit of $366.0 million.

 

AMTI has invested significant financial resources in research and development activities, including for its preclinical and clinical product candidates. AMTI has not generated any revenue from product sales to date and AMTI does not expect to generate revenue from product sales for several years, if at all. The amount of AMTI’s future net losses will depend, in part, on the level of its future expenditures and revenue. Moreover, AMTI’s net losses may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of AMTI’s results of operations may not be a good indication of its future performance.

 

AMTI expects to continue to incur expenses and operating losses for the foreseeable future. AMTI anticipates that it will continue to incur expenses if and as AMTI:

 

 

resumes AMTI’s research and discovery activities;

 

 

resumes the development of AMTI’s proprietary technology platform;

 

 

progresses AMTI’s current and any future product candidates through preclinical and clinical development;

 

 

initiates and conducts additional preclinical studies, clinical trials, or other studies for AMTI’s product candidates;

 

 

works with AMTI’s contract development and manufacturing organizations (“CDMOs”) to manufacture AMTI’s product candidates for AMTI’s clinical trials;

 

 

changes or adds additional contract manufacturers or suppliers;

 

 

seeks regulatory approvals and marketing authorizations for AMTI’s product candidates;

 

 

establishes sales, marketing, and distribution infrastructure to commercialize any products for which AMTI obtain approval;

 

 

takes steps to seek protection of AMTI’s intellectual property and defend AMTI’s intellectual property against challenges from third parties;

 

 

obtains, expands, maintains, protects, and enforces AMTI’s intellectual property portfolio;

 

 

pursues any licensing or collaboration opportunities;

 

 

attracts, hires, and retains qualified personnel including clinical, scientific, management, and administrative personnel;

 

 

provide additional internal infrastructure to support research and development operations and any planned commercialization efforts in the future;

 

 

experiences increased expenses as a result of increasing inflation;

 

 

experiences any delays or encounter other issues related to AMTI’s operations including as a result of the conflicts between Russia and Ukraine or Israel and Hamas;

 

 

implements operations, financial, and management information systems;

 

 

meets the requirements and demands of being a public company, including incurring expenses associated with efforts to raise money in the public financial markets; and

 

 

defends against any product liability claims or other lawsuits related to AMTI’s products or operations.

 

AMTI’s prior losses and expected future losses have had and will continue to have an adverse effect on AMTI’s stockholders’ equity, working capital, and AMTI’s ability to fund its development efforts and achieve and maintain profitability. In any particular period, AMTI’s operating results could be below the expectations of securities analysts or investors, which could cause AMTI’s stock price to decline.

 

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AMTI has historically financed its operations prior to the transactions contemplated under the Merger Agreement between Cyclo and AMTI, primarily through private placements of AMTI’s convertible preferred stock and the sale of common stock in public equity issuances, such as AMTI’s IPO in June 2020 and AMTI’s follow-on equity offering in April 2021. In addition, on January 27, 2022, AMTI entered into a Sales Agreement with the Agents, pursuant to which AMTI may offer and sell from time to time through the Agents up to $150.0 million in shares of AMTI’s common stock through an ATM facility. For so long as AMTI’s non-affiliate public float does not exceed $75 million, the amount of securities that it may sell pursuant to registration statements on Form S-3 will be limited to the equivalent of one-third of AMTI’s public float, which will limit AMTI’s ability to raise capital. As of September 30, 2023, AMTI has not yet sold any shares of common stock under the ATM facility and does not currently intend to do so. AMTI may seek to raise capital through debt financings, private or public convertible debt financings, private or public equity financings, license agreements, collaborative agreements or other arrangements with other companies, asset sales, or other sources of financing. There can be no assurance that such financing will be available or will be at terms acceptable to AMTI. If adequate funds are not available, AMTI may be required to reduce operating expenses, delay or reduce the scope of its development efforts, obtain funds through arrangements with others that may require AMTI to relinquish rights to certain of AMTI’s technologies or products that AMTI would otherwise seek to develop or commercialize itself, or cease operations.

 

Developing biologic therapeutics is a highly uncertain undertaking and involves a substantial degree of risk.

 

AMTI has no products approved for commercial sale. To obtain revenue from the sales of AMTI’s products that are significant or large enough to achieve profitability, AMTI must succeed, either alone or with third parties, in developing, obtaining regulatory approval for, manufacturing, and marketing approved products with significant commercial success. AMTI’s ability to generate revenue and achieve profitability depends on many factors, including:

 

 

initiating, enrolling patients in and completing clinical trials of product candidates on a timely basis;

 

 

completing research and preclinical and clinical development of AMTI’s product candidates;

 

 

obtaining specialty raw materials for use in production of AMTI’s product candidates;

 

 

obtaining regulatory approvals and marketing authorizations for product candidates for which AMTI successfully complete clinical development and clinical trials;

 

 

satisfying any post-marketing approval commitments required by applicable regulatory authorities;

 

 

developing sustainable, consistent, time-sensitive, and scalable manufacturing processes for AMTI’s product candidates, either by itself or with third-party manufacturers, and obtaining regulatory approvals for such processes, as well as establishing and maintaining commercially viable supply relationships with third parties that can provide adequate products and services to support clinical activities and commercial demand of AMTI’s products;

 

 

identifying, assessing, acquiring, and/or developing new product candidates or technologies;

 

 

launching and successfully commercializing products for which AMTI has obtained regulatory and marketing approval by establishing a sales, marketing, and distribution infrastructure;

 

 

obtaining and maintaining an adequate price for AMTI’s products, both in the United States and in foreign countries where AMTI’s products are commercialized;

 

 

obtaining coverage and adequate reimbursement for AMTI’s products from payors and patients’ willingness to pay in the absence of such coverage and adequate reimbursement;

 

 

obtaining market, patient, and medical community acceptance of AMTI’s products as viable treatment options;

 

 

addressing any competing technological and market developments;

 

 

obtaining additional funding to develop, and potentially manufacture and commercialize AMTI’s product candidates;

 

 

maintaining, protecting, expanding, and enforcing AMTI’s portfolio of intellectual property rights, including patents, trade secrets, and know-how;

 

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attracting, hiring, and retaining qualified personnel; and

 

 

negotiating favorable terms in any collaboration, licensing, or other arrangements which AMTI may pursue.

 

Because of the numerous risks and uncertainties associated with developing biologic therapeutics, AMTI is unable to predict the timing or amount of its expenses, or when AMTI will be able to generate any meaningful revenue or achieve or maintain profitability, if ever. In addition, AMTI’s expenses could increase beyond its current expectations if AMTI is required by the FDA or foreign regulatory authorities, to perform studies, or if there are any delays in any of its clinical trials or the development of any of AMTI’s product candidates. Even if one or more of AMTI’s product candidates is approved for commercial sale, AMTI anticipates incurring significant costs associated with launching and commercializing any approved product candidate and ongoing compliance efforts.

 

AMTI may not be successful in its efforts to use and expand AMTIs proprietary technology platform to build a pipeline of biologic product candidates.

 

A key element of AMTI’s strategy is to leverage AMTI’s technology platform to expand AMTI’s pipeline of biologic product candidates and in order to do so, AMTI must continue to invest in its platform and development capabilities. Although AMTI’s research and development efforts to date have resulted in a pipeline of oral product candidates, these product candidates may not be safe or effective in the indications that AMTI pursues. For example, AMTI previously announced that certain trials investigating the use of AMT-101 to treat ulcerative colitis failed to achieve their primary endpoint. In addition, although AMTI expects that AMTI’s platform will allow AMTI to develop a diverse pipeline of product candidates across multiple therapeutic areas and modalities, AMTI may not prove to be successful at doing so. Furthermore, AMTI may also find that the uses of AMTI’s platform are limited because alternative uses of AMTI’s biologic therapeutics prove not to be safe or effective. Even if AMTI is successful in continuing to build its pipeline, the potential product candidates that AMTI identifies may not be suitable for clinical development, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive marketing approval or achieve market acceptance. Even after approval, if AMTI cannot successfully develop or commercialize its products, or if serious adverse events are discovered after commercialization, AMTI will not be able to generate any product revenue, which would adversely affect business.

 

AMTI has limited resources. As a result, AMTI may fail to capitalize on other indications or product candidates that may ultimately have proven to be more profitable.

 

AMTI has limited resources and may not be able to simultaneously develop multiple product candidates in multiple therapeutic areas. Due to the significant resources required for the development of AMTI’s product candidates, AMTI must focus on specific product candidates and decide which product candidates to pursue and advance and the amount of resources to allocate to each. AMTI’s decisions concerning the allocation of research, development, collaboration, management, and financial resources toward particular product candidates or indications may not lead to the development of any viable commercial product and may divert resources away from better opportunities. If AMTI makes incorrect determinations regarding the viability or market potential of any of AMTI’s product candidates or misread trends in immunology and inflammation, gastroenterology, and metabolic diseases, or the biopharmaceutical industry as a whole, AMTI’s business, financial condition and results of operations could be materially adversely affected. As a result, AMTI may fail to maximize profitability on AMTI’s product candidates, capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other product candidates or other indications that may later prove to have greater commercial potential than those AMTI choose to pursue, or relinquish valuable rights to such product candidates through collaboration, licensing, or other royalty arrangements in cases in which it would have been advantageous for AMTI to invest additional resources to retain sole development and commercialization rights.

 

AMTI expects to rely on third parties to conduct AMTIs clinical trials and some aspects of AMTIs research and preclinical studies, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such clinical trials, research, or testing.

 

AMTI has relied on third parties, such as contract research organizations (“CROs”), CDMOs, medical institutions, academic institutions, and clinical investigators to conduct some aspects of AMTI’s research and preclinical studies and AMTI’s clinical trials.

 

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AMTI’s reliance on third parties for research and development activities reduces AMTI’s control over these activities but does not relieve AMTI of its responsibilities. For example, AMTI remains responsible for ensuring that each of AMTI’s clinical trials is conducted in accordance with the general investigational plan and protocols for the clinical trial. Moreover, the FDA requires AMTI to comply with current good clinical practices (“cGCP”) for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible, reproducible, and accurate and that the rights, integrity, and confidentiality of clinical trial participants are protected. AMTI also is required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database within certain timeframes. Failure to do so can result in fines, adverse publicity, and civil and criminal sanctions.

 

If third parties do not successfully carry out their contractual duties, meet expected deadlines, or conduct AMTI’s clinical trials in accordance with regulatory requirements or AMTI’s stated protocols, AMTI may be unable to complete, or may be delayed in completing, AMTI’s preclinical studies or AMTI’s clinical trials, and AMTI will not be able to obtain, or may be delayed in obtaining, marketing approvals for any product candidates AMTI may develop and will not be able to, or may be delayed in its efforts to, successfully commercialize its medicines. For example, completion of AMTI’s Phase 2 MARKET combination clinical trial of oral AMT-101 with anti-TNFα in moderate-to-severe ulcerative colitis patients was delayed because AMTI increased total enrollment from 30 patients to 51 patients due to an imbalance in the clinical trial’s planned 1:1 randomization. In addition, the ongoing conflict between Russia and Ukraine impacted AMTI’s CROs, CDMOs and clinical investigators’ ability to conduct AMTI’s LOMBARD clinical trial in Ukraine, Russia and other Eastern European countries, and the continued conflict may also impact future clinical trials. This could negatively impact the completion of AMTI’s clinical trials and/or analyses of clinical results, which could materially harm AMTI’s business.

 

AMTI also expects to rely on other third parties to store and distribute supplies for its clinical trials. Any performance failure on the part of AMTI’s distributors, including with the shipment of any supplies for AMTI’s clinical trials, could delay clinical development or marketing approval of any product candidates AMTI may develop or commercialization of its medicines, producing additional losses and depriving AMTI of potential product revenue.

 

The manufacturing of AMTIs product candidates is complex. AMTI and AMTIs third-party manufacturers may encounter difficulties in production. If AMTI encounters any such difficulties, AMTIs ability to supply AMTIs product candidates for clinical trials or, if approved, for commercial sale, could be delayed or halted entirely.

 

Manufacturing of biologic therapeutics is a complex process and represents a critical path to creating biologic product candidates and a key component of AMTI’s long-term success. AMTI has spent significant resources to develop its current manufacturing capabilities, processes and know-how to produce sufficient supply of AMTI’s product candidates. Although AMTI has successfully manufactured certain preclinical and clinical supply at its previously qualified manufacturing facility, AMTI has now discontinued those operations and may encounter difficulties should AMTI seek to re-establish internal manufacturing capabilities.

 

AMTI may continue to rely on third-party manufacturers to execute certain steps in the manufacturing of AMTI’s product candidates. The facilities used by AMTI’s contract manufactures to manufacture AMTI’s product candidates are subject to various regulatory requirements and may be subject to the inspection of FDA or other regulatory authorities. AMTI does not control the manufacturing process of, and is dependent on, its contract manufacturing partners for compliance with the regulatory requirements, known as cGMPs. If AMTI’s contract manufacturers cannot successfully manufacture material that conforms to AMTI’s specifications and the strict regulatory requirements of the FDA or comparable regulatory authorities in foreign jurisdictions, AMTI may not be able to rely on their manufacturing facilities for the manufacture of AMTI’s product candidates. In addition, AMTI has limited control over the ability of AMTI’s contract manufacturers to maintain adequate quality control, quality assurance, and qualified personnel. If the FDA or a comparable foreign regulatory authority finds these facilities inadequate for the manufacture of AMTI’s product candidates or if such facilities are subject to enforcement action in the future or are otherwise inadequate, AMTI may need to find alternative manufacturing facilities, which would significantly impact AMTI’s ability to develop, obtain regulatory approval for or market its product candidates.

 

The process of manufacturing AMTI’s product candidates is extremely susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, vendor or operator error, inconsistency in yields, variability in product characteristics, and difficulties in scaling the production process. AMTI has experienced in the past situations in which a contract manufacturer has failed to successfully complete a scheduled manufacturing run as a result of their manufacturing process errors or deviations from the product specifications. AMTI also has experienced in the past situations in which AMTI failed to successfully complete a schedule manufacturing run at its primary manufacturing site. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions. If microbial, viral, or other contaminants are discovered in AMTI’s product candidates or in the manufacturing facilities in which AMTI’s product candidates are made, AMTI may have to quarantine impacted manufacturing lots pending an impact assessment, or such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

 

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Any adverse developments affecting manufacturing operations for AMTI’s product candidates, if any are approved, may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls, or other interruptions in the supply of AMTI’s products. AMTI may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives. Furthermore, it is too early to estimate AMTI’s cost of goods sold. The actual cost to manufacture AMTI’s product candidates could be greater than AMTI expects because AMTI was early in its development efforts and AMTI’s platform is based on a novel therapeutic approach. Failure to develop AMTI’s own manufacturing capacity may hamper AMTI’s ability to further process improvement, maintain quality control, limit AMTI’s reliance on contract manufacturers, and protect AMTI’s trade secrets and other intellectual property.

 

AMTI has relied on third-party manufacturers to produce AMTIs product candidates. Any failure by a third-party manufacturer to produce acceptable product candidates for AMTI pursuant to its specifications and regulatory standards may delay or impair AMTIs ability to initiate or complete AMTIs clinical trials, obtain and maintain regulatory approvals or commercialize approved products.

 

AMTI currently has limited internal manufacturing experience and personnel. AMTI does not currently have the infrastructure or internal capability to manufacture AMTI’s product candidates for commercialization purposes. AMTI expects to continue to rely on third parties for certain manufacturing operations of AMTI’s product candidates for preclinical studies and clinical trials, in compliance with applicable regulatory and quality standards, including cGMP, and may do so for the commercial manufacture of some or all of AMTI’s product candidates, if approved. If AMTI is unable to arrange for and maintain third-party manufacturing sources that are capable of meeting regulatory standards, or fail to do so on commercially reasonable terms, AMTI may not be able to successfully produce sufficient supply of product candidate or AMTI may be delayed in doing so. If AMTI was to experience an unexpected loss of supply of its product candidates, for any reason, whether as a result of manufacturing, supply, logistics, or storage issues, the COVID-19 pandemic, or otherwise, AMTI could experience delays, disruptions, suspensions, or terminations of, or be required to restart or repeat, any pending or ongoing clinical trials. Such failure or substantial delay or loss of supply could materially harm AMTI’s business.

 

Reliance on third-party manufacturers entails risks including:

 

 

the possible failure of the third-party to manufacture AMTI’s product candidates according to AMTI’s schedule, or at all, including if AMTI’s third-party contractors give greater priority to the supply of other products over AMTI’s product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between AMTI and them;

 

 

reliance on the third-party for regulatory compliance and quality control and assurance and failure of the third-party to comply with regulatory requirements;

 

 

the possibility of breach of the manufacturing agreement by the third-party because of factors beyond AMTI’s control (including a failure to manufacture AMTI’s product candidates in accordance with AMTI’s product specifications);

 

 

the possible mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or active drug or placebo not being properly identified;

 

 

the possibility of clinical supplies not being delivered to clinical sites on time, leading to clinical trial interruptions, or of product candidate supplies not being distributed to commercial vendors in a timely manner;

 

 

the possible misappropriation of AMTI’s proprietary information, including AMTI’s trade secrets and know-how; and

 

 

the possibility of termination or nonrenewal of the agreement by the third-party at a time that is costly or damaging to AMTI.

 

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In addition, the FDA, EMA, and other regulatory authorities require that AMTI’s product candidates be manufactured according to cGMP and similar foreign standards. Pharmaceutical manufacturers and their subcontractors are required to register their facilities or products manufactured at the time of submission of the marketing application and then annually thereafter with the FDA and certain state and foreign agencies. They are also subject to periodic unannounced inspections by the FDA, state, and other foreign authorities. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of AMTI’s product candidates or if it withdraws any such approval in the future, AMTI may need to find alternative manufacturing facilities, which would significantly impact AMTI’s ability to develop, obtain marketing approval for or market AMTI’s product candidates, if approved. Any subsequent discovery of problems with a product, or a manufacturing or laboratory facility used by AMTI or AMTI’s strategic partners, may result in sanctions being imposed on AMTI, including fines, injunctions, civil penalties, restrictions on the product or on the manufacturing or laboratory facility, including license revocation, marketed product recall, suspension of manufacturing, product seizure, voluntary withdrawal of the product from the market, operating restrictions, or criminal prosecutions, any of which could significantly and adversely affect supplies of AMTI’s product candidates and harm AMTI’s business and results of operations.

 

AMTI may have little to no control regarding the occurrence of third-party manufacturer incidents. Any failure by AMTI’s third-party manufacturers to comply with cGMP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates in a timely manner, would lead to a delay in, or failure to seek or obtain, regulatory approval of any of AMTI’s product candidates. Furthermore, any change in manufacturer of AMTI’s product candidates or approved products, if any, would require new regulatory approvals, which could delay completion of clinical trials or disrupt commercial supply of approved products.

 

AMTI’s dependence upon others for the manufacture of AMTI’s product candidates may adversely affect AMTI’s future profit margins and AMTI’s ability to commercialize any product candidates that receive marketing approval on a timely and competitive basis.

 

In some cases, the technical skills or technology required to manufacture AMTI’s product candidates may be unique or proprietary to the original manufacturer, AMTI may have difficulty transferring such skills or technology to another third-party and a feasible alternative may not exist. These factors would increase AMTI’s reliance on such manufacturer or require AMTI to obtain a license from such manufacturer in order to have another third-party manufacture AMTI’s product candidates. If AMTI is required to change manufacturers for any reason, AMTI will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. The delays associated with the verification of a new manufacturer could negatively affect AMTI’s ability to develop product candidates in a timely manner or within budget.

 

AMTI depends on third-party suppliers for key raw materials used in its manufacturing processes, and the loss of these third-party suppliers or their inability to supply AMTI with adequate raw materials could harm AMTIs business.

 

AMTI relies on third-party suppliers for the raw materials required for the production of AMTI’s product candidates. AMTI’s dependence on these third-party suppliers and the challenges AMTI may face in obtaining adequate supplies of raw materials involve several risks, including delays as a result of widespread public health concerns, recent global supply chain disruptions, limited control over pricing, availability, quality and delivery schedules. For example, as a result of Brexit, the movement of goods between the UK and the remaining member states of the European Union (“EU”) are subject to additional inspections and documentation checks. As a result, AMTI has experienced delays in its supply chain.

 

As a small company, AMTI’s negotiating leverage is limited, and AMTI is likely to get lower priority than AMTI’s competitors who are larger than AMTI is. AMTI does not have long-term supply agreements, and AMTI purchases its required supplies on a development manufacturing services agreement or purchase order basis. AMTI cannot be certain that its suppliers will continue to provide AMTI with the quantities of these raw materials that AMTI requires or satisfy AMTI’s anticipated specifications and quality requirements. Any supply interruption in limited or sole sourced raw materials could materially harm AMTI’s ability to manufacture AMTI’s product candidates until a new source of supply, if any, could be identified and qualified. AMTI may be unable to find a sufficient alternative supply in a reasonable time or on commercially reasonable terms. Any performance failure on the part of AMTI’s suppliers could delay the development and potential commercialization of AMTI’s product candidates, including limiting supplies necessary for clinical trials and regulatory approvals, which would have a material adverse effect on AMTI’s business.

 

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The COVID-19 pandemic, and actions taken to mitigate the spread of the virus, has impacted and could continue to adversely impact AMTIs business.

 

While significant progress has been made to address the COVID-19 pandemic, with multiple vaccines and treatment options now available, the World Health Organization continues to classify COVID-19 as a pandemic and a public health emergency of international concern. The emergence of new variants has resulted in periodic surges in infection rates around the world and a cycle of fluctuating public health restrictions designed to mitigate the spread of the virus. The extent to which the COVID-19 pandemic, or any other widespread public health crisis, impacts AMTI’s business will depend on future developments, which are highly uncertain and cannot be predicted, such as the spread or emergence of new variants, the duration and severity of surges in outbreaks, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease and to address its impact, including on financial markets or otherwise. As a result of the COVID-19 pandemic, AMTI has experienced and could experience future disruptions that could severely impact AMTI’s business and any planned clinical trials and preclinical studies, including:

 

 

delays or difficulties in enrolling and retaining participants, particularly subjects who are at a higher risk of severe illness or death from COVID-19, and in recruiting clinical site investigators and clinical site staff;

 

 

challenges related to increased operational expenses related to the COVID-19 pandemic. For example, AMTI has incurred additional expenses by increasing the number of clinical trial sites for certain clinical trials to mitigate the impact of COVID-19 on patient enrollment rates;

 

 

difficulties interpreting data from AMTI’s clinical trials due to the possible effects of COVID-19 on patients;

 

 

diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as AMTI’s clinical trial sites and hospital staff supporting the conduct of clinical trials;

 

 

interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and clinical trial procedures, which may impact the integrity of subject data and clinical trial endpoints;

 

 

limitations in resources, including AMTI’s employees and consultants;

 

 

interruptions, difficulties or delays arising in AMTI’s existing operations and company culture as a result of some of AMTI’s employees working remotely, including those hired during the COVID-19 pandemic;

 

 

increased cybersecurity risks resulting from all of AMTI’s employees working remotely;

 

 

delays in receiving approval from regulatory authorities to initiate AMTI’s clinical trials;

 

 

interruptions in preclinical studies due to restricted or limited operations at CROs conducting such preclinical studies;

 

 

interruptions or delays in the operations of the FDA or other regulatory authorities, or the prioritization by such regulatory authorities of COVID-19 treatments, which may impact AMTI’s review and approval timelines;

 

 

refusal of the FDA to accept data from clinical trials in affected geographies outside the United States;

 

 

delays in receiving the supplies, materials and services needed to conduct clinical trials and preclinical studies;

 

 

changes in regulations as part of a response to the COVID-19 pandemic which may require AMTI to change the ways in which its clinical trials are conducted, which may result in unexpected costs or require AMTI to discontinue clinical trials altogether;

 

 

interruptions or delays to AMTI’s pipeline and research programs, and incurrence of additional costs as a result of any delays or adjustments; and

 

 

delays in necessary interactions with regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or furlough of government or contractor personnel.

 

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Further, as a result of the COVID-19 pandemic, the extent and length of which is uncertain, AMTI has and may continue to develop and implement additional clinical trial policies and procedures designed to help protect trial participants from the COVID-19 virus, which may include using telemedicine visits, remote monitoring of patients and clinical sites, and measures to ensure that data from clinical trials that may be disrupted as a result of the pandemic are collected pursuant to the trial protocol and consistent with cGCP, with any material protocol deviation reviewed and approved by the site Institutional Review Board (“IRB”). Patients who may miss scheduled appointments, any interruption in trial drug supply, or other consequence that may result in incomplete data being generated during a trial as a result of the pandemic must be adequately documented and justified. Since March 2020, the FDA has issued various COVID-19 related guidance documents for sponsors and manufacturers, including guidance regarding conducting clinical trials during the pandemic, good manufacturing practice considerations, manufacturing, supply chain, and inspections, among others.

 

While the extent of the impact of the COVID-19 pandemic and current and future regulatory policies and requirements on AMTI’s business and financial results are uncertain, a continued and prolonged public health crisis such as the COVID-19 pandemic could have a material negative impact on AMTI’s business, financial condition, and operating results. The administration ended the COVID-19 national and public health emergencies on May 11, 2023. The full impact of the termination of the public health emergencies on FDA and other regulatory policies and operations are unclear.

 

To the extent the COVID-19 pandemic adversely affects AMTI’s business and financial results, it may also have the effect of heightening many of the other risks described in this section entitled “Risk Factors”.

 

AMTIs ability to use its net operating loss carryforwards and certain other tax attributes may be limited.

 

As of December 31, 2022, AMTI had federal net operating loss carryforwards of $278.8 million. Of this amount, $13.3 million was generated before January 1, 2018 and will begin to expire in 2036. Federal net operating losses of $265.5 million generated after December 31, 2017 will carryforward indefinitely. As of December 31, 2022, AMTI had state net operating loss carryforwards of $69.5 million, which will begin to expire in 2036. Realization of these NOLs depends on future income, and there is a risk that AMTI’s existing NOLs could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect AMTI’s operating results.

 

Under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50-percentage-point cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period), the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited. AMTI completed an analysis under Section 382 through December 31, 2020 and concluded AMTI had experienced an ownership change in the past. However, the ownership change did not result in a limitation that would materially reduce the total amount of net operating loss carryforwards and credits that can be utilized. Net operating loss and tax credit carryforwards generated during the years ended December 31, 2021 and 2022 may be subject to an annual limitation under Section 382. In addition, AMTI expects to experience an “ownership change” in connection with the Merger that would significantly limit the combined company’s ability to use AMTI’s NOL carryforwards and other tax attributes to offset future taxable income or taxes.

 

AMTI is a fully-remote company, meaning that AMTIs team members work remotely which poses a number of risks and challenges that can affect AMTIs business, operating results, and financial condition. AMTI is increasingly dependent on technology in its operations and if AMTIs technology fails, AMTIs business could be adversely affected.

 

As a fully-remote company, AMTI faces a number of unique operational risks. For example, technologies in AMTI’s team members’ homes may not be robust enough and could cause the networks, information systems, applications, and other tools available to team members and service providers to be limited, unreliable, or unsecure. Additionally, AMTI is increasingly dependent on technology as a fully-remote company and if AMTI experiences problems with the operation of its current IT systems or the technology systems of third parties on which AMTI relies, that could adversely affect, or even temporarily disrupt, all or a portion of AMTI’s operations until resolved. In addition, in a fully-remote company, it may be difficult for AMTI to develop and preserve AMTI’s corporate culture and AMTI’s team members may have decreased opportunities to collaborate in meaningful ways. Any impediments to preserving AMTI’s corporate culture and fostering collaboration could harm AMTI’s future success, including AMTI’s ability to retain and recruit personnel, innovate and operate effectively, and execute on AMTI’s business strategy.

 

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Risks Related to the Discovery, Development, and Commercialization of AMTIs Product Candidates

 

Research and development related to novel biologic therapeutics is inherently risky. AMTIs business is heavily dependent on the successful development of AMTIs product candidates, which is currently discontinued. AMTI cannot give any assurance that any of AMTIs product candidates will receive regulatory or marketing approval, which is necessary before they can be commercialized.

 

AMTI’s oral biologic product candidates’ use of active transport to translocate through the intestinal epithelium (“IE”) and respiratory epithelium (“RE”) barriers is a novel therapeutic approach. AMTI’s active transport approach differs from current biologics and peptides and is unproven. AMTI is at the early stages of development of its product candidates. AMTI’s future success is dependent on AMTI’s ability to successfully develop, obtain regulatory approval for, and then successfully commercialize AMTI’s product candidates, and AMTI may fail to do so for many reasons, including the following:

 

 

AMTI’s product candidates may not successfully complete preclinical studies or clinical trials;

 

 

a product candidate may on further study be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;

 

 

AMTI may not have sufficient resources to complete development of a product candidate;

 

 

AMTI’s competitors may develop therapeutics that render AMTI’s product candidates obsolete or less attractive;

 

 

the product candidates that AMTI develop may not be sufficiently covered by intellectual property for which AMTI holds exclusive rights;

 

 

the product candidates that AMTI develops may be covered by third parties’ patents or other intellectual property or exclusive rights;

 

 

the market for a product candidate may change so that the continued development of that product candidate is no longer reasonable or commercially attractive;

 

 

a product candidate may not be capable of being produced in development and commercial quantities at an acceptable cost, or at all;

 

 

the product candidates that AMTI develops may be novel and therefore, not accepted by the medical community;

 

 

if a product candidate obtains regulatory approval, AMTI may be unable to establish sales and marketing capabilities, or successfully market such approved product candidate, to gain market acceptance; and

 

 

a product candidate may not be accepted as safe and effective by patients, the medical community, or third-party payors, if applicable.

 

If any of these events occur, AMTI may be forced to abandon any development efforts for one or more product candidates, which would have a material adverse effect on AMTI’s business and could potentially cause AMTI to cease operations.

 

AMTI may not be successful in its efforts to further develop AMTI’s current product candidates. AMTI is not permitted to market or promote any of its product candidates before AMTI receives regulatory approval from the FDA or comparable foreign regulatory authorities, and AMTI may never receive such regulatory approval for any of its product candidates. Each of AMTI’s product candidates are in the early stages of development and will require significant additional clinical development, management of preclinical, clinical, and manufacturing activities, regulatory approval, adequate manufacturing supply, a commercial organization, and significant marketing efforts before AMTI generates any revenue from product sales, if at all.

 

AMTI has never completed a clinical development program. In 2022, AMTI released top-line results from the Phase 2 LOMBARD clinical trial and Phase 2 MARKET clinical trial for AMT-101, which failed to meet its primary efficacy endpoints. None of AMTI’s product candidates have advanced into late-stage development and it may be years before any such clinical trial is initiated, if at all. Further, AMTI cannot be certain that any of AMTI’s product candidates will be successful in clinical trials. AMTI may in the future advance product candidates into clinical trials and terminate such clinical trials prior to their completion.

 

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AMTI has never commenced, compiled or applied for regulatory approval to market any product candidate. AMTI may never receive regulatory approval to market any product candidates even if such product candidates successfully complete clinical trials, which would adversely affect AMTI’s viability. To obtain regulatory approval in countries outside of the United States, AMTI must comply with numerous and varying regulatory requirements of such other countries regarding safety, efficacy, manufacturing and controls, clinical trials, commercial sales, pricing, and distribution of AMTI’s product candidates. Even if AMTI is successful in obtaining approval in one jurisdiction, AMTI cannot ensure that AMTI will obtain approval in any other jurisdictions. If AMTI is unable to obtain approval for its product candidates in multiple jurisdictions, AMTI’s business, financial condition, results of operations, and AMTI’s prospects could be negatively affected.

 

Even if AMTI receives regulatory approval to market any of its product candidates, AMTI cannot assure you that any such product candidate will be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives.

 

Investment in biopharmaceutical product development involves significant risk that any product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval, and become commercially viable. AMTI cannot provide any assurance that AMTI will be able to successfully advance any of AMTI’s product candidates through the development process or, if approved, successfully commercialize any of AMTI’s product candidates.

 

AMTI may encounter delays in its preclinical studies or clinical trials, or may not be able to conduct or complete its preclinical studies or clinical trials on the timelines AMTI expects, if at all.

 

Preclinical studies and clinical testing are expensive, time consuming, and subject to uncertainty. AMTI cannot guarantee that any preclinical studies and clinical trials will be conducted as planned or completed on schedule, if at all. AMTI cannot be sure that submission of an IND application or a Clinical Trial Application (“CTA”) will result in the FDA, EMA, or other regulatory authority, as applicable, allowing clinical trials to begin in a timely manner, if at all. Moreover, even if these preclinical studies or clinical trials begin, issues may arise that could suspend or terminate such preclinical studies or clinical trials. A failure of one or more preclinical studies or clinical trials can occur at any stage of testing, and AMTI’s future preclinical studies or clinical trials may not be successful. Events that may prevent successful or timely initiation or completion of preclinical studies or clinical trials include:

 

 

inability to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials;

 

 

delays in confirming target engagement, biomarkers, patient selection, or other relevant criteria to be utilized in preclinical and clinical product candidate development;

 

 

delays in reaching a consensus with regulatory authorities on clinical trial design;

 

 

delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

 

 

delays in identifying, recruiting, and training suitable clinical investigators;

 

 

delays in obtaining required IRB approval at each clinical trial site;

 

 

imposition of a temporary or permanent clinical hold by regulatory authorities for a number of reasons, including:

 

 

after review of an IND or amendment, CTA or amendment, or equivalent application or amendment;

 

 

as a result of a new safety finding that presents unreasonable risk to clinical trial participants;

 

 

a negative finding from an inspection of AMTI’s clinical trial operations or trial sites; or

 

 

the finding that the investigational protocol or plan is clearly deficient to meet its stated objectives;

 

 

delays in identifying, recruiting, and enrolling suitable patients to participate in AMTI’s clinical trials, and delays caused by patients withdrawing from clinical trials, or failing to return for post-treatment follow-up;

 

 

difficulty collaborating with patient groups and investigators;

 

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failure by AMTI’s CROs, other third parties, or AMTI to adhere to clinical trial requirements;

 

 

failure to perform in accordance with the FDA’s or any other regulatory authority’s cGCP requirements, or applicable EMA or other regulatory guidelines in other countries;

 

 

occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits;

 

 

changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;

 

 

changes in the standard of care on which a clinical development plan was based, which may require new or additional clinical trials;

 

 

the cost of clinical trials of AMTI’s product candidates being greater than AMTI anticipates;

 

 

health epidemics such as the COVID-19 pandemic;

 

 

geopolitical events such as the conflicts between Russia and Ukraine or Israel and Hamas;

 

 

preclinical studies or clinical trials of AMTI’s product candidates producing negative or inconclusive results, which may result in AMTI’s deciding, or regulators requiring AMTI, to conduct additional clinical trials or abandon product development programs; and

 

 

delays in manufacturing, testing, releasing, validating, transporting, or importing/exporting sufficient stable quantities of AMTI’s product candidates for use in preclinical studies or clinical trials or the inability to do any of the foregoing.

 

Any inability to successfully initiate or complete preclinical studies or clinical trials could result in additional costs to AMTI or impair its ability to generate revenue. In addition, if AMTI makes manufacturing or formulation changes to its product candidates, AMTI may be required, or AMTI may elect, to conduct additional preclinical studies to bridge AMTI’s modified product candidates to earlier versions. Preclinical studies or clinical trial delays could also shorten any periods during which AMTI’s products have patent protection and may allow AMTI’s competitors to bring products to market before AMTI does, which could impair AMTI’s ability to successfully commercialize AMTI’s product candidates and may harm AMTI’s business and results of operations.

 

AMTI has experienced in the past situations in which a contract manufacturer has failed to successfully complete a scheduled manufacturing run as a result of their manufacturing process errors or deviations from the product specifications. AMTI also has experienced in the past situations in which AMTI failed to successfully complete a schedule manufacturing run at AMTI’s primary manufacturing site. These situations have the potential to cause delays in timelines and increases in development costs.

 

AMTI could also encounter delays if a preclinical study or clinical trial is suspended or terminated by AMTI, by the data safety monitoring board for such clinical trial or by the FDA, EMA, or any other regulatory authority, or if the IRBs of the institutions in which such clinical trials are being conducted suspend or terminate the participation of their clinical investigators and sites subject to their review. Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or AMTI’s clinical protocols, inspection of the clinical trial operations or trial site by the FDA, EMA, or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions, or lack of adequate funding to continue the clinical trial.

 

AMTI may in the future terminate AMTI’s clinical trials prior to their completion, which could adversely affect AMTI’s business.

 

Delays in the completion of any preclinical study or clinical trial of AMTI’s product candidates will increase AMTI’s costs, slow down AMTI’s product candidate development and approval process, and delay, or potentially jeopardize AMTI’s ability to commence product sales and generate revenue. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of AMTI’s product candidates.

 

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If AMTI does not achieve its projected development goals in the timeframes AMTI announces and expects, AMTIs stock price may decline.

 

From time to time, AMTI estimates the timing of the anticipated accomplishment of various scientific, clinical, regulatory and other product development goals, which AMTI sometimes refer to as milestones. These milestones may include the commencement or completion of scientific studies and clinical trials, the public release of clinical data, and the submission of regulatory filings. From time to time, AMTI may publicly announce the expected timing of some of these milestones. All of these milestones are and will be based on numerous assumptions. The actual timing of these milestones can vary dramatically compared to AMTI’s estimates, in some cases for reasons beyond AMTI’s control. For example, AMTI has previously updated its anticipated timelines for milestones for AMTI’s clinical trials that were publicly announced. If AMTI does not meet milestones as publicly announced, AMTI’s stock price may decline.

 

AMTI may encounter difficulties enrolling patients or healthy volunteers in AMTIs clinical trials, and AMTIs clinical development activities could thereby be delayed or otherwise adversely affected.

 

The timely completion of clinical trials in accordance with their protocols depends, among other things, on AMTI’s ability to enroll a sufficient number of patients who remain in the clinical trial until its conclusion. AMTI has experienced and may experience difficulties in patient enrollment in AMTI’s clinical trials for a variety of reasons, including:

 

 

the patient eligibility criteria defined in the protocol;

 

 

the size of the clinical trial population required for analysis of the clinical trial’s primary endpoints;

 

 

the proximity of patients to a clinical trial site;

 

 

the design of the clinical trial;

 

 

AMTI’s ability to recruit clinical trial investigators with the appropriate competencies and experience;

 

 

competing clinical trials, including AMTI’s own clinical trials, for similar therapies or targeting patient populations meeting AMTI’s patient eligibility criteria;

 

 

clinicians’ and patients’ perceptions as to the potential advantages and side effects of the product candidate being studied in relation to other available therapies and product candidates;

 

 

AMTI’s ability to obtain and maintain patient consents;

 

 

health epidemics such as the COVID-19 pandemic. For example, there has been an increase in infections from COVID-19 variants which has impacted patient recruitment at certain of AMTI’s clinical trial sites and could result in increased costs and delays;

 

 

the risk that patients enrolled in clinical trials will not complete such clinical trials, for any reason; and

 

 

geopolitical events such as the conflicts between Russia and Ukraine.

 

AMTI faces significant competition and if AMTIs competitors develop and market technologies or products that are more effective, safer or less expensive than AMTIs product candidates, AMTIs commercial opportunities will be negatively impacted.

 

The development and commercialization of biologic therapeutics is highly competitive and subject to rapid and significant technological change. The pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition, and a strong emphasis on intellectual property. Any product candidates that AMTI successfully develops and commercializes will compete with current therapies and new therapies that may become available in the future.

 

AMTI has competitors both in the United States and internationally, including major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies, universities, academic institutions, government agencies, and other public and private research organizations that conduct research, seek patent protection, and establish collaborative arrangements for the research, development, manufacturing, and commercialization of therapies aimed at treating autoimmune, inflammatory, metabolic, and other diseases. Many of AMTI’s competitors have significantly greater financial, manufacturing, marketing, technical and human resources, and commercial expertise than AMTI does. Large pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining regulatory approvals, recruiting patients and in manufacturing biologic therapeutics. These companies also have significantly greater research and marketing capabilities than AMTI does. Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make AMTI’s product candidates obsolete. As a result of all of these factors, AMTI’s competitors may succeed in obtaining patent protection or FDA or other regulatory approval or discovering, developing and commercializing products in AMTI’s field before AMTI does.

 

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In particular, with respect to AMTI’s most advanced product candidates, AMT-101 and AMT-126, AMTI competes against companies that produce injectable biologic therapeutics such as AbbVie Inc., Amgen Inc., Bristol-Myers Squibb Co., Eli Lilly and Co., Janssen Pharmaceuticals, Inc., Merck Sharp & Dohme Corp., Roche Holding Ltd., Prometheus Biosciences, Inc., Takeda Pharmaceutical Company Ltd., as well as companies that produce oral products such as Abivax SA, Amgen Inc., Bristol-Myers Squibb Co., Dice Therapeutics Inc., Galapagos NV, Gilead Sciences, Inc., Landos Biopharma, Inc., Morphic Holding, Inc., Pfizer Inc., Protagonist Therapeutics, Inc., and Ventyx Biosciences, Inc.

 

AMTI is not aware of any other company or organization that has developed an FDA-approved oral biologic, other than peptides. However, AMTI is aware of other companies developing oral biologic product candidates using their own technology platform.

 

AMTI’s commercial opportunity could be reduced or eliminated if AMTI’s competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than the products that AMTI may develop. AMTI’s competitors also may obtain FDA or foreign regulatory approval for their products more rapidly than AMTI may obtain approval for AMTI’s product candidates, which could result in AMTI’s competitors establishing a strong market position before AMTI is able to enter the market.

 

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of AMTI’s competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with AMTI in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, and retaining third-party manufacturing resources, as well as in acquiring technologies complementary to, or necessary for, AMTI’s product candidates. AMTI’s commercial opportunity could be reduced or eliminated if AMTI’s competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are less expensive than any products that AMTI may develop. AMTI’s competitors also may obtain FDA, EMA, or other regulatory approval for their products more rapidly than AMTI may obtain approval for AMTI’s and may obtain orphan drug exclusivity from the FDA for indications AMTI’s product candidates are targeting, which could result in AMTI’s competitors establishing a strong market position before AMTI is able to enter the market. If AMTI fails to stay at the forefront of technological change, AMTI may be unable to compete effectively. Technological advances or products developed by AMTI’s competitors may render AMTI’s technologies or product candidates obsolete, less competitive or not economical.

 

In addition, AMTI could face litigation or other proceedings with respect to the scope, ownership, validity, and/or enforceability of AMTI’s patents relating to AMTI’s competitors’ products and AMTI’s competitors may allege that AMTI’s products infringe, misappropriate, or otherwise violate their intellectual property. The availability of AMTI’s competitors’ products could limit the demand, and the price AMTI is able to charge, for any products that AMTI may develop and commercialize.

 

AMTIs product candidates may face competition sooner than anticipated.

 

Even if AMTI is successful in achieving regulatory approval to commercialize a product candidate ahead of AMTI’s competitors, AMTI’s product candidates may face competition from biosimilar products or alternative therapies. In the United States, AMTI’s product candidates are regulated by the FDA as biologic products and AMTI intends to seek approval for these product candidates pursuant to the Biologics License Application (“BLA”) pathway. The Biologics Price Competition and Innovation Act of 2009 (“BPCIA”) created an abbreviated pathway for the approval of biosimilar and interchangeable biologic products. The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing brand product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original branded product was approved under a BLA. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for AMTI’s product candidates.

 

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AMTI believes that any of AMTI’s product candidates approved as a biologic product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider AMTI’s product candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Moreover, the extent to which a biosimilar product, once approved, will be substituted for any one of AMTI’s reference products in a way that is similar to traditional generic substitution for non-biologic products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing. In addition, a competitor could decide to forego the biosimilar approval path and submit a full BLA after completing its own preclinical studies and clinical trials. In such cases, any exclusivity to which AMTI may be eligible under the BPCIA would not prevent the competitor from marketing its product as soon as it is approved.

 

In Europe, the European Commission has granted marketing authorizations for several biosimilar products pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued over the past few years. In Europe, a competitor may reference data supporting approval of an innovative biological product but will not be able to get it on the market until 10 years after the time of approval of the innovative product. This 10-year marketing exclusivity period will be extended to 11 years if, during the first eight of those 10 years, the marketing authorization holder obtains an approval for one or more new therapeutic indications that bring significant clinical benefits compared with existing therapies. In addition, companies may be developing biosimilar products in other countries that could compete with AMTI’s products, if approved.

 

If competitors are able to obtain marketing approval for biosimilars referencing AMTI’s product candidates, if approved, such products may become subject to competition from such biosimilars, with the attendant competitive pressure and potential adverse consequences. Such competitive products may be able to immediately compete with AMTI in each indication for which AMTI’s product candidates may have received approval.

 

Even if any product candidates AMTI develops receive marketing approval, AMTIs product candidates may not achieve adequate market acceptance by physicians, patients, healthcare payors, and others in the medical community necessary for commercial success.

 

The commercial success of any of AMTI’s product candidates will depend upon its degree of market acceptance by physicians, patients, third-party payors, and others in the medical community. Even if any product candidates AMTI may develop receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, healthcare payors, and others in the medical community. The degree of market acceptance of any product candidates AMTI may develop, if approved for commercial sale, will depend on a number of factors, including:

 

 

the efficacy and safety of such product candidates as demonstrated in clinical trials and published in peer-review journals or presented at medical conferences;

 

 

the potential and perceived advantages compared to alternative treatments;

 

 

the ability to offer AMTI’s products for sale at competitive prices;

 

 

sufficient third-party coverage or adequate reimbursement and patients’ willingness to pay in the absence of such coverage and adequate reimbursement;

 

 

the ability to offer appropriate patient access programs, such as co-pay assistance;

 

 

the extent to which physicians recommend AMTI’s products to their patients;

 

 

convenience and ease of dosing and administration compared to alternative treatments;

 

 

the clinical indications for which the product candidate is approved by FDA, EMA, or other regulatory authorities;

 

 

product labeling or product insert requirements of the FDA, EMA, or other comparable foreign regulatory authorities, including any limitations, contraindications, or warnings contained in a product’s approved labeling;

 

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restrictions on how the product is distributed;

 

 

the timing of market introduction of competitive products;

 

 

publicity concerning AMTI’s products or competing products and treatments;

 

 

the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

 

 

the strength and effectiveness of sales and marketing and distribution efforts; and

 

 

the prevalence and severity of any side effects.

 

If any product candidates AMTI develops do not achieve an adequate level of acceptance, AMTI may not generate or derive sufficient revenue from that product candidate and AMTI’s financial results could be negatively impacted.

 

If AMTI is unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any product candidates AMTI may develop, AMTI may not be successful in commercializing those product candidates if and when they are approved.

 

AMTI does not have a sales or marketing infrastructure and has no experience in the sale, marketing, or distribution of biologic therapeutics. To achieve commercial success for any approved product for which AMTI retain sales and marketing responsibilities, AMTI must either develop a sales and marketing organization or outsource these functions to third parties. In the future, AMTI may choose to build a focused sales, marketing, and commercial support infrastructure to sell, or participate in sales activities for some of AMTI’s product candidates if and when they are approved.

 

There are risks involved with both establishing AMTI’s own commercial capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a sales force or reimbursement specialists is expensive and time-consuming and could delay any product launch. If the commercial launch of a product for which AMTI recruits a sales force and establishes marketing and other commercialization capabilities is delayed or does not occur for any reason, AMTI would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and AMTI’s investment would be lost if AMTI cannot retain or reposition AMTI’s commercialization personnel.

 

Factors that may inhibit AMTI’s efforts to commercialize any approved product on AMTI’s own include:

 

 

AMTI’s inability to recruit and retain adequate numbers of effective sales, marketing, reimbursement, customer service, medical affairs, and other support personnel;

 

 

the inability of sales personnel to obtain access to physicians or educate adequate numbers of physicians on the benefits of prescribing any future approved products;

 

 

AMTI’s inability to obtain coverage and adequate reimbursement for AMTI’s products from payors;

 

 

the inability to price AMTI’s products at a sufficient price point to ensure an adequate and attractive level of profitability;

 

 

restricted or closed distribution channels that make it difficult to distribute AMTI’s products to segments of the patient population; and

 

 

unforeseen costs and expenses associated with creating an independent commercialization organization.

 

If AMTI enters into arrangements with third parties to perform sales, marketing, commercial support, and distribution services, AMTI’s product revenue or the profitability of product revenue may be lower than if AMTI was to market and sell any products it may develop itself. In addition, AMTI may not be successful in entering into arrangements with third parties to commercialize AMTI’s product candidates or may be unable to do so on terms that are favorable to AMTI. AMTI may have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market AMTI’s products effectively. If AMTI does not establish commercialization capabilities successfully, either on AMTI’s own or in collaboration with third parties, AMTI will not be successful in commercializing AMTI’s product candidates, if approved.

 

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If the market opportunities for any product that AMTI develops are smaller than AMTI believe they are, AMTIs revenue may be adversely affected and AMTIs business may suffer.

 

AMTI’s projections of both the number of people who have the diseases AMTI may be targeting, as well as the subset of people with these health issues who have the potential to benefit from treatment with AMTI’s technology platform and investigational medicines, and any product candidates, are based on AMTI’s beliefs and estimates. These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations, or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases and health issues. The potentially addressable patient population for AMTI’s investigational medicines may be limited or may not be amenable to treatment with AMTI’s technology platform or investigational medicines. Even if AMTI obtains significant market share for AMTI’s products, if approved, if the potential target populations are small, AMTI may never achieve profitability without obtaining regulatory approval for additional indications.

 

Risks Related to Regulatory Approval and Other Legal Compliance Matters

 

AMTI may be unable to obtain U.S. or foreign regulatory approval for its product candidates and, as a result, may be unable to commercialize its product candidates.

 

The time required to obtain approval by the FDA, EMA, and comparable foreign regulatory authorities is unpredictable, typically takes many years following the commencement of clinical trials, and depends upon numerous factors, including the type, complexity, and novelty of the product candidates involved. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that AMTI’s data is insufficient for approval and require additional preclinical studies, clinical trials, or other studies. AMTI has not submitted for, or obtained regulatory approval for any product candidate, and it is possible that none of AMTI’s existing product candidates or any product candidates AMTI may seek to develop in the future will ever obtain regulatory approval.

 

Applications for AMTI’s product candidates could fail to receive regulatory approval in an initial or subsequent indication for many reasons, including but not limited to the following:

 

 

the FDA, EMA, or comparable foreign regulatory authorities may disagree with the design, implementation, or results of AMTI’s clinical trials;

 

 

the FDA, EMA, or comparable foreign regulatory authorities may determine that AMTI’s product candidates are not safe and effective, only moderately effective or have undesirable or unintended side effects, toxicities, or other characteristics that preclude AMTI’s further development of AMTI’s product candidates or AMTI’s obtaining marketing approval or prevent or limit commercial use;

 

 

the population studied in the clinical program may not be sufficiently broad or representative to assure efficacy and safety in the full population for which AMTI seeks approval;

 

 

AMTI may be unable to demonstrate to the FDA, EMA, or comparable foreign regulatory authorities that a product candidate’s risk-benefit ratio for a proposed indication is acceptable, particularly when compared to the standard of care;

 

 

the FDA, EMA, or comparable foreign regulatory authorities may disagree with AMTI’s interpretation of data from preclinical studies or clinical trials;

 

 

the data collected from clinical trials of AMTI’s product candidates may not be sufficient to support the submission of a NDA, BLA, or other submission or to obtain regulatory approval in the United States or elsewhere;

 

 

the FDA, EMA, or comparable foreign regulatory authorities may fail to approve AMTI’s manufacturing processes, test procedures, and specifications, or facilities, and those of third-party manufacturers with which AMTI contracts for clinical and commercial supplies; and

 

 

the approval policies or regulations of the FDA, EMA, or comparable foreign regulatory authorities may significantly change in a manner rendering AMTI’s clinical data insufficient for approval.

 

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This lengthy approval process, as well as the unpredictability of the results of clinical trials, may result in AMTI failing to obtain regulatory approval to market any of its product candidates, which would significantly harm AMTI’s business, results of operations, and prospects.

 

The FDA, EMA and comparable foreign regulatory authorities have limited experience with AMTI’s technology platform and AMTI is not aware of any similar technology platform which has been approved by the FDA, EMA or comparable foreign regulatory authorities, which may increase the complexity, uncertainty and length of the regulatory approval process for AMTI’s product candidates. For example, since the scientific evidence to support the feasibility of developing AMTI’s product candidates and discovery programs is both preliminary and limited, the FDA may require AMTI to provide additional data to support AMTI’s regulatory applications. Moreover, advancing AMTI’s novel oral biologic product candidates creates other significant challenges for AMTI, including educating medical personnel regarding a novel technology platform and its potential efficacy and safety benefits.

 

Further, the ability of the FDA or other regulatory agencies to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, disruptions from natural disasters or public health concerns, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In response to the COVID-19 public health emergency, since March 2020 when foreign and domestic inspections of facilities were largely placed on hold, the FDA has worked to resume normal operations. In 2020 and 2021, a number of companies announced receipt of Complete Response Letters due to the FDA’s inability to complete required inspections for their applications. While the FDA has largely caught up with domestic preapproval inspections, it continues to work through its backlog of foreign inspections.

 

In addition, government funding of the SEC and other government agencies on which AMTI’s operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. If a prolonged government shutdown or other disruption occurs, including due to travel restrictions, staffing shortages, or if global health or other concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities in a timely manner, it could significantly impact the ability of the FDA to timely review and process AMTI’s regulatory submissions, which could have a material adverse effect on AMTI’s business. Further, in AMTI’s operations as a public company, future government shutdowns could impact AMTI’s ability to access the public markets and obtain necessary capital in order to properly capitalize and continue AMTI’s operations.

 

AMTI may never receive approval to market and commercialize any product candidate. Even if AMTI obtains regulatory approval, the approval may be for targets, disease indications or patient populations that are not as broad as AMTI intended or desired or may require labeling that includes significant use or distribution restrictions or safety warnings. AMTI may be subject to post-marketing testing requirements to maintain regulatory approval. In addition, upon obtaining any marketing approvals, AMTI may have difficulty in establishing the necessary sales and marketing capabilities to gain market acceptance.

 

If any of AMTI’s product candidates prove to be ineffective, unsafe or commercially unviable, AMTI’s entire pipeline could have little, if any, value, and it may prove to be difficult or impossible to finance the further development of AMTI’s pipeline. Any of these events would have a material and adverse effect on AMTI’s business, financial condition, results of operations, and prospects.

 

AMTIs product candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential, or result in significant negative consequences.

 

Adverse events or other undesirable side effects caused by AMTI’s product candidates could cause AMTI or regulatory authorities to interrupt, delay, or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA, EMA, or other comparable foreign regulatory authorities. AMT-101 is a gastrointestinal (GI)-selective oral fusion of interleukin (IL)-10, and previous clinical trials conducted by others in the field with systemic IL-10 showed significant toxicities that prevented further development. AMT-126 is a GI-selective oral fusion of IL-22, and in current clinical trials conducted by others in the field with systemic IL-22, toxicities and adverse events have been observed.

 

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Side effects could affect patient recruitment, the ability of enrolled patients to complete the clinical trial, and/or result in potential product liability claims. AMTI is required to maintain product liability insurance pursuant to certain of AMTI’s development and commercialization agreements. AMTI may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect AMTI against losses due to liability. A successful product liability claim or series of claims brought against AMTI could adversely affect AMTI’s results of operations, business, and reputation. In addition, regardless of merit or eventual outcome, product liability claims may result in impairment of AMTI’s business reputation, withdrawal of clinical trial participants, costs due to related litigation, distraction of management’s attention from AMTI’s primary business, initiation of investigations by regulators, substantial monetary awards to patients or other claimants, the inability to commercialize AMTI’s product candidates, and decreased demand for AMTI’s product candidates, if approved for commercial sale.

 

Additionally, if one or more of AMTI’s product candidates receives marketing approval, and AMTI or others later identify undesirable side effects or adverse events caused by such products, a number of potentially significant negative consequences could result, including but not limited to:

 

 

regulatory authorities may withdraw approvals of such product and cause AMTI to recall AMTI’s products;

 

 

regulatory authorities may require additional warnings on the label;

 

 

AMTI may be required to change the way the product is administered or conduct additional clinical trials or post-approval studies;

 

 

AMTI may be required to create a risk evaluation and mitigation strategy plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers, and/or other elements, such as boxed warning on the packaging, to assure safe use;

 

 

AMTI could be sued and held liable for harm caused to patients; and

 

 

AMTI’s reputation may suffer.

 

Any of these events could prevent AMTI from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm AMTI’s business, financial condition, results of operations, and prospects.

 

If product liability lawsuits are brought against AMTI, AMTI may incur substantial liabilities and may be required to limit commercialization of AMTIs products.

 

AMTI faces an inherent risk of product liability as a result of the clinical testing of AMTI’s product candidates and will face an even greater risk when and if AMTI commercializes any products. For example, AMTI may be sued if AMTI’s products cause or are perceived to cause injury or are found to be otherwise unsuitable during clinical testing, manufacturing, marketing, or sale post-approval. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, or a breach of warranties. Claims could also be asserted under state consumer protection laws. If AMTI cannot successfully defend itself against product liability claims, AMTI may incur substantial liabilities or be required to limit testing and commercialization of AMTI’s products. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

 

 

decreased or interrupted demand for AMTI’s products;

 

 

injury to AMTI’s reputation;

 

 

withdrawal of clinical trial participants and inability to continue clinical trials;

 

 

initiation of investigations by regulators;

 

 

costs to defend the related litigation;

 

 

a diversion of management’s time and AMTI’s resources;

 

 

substantial monetary awards to clinical trial participants or patients;

 

 

product recalls, withdrawals or labeling, marketing, or promotional restrictions;

 

 

loss of revenue;

 

 

exhaustion of any available insurance and AMTI’s capital resources; and

 

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the inability to commercialize any products.

 

AMTI’s inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products AMTI develops. AMTI’s insurance policies may have various exclusions, and AMTI may be subject to a product liability claim for which AMTI has no coverage. AMTI may have to pay any amounts awarded by a court or negotiated in a settlement that exceed AMTI’s coverage limitations or that are not covered by AMTI’s insurance, and AMTI may not have, or be able to obtain, sufficient capital to pay such amounts. Even if AMTI’s agreements with any future corporate collaborators entitle AMTI to indemnification against losses, such indemnification may not be available or adequate should any claim arise.

 

Obtaining and maintaining regulatory approval of AMTIs product candidates in one jurisdiction does not mean that AMTI will be successful in obtaining regulatory approval of AMTIs product candidates in other jurisdictions.

 

If AMTI succeeds in developing any products, AMTI intends to market them in the United States as well as the European Union and other foreign jurisdictions. In order to market and sell AMTI’s products in other jurisdictions, AMTI must obtain separate marketing approvals and comply with numerous and varying regulatory requirements.

 

Obtaining and maintaining regulatory approval of AMTI’s product candidates in one jurisdiction does not guarantee that AMTI will be able to obtain or maintain regulatory approval in any other jurisdiction, but a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the FDA or EMA grants marketing approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing, and promotion of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from those in the United States, including additional preclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that AMTI intends to charge for AMTI’s products is also subject to approval.

 

Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties, and costs for AMTI and could delay or prevent the introduction of AMTI’s products in certain countries. If AMTI or any partner AMTI works with fails to comply with the regulatory requirements in international markets or fail to receive applicable marketing approvals, AMTI’s target market will be reduced, and AMTI’s ability to realize the full market potential of AMTI’s product candidates will be harmed.

 

Coverage and reimbursement decisions by third-party payors may have an adverse effect on pricing and market acceptance. If reimbursement is not available or is not sufficient for AMTIs products, it is less likely that AMTIs products will be widely used.

 

Even if AMTI’s product candidates are approved for sale by the appropriate regulatory authorities, market acceptance and sales of these products will depend on coverage and reimbursement policies and may be affected by future healthcare reform measures. Third-party payors, such as government healthcare programs, private health insurers and health maintenance organizations, decide what therapies they will cover and establish the level of reimbursement for such therapies. AMTI cannot be certain that coverage and reimbursement will be available or adequate for any products that AMTI develops. If coverage and adequate reimbursement is not available or is available on a limited basis, AMTI may not be able to successfully commercialize any of AMTI’s product candidates, if approved.

 

There may be significant delays in obtaining coverage and reimbursement for newly approved therapies, and coverage may be more limited than the purposes for which the therapy is approved by the FDA, EMA or other regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that a therapy will be paid for in all cases or at a rate that is commensurate with AMTI’s product pricing that covers AMTI’s costs, including research, development, manufacturing, sale and distribution expenses. Interim reimbursement levels for new therapies, if applicable, may also be insufficient to cover AMTI’s costs and may not be made permanent. Reimbursement rates may vary according to the use of the therapy and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost therapies and may be incorporated into existing payments for other services. Further, no uniform policy for coverage and reimbursement exists in the United States, and coverage and reimbursement can differ significantly from payor to payor. Net prices for therapies may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future change to laws that presently restrict imports of therapies from countries where they may be sold at lower prices than in the United States. AMTI’s inability to promptly obtain coverage and adequate reimbursement from third-party payors, including both government-funded and private payors, for any approved products that AMTI develops could have a material adverse effect on AMTI’s operating results, AMTI’s ability to raise capital needed to commercialize products and AMTI’s overall financial condition.

 

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AMTI has conducted clinical trials for AMT-101 and AMT-126 outside of the United States, and AMTI may do so for AMTIs other product candidates, which exposes AMTI to additional risks. For example, the FDA, EMA, and applicable foreign regulatory authorities may not accept data from such clinical trials, in which case AMTIs development plans will be delayed, which could materially harm AMTIs business.

 

AMTI has conducted AMTI’s Phase 2 clinical trials for AMT-101 and AMTI’s Phase 1 clinical trial for AMT-126 in countries outside of the United States. AMTI also plans to conduct additional future clinical trials outside the United States. The acceptance of clinical trial data from clinical trials conducted outside the United States by the FDA, EMA, or applicable foreign regulatory authority may be subject to certain conditions. In cases where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the United States population and United States medical practice; and (ii) the clinical trials were performed by clinical investigators of recognized competence and pursuant to cGCP regulations. Additionally, the FDA’s clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met. Many foreign regulatory bodies have similar approval requirements. In addition, such foreign clinical trials would be subject to the applicable local laws of the foreign jurisdictions where the clinical trials are conducted. There can be no assurance that the FDA, EMA, or any applicable foreign regulatory authority will accept data from clinical trials conducted outside their applicable jurisdiction. If the FDA, EMA, or any applicable foreign regulatory authority does not accept such data, it would result in the need for additional clinical trials, which would be costly and time-consuming and delay aspects of AMTI’s business plan, and which may result in AMTI’s product candidates not receiving approval or clearance for commercialization in the applicable jurisdiction.

 

Conducting clinical trials outside the United States also exposes AMTI to additional risks, including risks associated with:

 

 

additional foreign regulatory requirements;

 

 

foreign exchange fluctuations;

 

 

increased supply chain complexity, including compliance with foreign manufacturing, customs, shipment and storage requirements and regulations;

 

 

regional differences in medical practice and clinical trial research;

 

 

diminished protection of intellectual property in some countries; and

 

 

interruptions or delays in AMTI’s clinical trials resulting from geopolitical events such as war or terrorism including the conflicts between Russia and Ukraine or Israel and Hamas.

 

For example, currently there is a conflict between Russia and Ukraine. AMTI’s AMT-101 Phase 2 LOMBARD and AMT-101 Phase 2 MARKET clinical trials included clinical trial sites located in Ukraine, Russia, and other Eastern European countries, and this conflict impacted AMTI’s ability to conduct these clinical trials. AMTI may conduct future clinical trials in Ukraine, Russia and other Eastern European countries, and the conflict may impact AMTI’s ability to timely and successfully complete such clinical trials. This could negatively impact the completion of AMTI’s clinical trials and/or analyses of clinical results or result in increased costs, all of which could materially impact AMTI’s ability to obtain regulatory approval for AMTI’s product candidates and harm AMTI’s business.

 

Also, recent and potential global supply chain disruptions and geopolitical events may impact AMTI’s ability to manufacture and deliver clinical trial drug supply to AMTI’s clinical trial sites, particularly those outside the United States. If AMTI or AMTI’s contractors are unable to deliver sufficient quantities of a study product candidate, the completion of AMTI’s clinical trials may be delayed, which could materially harm AMTI’s business.

 

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In addition to U.S. regulatory requirements, AMTI is also subject to regulation by foreign regulatory authorities, ethics committees, and other governmental entities with respect to clinical trials AMTI conduct or sponsor outside of the U.S. For example, the EU Clinical Trials Regulation (“CTR”) became applicable on January 31, 2022, repealing the EU Clinical Trials Directive. The implementation of the CTR also includes the implementation of the Clinical Trials Information System, a new clinical trial portal and database that will be maintained by the EMA in collaboration with the European Commission and the EU Member States. Complying with changes in regulatory requirements can incur additional costs, delay AMTI’s clinical development plans, or expose AMTI to greater liability if AMTI is slow or unable to adapt to changes in existing requirements or new requirements or policies governing AMTI’s business operations, including AMTI’s clinical trials.

 

Further, Brexit and uncertainty in the regulatory framework as well as future legislation in the UK, European Union, and other jurisdictions can lead to disruption in the execution of international multi-center clinical trials, the monitoring of adverse events through pharmacovigilance programs, the evaluation of the benefit-risk profiles of new medicinal products, and determination of marketing authorization across different jurisdictions. Uncertainty in the regulatory framework could also result in disruption to the supply and distribution as well as the import/export of active pharmaceutical ingredients and finished product candidates. Such a disruption could create supply difficulties for any clinical trials. The cumulative effects of the disruption to the regulatory framework, uncertainty in future regulation, and changes to existing regulations may increase AMTI’s development lead time to marketing authorization and commercialization of products in the European Union and/or the UK and increase AMTI’s costs. AMTI cannot predict the impact of such changes and future regulation on AMTI’s business or the results of AMTI’s operations.

 

Preliminary data from AMTIs clinical trials that AMTI announces or publishes from time to time may change as additional patient data become available and are subject to verification procedures that could result in material changes in the final data or clinical conclusions.

 

From time to time, AMTI may publicly disclose preliminary data from AMTI’s clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or clinical trial such as data from AMTI’s clinical trials of AMT-101 and AMT-126. AMTI also makes assumptions, estimations, calculations and conclusions as part of AMTI’s analyses of data, and AMTI may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the preliminary results that AMTI reports may differ from future results of the same preclinical studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data AMTI previously published.

 

Further, others, including regulatory agencies, may not accept or agree with AMTI’s assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular product candidate, AMTI’s ability to advance a product candidate to the next phase of clinical development, the approvability or commercialization of the particular product candidate or product, and AMTI in general. In addition, the information AMTI chooses to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what AMTI determines is the material or otherwise appropriate information to include in AMTI’s disclosure, and any information AMTI determines not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, product candidate or AMTI’s business. If the preliminary data that AMTI reports differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, AMTI’s ability to obtain approval for, and commercialize, AMTI’s product candidates may be harmed, which could harm AMTI’s business, operating results, prospects or financial condition.

 

Even if AMTI obtains regulatory approval for a product candidate, AMTIs products will remain subject to extensive regulatory scrutiny.

 

If any of AMTI’s product candidates are approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and submission of safety, efficacy, and other post-market information, including both federal and state requirements in the United States and requirements of comparable foreign regulatory authorities.

 

Manufacturers and manufacturers’ facilities are required to comply with extensive requirements imposed by the FDA, EMA, and comparable foreign regulatory authorities, including ensuring that quality control and manufacturing procedures conform to cGMP regulations. As such, AMTI and AMTI’s contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any NDA, BLA, or marketing authorization application (“MAA”). Accordingly, AMTI and others with whom AMTI works with must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, and quality control.

 

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Any regulatory approvals that AMTI receives for its product candidates will be subject to limitations on the approved indicated uses for which the product may be marketed and promoted or to the conditions of approval (including the requirement to implement a risk evaluation and mitigation strategy), or contain requirements for potentially costly post-marketing testing. AMTI will be required to report certain adverse reactions and production problems, if any, to the FDA, EMA, and comparable foreign regulatory authorities. The FDA and other agencies, including the Department of Justice, closely regulate and monitor the post-approval marketing and promotion of products to ensure that they are manufactured, marketed, and distributed only for the approved indications and in accordance with the provisions of the approved labeling. AMTI will have to comply with requirements concerning advertising and promotion for AMTI’s products. Promotional communications with respect to biologic therapeutics are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label. As such, AMTI may not promote its products for indications or uses for which they do not have approval, commonly referred to as “off-label uses.” The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label may be subject to significant liability. However, physicians may, in their independent medical judgment, prescribe legally available products for off-label uses. The FDA does not regulate the behavior of physicians in their choice of treatments, but the FDA does restrict manufacturer communications on the subject of off-label use of their products. The holder of an approved NDA, BLA, or MAA must submit new or supplemental applications and obtain approval for certain changes to the approved product, product labeling, or manufacturing process. AMTI could also be asked to conduct post-marketing clinical trials to verify the safety and efficacy of AMTI’s products in general or in specific patient subsets. If original marketing approval was obtained via the accelerated approval pathway, AMTI could be required to conduct a successful post-marketing clinical trial to confirm clinical benefit for AMTI’s products.

 

An unsuccessful post-marketing clinical trial or failure to complete such a clinical trial could result in the withdrawal of marketing approval. In December 2022, the Consolidated Appropriations Act, 2023, including the Food and Drug Omnibus Reform Act (“FDORA”), was signed into law. FDORA made several changes to the FDA’s authorities and its regulatory framework, including, among other changes, reforms to the accelerated approval pathway, such as requiring the FDA to specify conditions for post-approval study requirements and setting forth procedures for the FDA to withdraw a product on an expedited basis for non-compliance with post-approval requirements.

 

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, such regulatory agency may impose restrictions on that product or AMTI, including requiring withdrawal of the product from the market. If AMTI fails to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:

 

 

issue warning letters that would result in adverse publicity;

 

 

impose civil or criminal penalties;

 

 

suspend or withdraw regulatory approvals;

 

 

suspend any of AMTI’s clinical trials;

 

 

refuse to approve pending applications or supplements to approved applications submitted by AMTI;

 

 

impose restrictions on AMTI’s operations;

 

 

seize or detain products; or

 

 

require a product recall.

 

Any government investigation of alleged violations of law could require AMTI to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect AMTI’s ability to commercialize and generate revenue from AMTI’s products. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of AMTI and AMTI’s operating results will be adversely affected.

 

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AMTI has sought and may again seek orphan drug designation for one or more of its product candidates, but AMTI may be unable to obtain such designations or to maintain the benefits associated with orphan drug status, including market exclusivity, which may cause AMTIs revenue, if any, to be reduced.

 

AMTI sought and, in November 2022, received orphan drug designation for AMT-101 in patients with pouchitis. In the future, AMTI may seek orphan drug designations for one or more of AMTI’s product candidates, but may be unable to obtain an orphan drug designation for any additional product candidates. Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States when there is no reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be recovered from sales in the United States for that drug or biologic. Orphan drug designation must be requested before submitting an NDA or BLA. In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

 

If a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other NDA or BLA applications to market the same drug or biologic for the same indication for seven years, except in limited circumstances such as a showing of clinical superiority to the product with orphan exclusivity or if FDA finds that the holder of the orphan exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan product to meet the needs of patients with the disease or condition for which the drug was designated. Furthermore, the FDA can waive orphan exclusivity if AMTI is unable to manufacture sufficient supply of AMTI’s product.

 

In Catalyst Pharms., Inc. v. Becerra, 14 F.4th 1299 (11th Cir. 2021), the court disagreed with the FDA’s longstanding position that the orphan drug exclusivity only applies to the approved use or indication within an eligible disease. This decision created uncertainty in the application of the orphan drug exclusivity. On January 24, 2023, the FDA published a notice in the Federal Register to clarify that while the agency complies with the court’s order in Catalyst, FDA intends to continue to apply its longstanding interpretation of the regulations to matters outside of the scope of the Catalyst order - that is, the agency will continue tying the scope of orphan-drug exclusivity to the uses or indications for which a drug is approved, which permits other sponsors to obtain approval of a drug for new uses or indications within the same orphan designated disease or condition that have not yet been approved. It is unclear how future litigation, legislation, agency decisions, and administrative actions will impact the scope of the orphan drug exclusivity.

 

A breakthrough therapy designation or Fast Track designation by the FDA for a drug may not lead to a faster development or regulatory review or approval process, and it would not increase the likelihood that the drug will receive marketing approval.

 

In the future, AMTI may seek a breakthrough therapy designation for one or more of AMTI’s investigational medicines. A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For drugs that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the clinical trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Drugs designated as breakthrough therapies by the FDA are also eligible for priority review if supported by clinical data at the time of the submission of the biologics license application.

 

Designation as a breakthrough therapy is at the discretion of the FDA. Accordingly, even if AMTI believes that one of AMTI’s investigational medicines meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a breakthrough therapy designation for a drug may not result in a faster development process, review, or approval compared to drugs considered for approval under conventional FDA procedures and it would not assure ultimate approval by the FDA. In addition, even if one or more of AMTI’s investigational medicines qualify as breakthrough therapies, the FDA may later decide that the investigational medicine no longer meets the conditions for qualification, or it may decide that the time period for FDA review or approval will not be shortened.

 

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AMTI may seek Fast Track designation for some of AMTI’s investigational medicines. If a therapy is intended for the treatment of a serious or life-threatening condition and the therapy demonstrates the potential to address significant unmet medical needs for this condition, the drug sponsor may apply for Fast Track designation. The FDA has broad discretion whether or not to grant this designation, and even if AMTI believes a particular investigational medicine is eligible for this designation, AMTI cannot assure you that the FDA would decide to grant it. Even if AMTI does receive Fast Track designation, AMTI may not experience a faster development process, review, or approval compared to conventional FDA procedures. If AMTI’s clinical development program does not continue to meet the criteria for Fast Track designation, or if AMTI’s clinical trials are delayed, suspended, or terminated, or put on clinical hold due to unexpected adverse events or issues with clinical supply, AMTI will not receive the benefits associated with the Fast Track program. Furthermore, Fast Track designation and priority review do not change the standards for approval. The FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from AMTI’s clinical development program. Fast Track designation alone does not guarantee qualification for the FDA’s priority review procedures.

 

Current and future legislation may increase the difficulty and cost for AMTI to commercialize AMTIs product candidates, if approved, and affect the prices AMTI may obtain.

 

Third-party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In both the United States and certain foreign jurisdictions, there have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal, and state levels directed at containing or lowering the cost of healthcare. AMTI cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations, and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect:

 

 

the demand for AMTI’s product candidates, if AMTI obtains regulatory approval;

 

 

AMTI’s ability to receive or set a price that AMTI believes is fair for its products;

 

 

AMTI’s ability to generate revenue and achieve or maintain profitability;

 

 

the level of taxes that AMTI is required to pay; and

 

 

the availability of capital.

 

In March 2010, the Patient Protection and Affordable Care Act (“ACA”) was enacted, which includes measures that have significantly changed the way healthcare is financed by both governmental and private insurers. The ACA continues to significantly impact the United States’ pharmaceutical industry. Since its enactment, there have been executive, judicial, and Congressional challenges to certain aspects of the ACA. In June 2021, the United States Supreme Court held that Texas and other challengers had no legal standing to challenge the ACA, dismissing the case without specifically ruling on the constitutionality of the ACA. Accordingly, the ACA remains in effect in its current form. On January 28, 2021, President Biden issued an executive order instructing certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including, among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how this Supreme Court decision, future litigation, and healthcare measures promulgated by the current administration will impact the ACA, AMTI’s business, financial condition, and results of operations. Complying with any new legislation or reversing changes implemented under the ACA could be time-intensive and expensive, resulting in a material adverse effect on AMTI’s business.

 

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year pursuant to the Budget Control Act of 2011, which began in 2013 and will remain in effect through 2031, with the exception of a temporary suspension implemented under various COVID-19 relief legislation from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken. Under current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 4% in the final fiscal year of the sequester.

 

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Moreover, there has recently been heightened governmental scrutiny over the manner in which drug manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

 

Under the American Rescue Plan Act of 2021, effective January 1, 2024, the statutory cap on Medicaid Drug Rebate Program rebates that manufacturers pay to state Medicaid programs will be eliminated. Elimination of this cap may require pharmaceutical manufacturers to pay more in rebates than they receive on the sale of products, which could have a material impact on AMTI’s business. In July 2021, the current administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at increasing competition for prescription drugs. In response to this executive order, the U.S. Department of Health and Human Services (“HHS”) released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and potential legislative policies that Congress could pursue to advance these principles. In August 2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries, including allowing the federal government to negotiate a maximum fair price for certain high-priced single source Medicare drugs, imposing penalties and excise tax for manufacturers that fail to comply with the drug price negotiation requirements, requiring inflation rebates for all Medicare Part B and Part D drugs, with limited exceptions, if their drug prices increase faster than inflation, and redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, among other changes. The impact of these legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented by the current administration on AMTI and the biopharmaceutical industry as a whole is unclear. The implementation of cost containment measures or other healthcare reforms may prevent AMTI from being able to generate revenue, attain profitability, or commercialize AMTI’s product candidates if approved.

 

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. A number of states are considering or have recently enacted state drug price transparency and reporting laws that could substantially increase AMTI’s compliance burdens and expose AMTI to greater liability under such state laws once AMTI begins commercialization if AMTI obtains regulatory approval for any of AMTI’s products. AMTI is unable to predict the future course of federal or state healthcare legislation in the United States directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. These and any further changes in the law or regulatory framework that reduce AMTI’s revenue or increase AMTI’s costs could also have a material and adverse effect on AMTI’s business, financial condition, and results of operations.

 

AMTI expects that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, lower reimbursement, and new payment methodologies. This could lower the price that AMTI receives for any approved product. Any denial in coverage or reduction in reimbursement from Medicare or other government-funded programs may result in a similar denial or reduction in payments from private payors, which may prevent AMTI from being able to generate sufficient revenue, attain profitability, or commercialize AMTI’s product candidates, if approved.

 

In the European Union, similar political, economic, and regulatory developments may affect AMTI’s ability to profitably commercialize AMTI’s current or any future products. In addition to continuing pressure on prices and cost containment measures, legislative developments at the European Union or member state level may result in significant additional requirements or obstacles that may increase AMTI’s operating costs. In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies. AMTI’s future products, if any, might not be considered medically reasonable and necessary for a specific indication or cost-effective by third-party payors, an adequate level of reimbursement might not be available for such products and third-party payors’ reimbursement policies might adversely affect AMTI’s ability to sell any future products profitably.

 

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for biologic therapeutics. AMTI cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of AMTI’s product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject AMTI to more stringent product labeling and post-approval testing and other requirements.

 

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AMTI cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If AMTI is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if AMTI is not able to maintain regulatory compliance, AMTI’s product candidates may lose any marketing approval that may have been obtained and AMTI may not achieve or sustain profitability, which would adversely affect AMTI’s business. Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.

 

AMTIs employees, independent contractors, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

 

AMTI is exposed to the risk of fraud, misconduct, or other illegal activity by AMTI’s employees, independent contractors, consultants, commercial partners, and vendors. Misconduct by these parties could include intentional, reckless, and negligent conduct that fails to:

 

 

comply with the laws of the FDA, EMA, and other comparable foreign regulatory authorities;

 

 

provide true, complete, and accurate information to the FDA, EMA, and other comparable foreign regulatory authorities;

 

 

comply with manufacturing standards AMTI has established;

 

 

comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws; or

 

 

report financial information or data accurately or to disclose unauthorized activities to AMTI.

 

If AMTI obtains FDA approval of any of AMTI’s product candidates and begin commercializing those products in the United States, AMTI’s potential exposure under such laws will increase significantly, and AMTI’s costs associated with compliance with such laws are also likely to increase. In particular, research, sales, marketing, education, and other business arrangements in the healthcare industry are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing, and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, educating, marketing and promotion, sales and commission, certain customer incentive programs, and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials, which could result in regulatory sanctions and cause serious harm to AMTI’s reputation. AMTI has adopted a code of business conduct and ethics, but it is not always possible to identify and deter misconduct by employees and third parties, and the precautions AMTI takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting AMTI from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws. If any such actions are instituted against AMTI, and AMTI is not successful in defending itself or asserting AMTI’s rights, those actions could have a significant impact on AMTI’s business, including the imposition of significant fines or other sanctions.

 

If AMTI fails to comply with healthcare laws, AMTI could face substantial penalties and AMTIs business, operations, and financial conditions could be adversely affected.

 

If AMTI obtains FDA approval for any of AMTI’s product candidates and begin commercializing those products in the United States, AMTI’s operations will be subject to various federal and state fraud and abuse laws. The laws that AMTI is currently subject to or which AMTI may become subject to if AMTI obtains FDA approval of any of AMTI’s product candidates, and which may impact AMTI’s operations include the following:

 

 

The federal Anti-Kickback Statute which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering, or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order, or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

 

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Federal civil and criminal false claims laws, including the False Claims Act, which can be enforced through civil “qui tam” or “whistleblower” actions, and civil monetary penalty laws, impose criminal and civil penalties against individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other third-party payors that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease, or conceal an obligation to pay money to the federal government. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of these statutes or specific intent to violate them in order to have committed a violation.

 

 

The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).

 

 

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009.

 

 

The federal Physician Payment Sunshine Act, created under the ACA, and its implementing regulations, require applicable manufacturers of drugs, devices, biologicals, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the HHS under the Open Payments Program, information related to certain payments and other transfers of value made in the previous year to covered recipients, including physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician healthcare professionals (such as physician assistants and nurse practitioners) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. The information reported annually is publicly available on a searchable website.

 

 

Analogous state and foreign laws and regulations, such as state and foreign anti-kickback and false claims laws, may apply to pharmaceutical business practices, including but not limited to, research, distribution, sales and marketing arrangements, as well as submitting claims involving healthcare items or services reimbursed by any third-party payor, including commercial insurers.

 

 

State laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines, and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that may be made to healthcare providers and other potential referral sources.

 

 

State and local laws that require drug manufacturers to file reports with states regarding pricing and marketing information, such as the tracking and reporting of gifts, compensation and other remuneration, and items of value provided to healthcare professionals and entities.

 

 

State and local laws that require the registration of pharmaceutical sales representatives.

 

 

State and foreign laws that govern the privacy and security of personal information (including health information) in certain circumstances. These include, but are not limited to, the EU General Data Protection Regulation, and the California Consumer Privacy Act, as amended and expanded by the California Privacy Rights Act, each of which is discussed below. Many of these laws governing the privacy and security of personal information differ from each other in significant ways and may not have the same effects or obligations, thus complicating compliance efforts.

 

In addition, AMTI is subject to federal and state consumer protection and unfair competition laws that broadly regulate marketplace activities and activities that potentially harm consumers.

 

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of AMTI’s business activities could, despite AMTI’s efforts to comply, be subject to challenge under one or more of such laws. Efforts to ensure that AMTI’s business arrangements will comply with applicable healthcare laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that AMTI’s business practices may not comply with current or future statutes, regulations, or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against AMTI, and AMTI is not successful in defending itself or asserting its rights, those actions could have a significant impact on AMTI’s business, including the imposition of significant civil, criminal, and administrative penalties, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid, and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of AMTI’s operations, any of which could adversely affect AMTI’s ability to operate AMTI’s business and AMTI’s results of operations. In addition, the approval and commercialization of any of AMTI’s product candidates outside the United States will also likely subject AMTI to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.

 

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If AMTI or any contract manufacturers and suppliers AMTI engages fail to comply with environmental, health, and safety laws and regulations, AMTI could become subject to fines or penalties or incur costs that could have a material adverse effect on AMTIs business.

 

AMTI and any contract manufacturers and suppliers AMTI engages are subject to numerous federal, state, and local environmental, health, and safety laws, regulations, and permitting requirements, including those governing laboratory procedures; the generation, handling, use, storage, treatment, and disposal of hazardous and regulated materials and wastes; the emission and discharge of hazardous materials into the ground, air, and water; and employee health and safety. AMTI’s operations involve the use of hazardous and flammable materials, including chemicals and biological and radioactive materials. AMTI’s operations also produce hazardous waste. AMTI generally contracts with third parties for the disposal of these materials and wastes. AMTI cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from AMTI’s use of hazardous materials, AMTI could be held liable for any resulting damages, and any liability could exceed AMTI’s resources. Under certain environmental laws, AMTI could be held responsible for costs relating to any contamination at AMTI’s past facilities and at third-party facilities. AMTI also could incur significant costs associated with civil or criminal fines and penalties.

 

Compliance with applicable environmental laws and regulations may be expensive, and current or future environmental laws and regulations may impair AMTI’s research, product development, and manufacturing efforts. In addition, AMTI cannot entirely eliminate the risk of accidental injury or contamination from these materials or wastes. Although AMTI maintains workers’ compensation insurance to cover AMTI for costs AMTI may incur due to injuries to AMTI’s employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. AMTI does not carry specific biological or hazardous waste insurance coverage, and AMTI’s property, casualty, and general liability insurance policies only provide limited coverage. Accordingly, in the event of contamination or injury, AMTI could be held liable for damages or be penalized with fines in an amount exceeding AMTI’s resources, and AMTI’s clinical trials or regulatory approvals could be suspended, which could have a material adverse effect on AMTI’s business, financial condition, results of operations, and prospects.

 

AMTIs business activities may be subject to the Foreign Corrupt Practices Act (FCPA) and similar anti-bribery and anti-corruption laws, as well as U.S. and certain foreign export controls, trade sanctions, and import laws and regulations. AMTI can face criminal liability and other serious consequences for violations, which can harm AMTIs business.

 

AMTI’s business activities may be subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations, or rules of other countries in which AMTI operates. These laws generally prohibit companies and their employees and third-party business partners, representatives, and agents from engaging in corruption and bribery, including offering, promising, giving, or authorizing the provision of anything of value, either directly or indirectly, to a government official or commercial party in order to influence official action, direct business to any person, gain any improper advantage, or obtain or retain business. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls. AMTI’s business is heavily regulated and therefore involves significant interaction with government officials, including officials of non-U.S. governments. Additionally, in many countries, healthcare providers are employed by the government, and the purchasers of biopharmaceuticals are government entities; therefore, AMTI’s dealings with these providers and purchasers are subject to regulation and such healthcare providers and employees of such purchasers may be considered “foreign officials” as defined in the FCPA. Recently, the SEC and Department of Justice have increased their FCPA enforcement activities with respect to biotechnology companies. In addition to AMTI’s own employees, AMTI leverages third parties to conduct AMTI’s business abroad, such as managing AMTI’s clinical trials and obtaining government licenses and approvals. AMTI and AMTI’s third-party business partners, representatives and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and AMTI may be held liable for the corrupt or other illegal activities of AMTI’s employees, AMTI’s third-party business partners, representatives and agents, even if AMTI does not explicitly authorize such activities. There is no certainty that AMTI’s employees or the employees of AMTI’s third-party business partners, representatives and agents will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, debarment from U.S. and other government contracts, substantial diversion of management’s attention, significant legal fees and fines, severe criminal or civil sanctions against AMTI, AMTI’s officers, or AMTI’s employees, disgorgement, and other sanctions and remedial measures, and prohibitions on the conduct of AMTI’s business. Any such violations could include prohibitions on AMTI’s ability to offer AMTI’s products in one or more countries and could materially damage AMTI’s reputation, AMTI’s brand, AMTI’s international expansion efforts, AMTI’s ability to attract and retain employees, and AMTI’s business, prospects, operating results, financial condition and stock price.

 

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In addition, AMTI’s products may be subject to U.S. and foreign export controls, trade sanctions and import laws and regulations. Governmental regulation of the import or export of AMTI’s products, or AMTI’s failure to obtain any required import or export authorization for AMTI’s products, when applicable, could harm AMTI’s business. Furthermore, U.S. export control laws and economic sanctions prohibit the provision of certain products and services to countries, governments, and persons targeted by U.S. sanctions. For example, U.S. sanctions that have been or may be imposed as a result of the conflicts between Russia and Ukraine or Israel and Hamas may impact AMTI’s ability to continue activities at clinical trial sites within regions covered by such sanctions. If AMTI fails to comply with export and import regulations and such economic sanctions, penalties could be imposed, including fines and/or denial of certain export privileges.

 

Data collection under European and U.S. laws is governed by restrictive regulations addressing the collection, use, processing and, in the case of Europe, cross-border transfer, of personal information.

 

AMTI may collect, process, use or transfer personal information from individuals located in the EU and UK in connection with AMTI’s business, including in connection with conducting clinical trials in the EU and UK. Additionally, if any of AMTI’s product candidates are approved, AMTI may seek to commercialize those products in the EU and UK. The collection and use of personal health data in the EU and UK are governed by laws, regulations, and directives, including the General Data Protection Regulation (EU) 2016/679 (“GDPR”) and a UK version of the GDPR (combining the GDPR and the UK’s Data Protection Act 2018). This legislation imposes requirements relating to having legal bases for processing personal information relating to identifiable individuals and transferring such information outside of the European Economic Area (“EEA”), in the case of the GDPR, and the UK, including to the United States, providing details to those individuals regarding the processing of their personal information, keeping personal information secure, having data processing agreements with third parties who process personal information, responding to individuals’ requests to exercise their rights in respect of their personal information, reporting security breaches involving personal data to the competent national data protection authority and affected individuals, appointing data protection officers, conducting data protection impact assessments and record-keeping. This legislation imposes significant responsibilities and liabilities in relation to personal data that AMTI process, and AMTI may be required to put in place additional mechanisms ensuring compliance. In particular, with respect to cross-border transfers of personal data, judicial and regulatory developments in the EU have created uncertainty. In a decision issued by the Court of Justice of the European Union (“CJEU”) on July 16, 2020, the CJEU invalidated one mechanism for cross-border personal data transfer, the EU-U.S. Privacy Shield, and imposed additional obligations on companies, including AMTI, relying on standard contractual clauses (“SCCs”) issued by the European Commission for cross-border personal data transfers. The European Commission released new SCCs designed to address the CJEU concerns on June 4, 2021. On February 2, 2022, the United Kingdom’s Information Commissioner’s Office issued new standard contractual clauses (“UK SCCs”) to support personal data transfers out of the UK. AMTI has undertaken certain efforts to conform transfers of personal data from the EEA and UK to the United States to AMTI’s understanding of current regulatory obligations and guidance of data protection authorities, but the CJEU’s decision, the revised SCCs and UK SCCs, regulatory guidance and opinions, and other developments relating to cross-border data transfer may require AMTI to implement additional contractual and technical safeguards for any personal data transferred out of the EEA and UK, which may increase compliance costs, lead to increased regulatory scrutiny or liability, may require additional contractual negotiations, and may adversely impact AMTI’s business, financial condition and operating results. Any actual or alleged failure to comply with the requirements of the GDPR or other laws, regulations, and directives of the member states of the EU and UK may result in substantial fines, other administrative penalties and civil claims being brought against AMTI, which could have a material adverse effect on AMTI’s business, financial condition, and results of operations.

 

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In addition, U.S. states are adopting new laws or amending existing laws and regulations, requiring attention to frequently changing regulatory requirements applicable to data related to individuals. For example, California has enacted the California Consumer Privacy Act (“CCPA”), which took effect on January 1, 2020 and has been dubbed the first “GDPR-like” law in the United States. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined and which can include any of AMTI’s current or future employees who may be California residents or any other California residents whose data AMTI collect or process) and provide such residents new ways to opt out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. As AMTI expand AMTI’s operations and clinical trials (both preclinical or clinical), the CCPA may increase AMTI’s compliance costs and potential liability. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States.

 

Additionally, a new privacy law, the California Privacy Rights Act (“CPRA”), was approved by California voters in the election on November 3, 2020. The CPRA creates obligations relating to consumer data as of January 1, 2022, with enforcement anticipated to begin July 1, 2023. The CPRA modifies the CCPA significantly, potentially resulting in further uncertainty and requiring AMTI to incur additional costs and expenses in an effort to comply. Additionally, other U.S. states continue to propose, and in certain cases adopt, privacy-focused legislation such as Colorado, Connecticut, Delaware, Oregon, Texas, Utah, and Virginia. Aspects of these state laws remain unclear, resulting in further uncertainty and potentially requiring AMTI to modify AMTI’s data practices and policies and to incur substantial additional costs and expenses in an effort to comply. Additionally, the U.S. federal government is contemplating federal privacy legislation.

 

Laws, regulations, and directives relating to privacy and data security are not consistent across jurisdictions, and they may impose conflicting or uncertain obligations. Compliance with laws, regulations, and directives is a rigorous, costly, and time-intensive process, and AMTI may find it necessary or appropriate to put in place additional mechanisms ensuring compliance with new and changing data protection obligations. Actual or alleged noncompliance with any such laws, regulations, and directives may lead to regulatory investigations, enforcement actions and other proceedings, claims, and litigation, with the potential for significant fines, penalties, and other liabilities in the event of actual or alleged noncompliance. Any of these could adversely affect AMTI’s business, financial condition and results of operations.

 

Risks Related to AMTIs Intellectual Property

 

If AMTI is unable to obtain and maintain patent protection for any product candidates AMTI develops, AMTIs competitors could develop and commercialize products similar or identical to AMTIs, and AMTIs ability to successfully commercialize any product candidates AMTI may develop may be adversely affected.

 

AMTI’s success depends in large part on AMTI’s ability to obtain and maintain patent protection in the United States and other countries with respect to AMTI’s proprietary product candidates and other technologies AMTI may develop. AMTI seeks to protect its proprietary position by filing patent applications in the United States and abroad relating to AMTI’s core programs and product candidates, as well as other technologies that are important to AMTI’s business. AMTI has filed or intend to file patent applications on aspects of AMTI’s technology and core product candidates; however, there can be no assurance that such patent applications will issue as granted patents around the world. The requirements for patentability differ in certain countries, and certain countries have heightened requirements for patentability. Furthermore, in some cases, AMTI has only filed provisional patent applications on certain aspects of AMTI’s technology and product candidates and each of these provisional patent applications is not eligible to become an issued patent until, among other things, AMTI files a non-provisional patent application within 12 months of the filing date of the applicable provisional patent application. Any failure to file a non-provisional patent application within this timeline could cause AMTI to lose the ability to obtain patent protection for the inventions disclosed in the associated provisional patent applications. Furthermore, in some cases, AMTI may not be able to obtain issued claims covering compositions relating to AMTI’s core programs and product candidates, as well as other technologies that are important to AMTI’s business, and instead may need to rely on filing patent applications with claims covering a method of use and/or method of manufacture for protection of such core programs, product candidates, and other technologies. Any changes AMTI makes to its product candidates to cause them to have what AMTI views as more advantageous properties may not be covered by AMTI’s existing patents and patent applications, and AMTI may be required to file new applications and/or seek other forms of protection for any such altered product candidates. There can be no assurance that AMTI would be able to secure patent protection that would adequately cover altered product candidates. There can be no assurance that any such patent applications will issue as granted patents, and even if they do issue, such patent claims may be insufficient to prevent third parties, such as AMTI’s competitors, from utilizing AMTI’s technology. Any failure to obtain or maintain patent protection with respect to AMTI’s core programs and product candidates could have a material adverse effect on AMTI’s business, financial condition, results of operations, and prospects.

 

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If the scope of any patent protection AMTI obtains is not sufficiently broad, or if AMTI loses any of its patent protection, AMTIs ability to prevent AMTIs competitors from commercializing similar or identical technology and product candidates would be adversely affected.

 

The patent position of biopharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has been the subject of much litigation in recent years. As a result, the issuance, scope, validity, enforceability, and commercial value of AMTI’s patent rights are highly uncertain. AMTI’s pending and future patent applications may not result in patents being issued which protect AMTI’s product candidates or other technologies or which effectively prevent others from commercializing competitive technologies and product candidates.

 

Moreover, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Patent applications AMTI owns currently or that in the future issue as patents may not be issued in a form that will provide AMTI with any meaningful protection, prevent competitors or other third parties from competing with AMTI, or otherwise provide AMTI with any competitive advantage. Any patents to which AMTI has rights may be challenged, narrowed, circumvented, or invalidated by third parties. Consequently, AMTI does not know whether product candidates or other technologies will be protectable or remain protected by valid and enforceable patents. AMTI’s competitors or other third parties may be able to circumvent AMTI’s patents by developing similar or alternative technologies or products in a non-infringing manner which could materially adversely affect AMTI’s business, financial condition, results of operations, and prospects.

 

The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and AMTI’s patents may be challenged in the courts or patent offices in the United States and abroad. AMTI may be subject to a third-party pre-issuance submission of prior art to the United States Patent and Trademark Office (“USPTO”), or post-issuance become involved in opposition, derivation, revocation, reexamination, post-grant and inter partes review, or interference proceedings or other similar proceedings challenging AMTI’s patent rights. An adverse determination in any such submission, proceeding, or litigation could reduce the scope of, or invalidate or render unenforceable, such patent rights, allow third parties to commercialize AMTI’s product candidates or other technologies and compete directly with AMTI, without payment to AMTI, or result in AMTI’s inability to manufacture or commercialize products without infringing third-party patent rights. Moreover, AMTI may have to participate in interference proceedings declared by the USPTO to determine priority of invention or in post-grant challenge proceedings, such as post-grant review at the USPTO or oppositions in a foreign patent office, that challenge AMTI’s priority of invention or other features of patentability with respect to AMTI’s patents and patent applications. Such challenges may result in loss of patent rights, loss of exclusivity, or in patent claims being narrowed, invalidated, or held unenforceable, which could limit AMTI’s ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of AMTI’s product candidates and other technologies. Such proceedings also may result in substantial cost and require significant time from AMTI’s scientists and management, even if the eventual outcome is favorable to AMTI. If AMTI is unsuccessful in any such proceeding or other priority or inventorship dispute, AMTI may be required to obtain licenses from third parties, including parties involved in any such interference proceedings or other priority or inventorship disputes. Such licenses may not be available on commercially reasonable terms or at all, or may be non-exclusive. If AMTI is unable to obtain and maintain such licenses, AMTI may need to cease the development, manufacture, and commercialization of one or more of the product candidates AMTI may develop. Termination of these licenses or reduction or elimination of AMTI’s rights under these licenses may result in AMTI’s having to negotiate new or reinstated agreements with less favorable terms, or cause AMTI to lose its rights under these licenses, including AMTI’s rights to important intellectual property or technology. The loss of exclusivity or the narrowing of AMTI’s owned and licensed patent claims could limit AMTI’s ability to stop others from using or commercializing similar or identical technology and products.

 

In addition, given the amount of time required for the development, testing, and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. As a result, AMTI’s intellectual property may not provide AMTI with sufficient rights to exclude others from commercializing products similar or identical to AMTI’s.

 

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Some of AMTI’s patents and patent applications may in the future be co-owned with third parties. In addition, future collaborators or licensors may co-own their patents and patent applications with other third parties with whom AMTI does not have a direct relationship. AMTI’s rights to certain of these patents and patent applications may be dependent, in part, on inter-institutional or other operating agreements between the joint owners of such patents and patent applications, who are not parties to AMTI’s license agreements. If AMTI’s future collaborators or licensors do not have exclusive control of the grant of licenses under any such third-party co-owners’ interest in such patents or patent applications or AMTI is otherwise unable to secure such exclusive rights, such co-owners may be able to license their rights to other third parties, including AMTI’s competitors, and AMTI’s competitors could market competing products and technology to the extent such products and technology are not also covered by AMTI’s intellectual property. In addition, AMTI may need the cooperation of any such co-owners of AMTI’s patents in order to enforce such patents against third parties, and such cooperation may not be provided to AMTI. Any of the foregoing could have a material adverse effect on AMTI’s competitive position, business, financial conditions, results of operations, and prospects.

 

If AMTI is unable to obtain licenses from third parties on commercially reasonable terms or fails to comply with its obligations under such agreements, AMTIs business could be harmed.

 

It may be necessary for AMTI to use the patented or proprietary technology of third parties to commercialize AMTI’s products, in which case AMTI would be required to obtain a license from these third parties. If AMTI is unable to license such technology, or if AMTI is forced to license such technology, on unfavorable terms, AMTI’s business could be materially harmed. If AMTI is unable to obtain a necessary license, AMTI may be unable to develop or commercialize the affected product candidates, which could materially harm AMTI’s business, and the third parties owning such intellectual property rights could seek either an injunction prohibiting AMTI’s sales, or, with respect to AMTI’s sales, an obligation on AMTI’s part to pay royalties and/or other forms of compensation. Even if AMTI is able to obtain a license, it may be non-exclusive, thereby giving AMTI’s competitors access to the same technologies licensed to AMTI.

 

If AMTI fails to comply with its obligations under its license agreements, AMTI’s counterparties may have the right to terminate these agreements, in which event AMTI might not be able to develop, manufacture or market, or may be forced to cease developing, manufacturing, or marketing, any product that is covered by these agreements or may face other penalties under such agreements. Such an occurrence could materially adversely affect the value of the product candidate being developed under any such agreement. Termination of these agreements or reduction or elimination of AMTI’s rights under these agreements may result in AMTI’s having to negotiate new or reinstated agreements with less favorable terms, cause AMTI to lose AMTI’s rights under these agreements, including AMTI’s rights to important intellectual property or technology, or impede, delay or prohibit the further development or commercialization of one or more product candidates that rely on such agreements.

 

AMTIs rights to develop and commercialize AMTIs product candidates may be subject, in part, to the terms and conditions of agreements with others.

 

Agreements AMTI may enter into in the future may not provide exclusive rights to use certain intellectual property and technology retained by the collaborator in all relevant fields of use and in all territories in which AMTI may wish to develop or commercialize AMTI’s technology and products in the future. As a result, AMTI may not be able to prevent competitors or other third parties from developing and commercializing competitive products that utilize technology retained by such collaborators to the extent such products are not also covered by AMTI’s intellectual property.

 

In addition, subject to the terms of any such agreements, AMTI may not have the right to control the preparation, filing, prosecution, and maintenance, and AMTI may not have the right to control the enforcement and defense of certain patents and patent applications retained by the collaborator and provided to AMTI under a limited license. AMTI cannot be certain that patents and patent applications that are controlled by future collaborators will be prepared, filed, prosecuted, maintained, enforced, and defended in a manner consistent with the best interests of AMTI’s business. If AMTI’s collaborators fail to prosecute, maintain, enforce, and defend such patents, or lose rights to those patents or patent applications, the limited rights AMTI has licensed may be reduced or eliminated, AMTI’s right to develop and commercialize any of AMTI’s product candidates that are subject of such licensed rights could be adversely affected, and AMTI may have a reduced ability to prevent competitors from making, using, and selling competing products. In addition, even where AMTI has the right to control patent prosecution of patents and patent applications AMTI has licensed to and from future collaborators, AMTI may still be adversely affected or prejudiced by actions or inactions of future collaborators that took place prior to the date upon which AMTI assumed control over patent prosecution.

 

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AMTI may enter into agreements with future collaborators to option or license certain intellectual property and may need to obtain additional intellectual property rights from others to advance AMTI’s research or allow commercialization of product candidates AMTI may develop. AMTI may be unable to obtain additional intellectual property rights at a reasonable cost or on reasonable terms, if at all. In that event, AMTI may be required to expend significant time and resources to redesign AMTI’s technology, product candidates, or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis. If AMTI is unable to do so, AMTI may be unable to develop or commercialize the affected product candidates, which could harm AMTI’s business, financial condition, results of operations, and prospects significantly. AMTI cannot provide any assurances that third-party patents do not exist which might be enforced against AMTI’s current technology, manufacturing methods, product candidates, or future methods or products resulting in either an injunction prohibiting AMTI’s manufacture or future sales, or, with respect to AMTI’s future sales, an obligation on AMTI’s part to pay royalties and/or other forms of compensation to third parties, which could be significant.

 

Furthermore, AMTI’s or AMTI’s future collaborators’ patents may be subject to a reservation of rights by one or more third parties. The U.S. government may have certain rights to resulting intellectual property. When new technologies are developed with U.S. government funding, the U.S. government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the U.S. government to use the invention or to have others use the invention on its behalf. The U.S. government’s rights may also permit it to disclose the funded inventions and technology to third parties and to exercise march-in rights to use or allow third parties to use the technology developed using U.S. government funding. The U.S. government may exercise its march-in rights if it determines that action is necessary because AMTI fails to achieve the practical application of the government funded technology, or because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, AMTI’s rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in facilities in the United States in certain circumstances and if this requirement is not waived. Any exercise by the U.S. government of such rights or by any third-party of its reserved rights could have a material adverse effect on AMTI’s competitive position, business, financial condition, results of operations, and prospects.

 

If AMTI fails to comply with AMTIs obligations in agreements under which AMTI options or licenses intellectual property rights from future collaborators or licensors or otherwise experience disruptions to AMTIs business relationships with future collaborators or licensors, AMTI could lose intellectual property rights that are important to AMTIs business.

 

AMTI may enter into agreements with future collaborators that impose various economic, development, diligence, commercialization, and other obligations on AMTI. Such collaboration agreements may also require AMTI to meet development timelines, or to exercise commercially reasonable efforts to develop and commercialize licensed products. AMTI’s future collaborators might conclude that AMTI has materially breached its obligations under such agreements and might therefore terminate or seek damages under the agreements, thereby removing or limiting AMTI’s ability to develop and commercialize products and technology covered by these agreements. Termination of these agreements could cause AMTI to lose the rights to certain patents or other intellectual property, or the underlying patents could fail to provide the intended exclusivity, and competitors or other third parties may have the freedom to seek regulatory approval of, and to market, products similar to or identical to AMTI’s and AMTI may be required to cease its development and commercialization of certain of AMTI’s product candidates. Any of the foregoing could have a material adverse effect on AMTI’s competitive position, business, financial conditions, results of operations, and prospects.

 

Moreover, disputes may arise regarding intellectual property subject to a collaboration agreement, including:

 

 

the scope of the option or license rights granted under the agreement and other interpretation-related issues;

 

 

the extent to which AMTI’s technology and processes infringe on intellectual property of the collaborator that is not subject to the option or license rights granted under the agreement;

 

 

the sublicensing of patent and other rights under AMTI’s collaborative development relationships;

 

 

AMTI’s diligence obligations under the agreement and what activities satisfy those diligence obligations;

 

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the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by AMTI’s collaborators and AMTI and AMTI’s other partners; and

 

 

the priority of invention of patented technology.

 

AMTI may enter into agreements to option or license intellectual property or technology from third parties that are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what AMTI believes to be the scope of AMTI’s rights to the relevant intellectual property or technology, or increase what AMTI believes to be AMTI’s financial or other obligations under the relevant agreement, either of which could have a material adverse effect on AMTI’s business, financial condition, results of operations, and prospects. Moreover, if disputes over intellectual property that AMTI has optioned or licensed prevent or impair AMTI’s ability to maintain such arrangements on commercially acceptable terms, AMTI may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect on AMTI’s business, financial conditions, results of operations, and prospects.

 

AMTI may not be able to protect AMTIs intellectual property and proprietary rights throughout the world.

 

Filing, prosecuting, and defending patents on AMTI’s product candidates and other technologies in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect AMTI’s rights to the same extent as the laws of the United States.

 

Consequently, AMTI may not be able to prevent third parties from using AMTI’s inventions in all countries outside the United States, or from selling or importing products made using AMTI’s inventions in and into the United States or other jurisdictions. Competitors may use AMTI’s technologies in jurisdictions where AMTI has not obtained patent protection to develop their own products, and, further, may export otherwise infringing products to territories where AMTI has patent protection, but enforcement is not as strong as that in the United States. These products may compete with AMTI’s products, and AMTI’s patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

 

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biopharmaceutical products, which could make it difficult for AMTI to stop the infringement of AMTI’s patents or marketing of competing products in violation of AMTI’s intellectual property and proprietary rights generally. Proceedings to enforce AMTI’s intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert AMTI’s efforts and attention from other aspects of AMTI’s business, could put AMTI’s patents at risk of being invalidated or interpreted narrowly, could put AMTI’s patent applications at risk of not issuing, and could provoke third parties to assert claims against AMTI. AMTI may not prevail in any lawsuits that AMTI initiates, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, AMTI’s efforts to enforce its intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that AMTI develops or licenses.

 

Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If AMTI or any of AMTI’s future collaborators or licensors is forced to grant a license to third parties with respect to any patents relevant to AMTI’s business, AMTI’s competitive position may be impaired, and AMTI’s business, financial condition, results of operations, and prospects may be adversely affected.

 

Issued patents covering AMTIs product candidates and other technologies could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad.

 

If AMTI initiated legal proceedings against a third party to enforce a patent covering AMTI’s product candidates or other technologies, the defendant could counterclaim that such patent is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may raise claims challenging the validity or enforceability of AMTI’s patents before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation of, cancellation of, or amendment to AMTI’s patents in such a way that they no longer cover AMTI’s product candidates or other technologies or may result in a change in inventorship which could impact AMTI’s exclusive ownership of a patent. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, AMTI cannot be certain that there is no invalidating prior art, of which AMTI and the patent examiner were unaware during prosecution. If a third party were to prevail on a legal assertion of invalidity or unenforceability, AMTI would lose at least part, and perhaps all, of the patent protection on AMTI’s product candidates or other technologies. Such a loss of patent protection would have a material adverse impact on AMTI’s business, financial condition, results of operations, and prospects.

 

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Third-party claims of intellectual property infringement, misappropriation, or other violation against AMTI may prevent or delay the development and commercialization of AMTIs product candidates and other technologies.

 

The fields of designing and developing treatments for immunology, inflammation, and metabolic diseases are highly competitive and dynamic. In addition, while research and development that is taking place by several companies, including AMTI and AMTI’s competitors in oral biologic therapeutics, the technology used in AMTI’s product candidates is still in development and no products utilizing similar technology have yet reached the market. As such, it is difficult to conclusively assess AMTI’s freedom to operate without infringing on third-party rights. This could lead to significant intellectual property related litigation and proceedings relating to AMTI’s, and other third party, intellectual property, and proprietary rights in the future.

 

AMTI’s commercial success depends in part on AMTI’s ability to develop, manufacture, market, and sell any product candidates that AMTI develops and to use AMTI’s proprietary technologies without infringing, misappropriating, and otherwise violating the patents and other intellectual property rights of third parties. There is a substantial amount of complex litigation involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, as well as administrative proceedings for challenging patents, including interference, post-grant review, inter partes review, derivation proceedings, and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions. AMTI may become party to, or threatened with, such actions in the future, regardless of their merit.

 

Numerous U.S. and foreign issued patents and pending patent applications owned by third parties exist in the fields in which AMTI were developing AMTI’s product candidates. AMTI cannot assure you that AMTI’s product candidates and other technologies that AMTI has developed or may develop in the future will not infringe existing or future patents owned by third parties. AMTI may not be aware of patents that have already been issued and that a third party, for example, a competitor in the fields in which AMTI were developing product candidates, and other technologies might assert are infringed by AMTI’s current or future product candidates or other technologies, including claims to compositions, formulations, methods of manufacture or methods of use or treatment that cover AMTI’s product candidates or other technologies. It is also possible that patents owned by third parties of which AMTI is aware, but which AMTI does not believe are relevant to AMTI’s product candidates or other technologies, could be found to be infringed by AMTI’s product candidates or other technologies. In addition, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that AMTI’s product candidates or other technologies may infringe.

 

Third parties may have patents or obtain patents in the future and claim that the manufacture, use, or sale of AMTI’s product candidates or other technologies infringes upon these patents. In the event that any third-party claims that AMTI infringes their patents or that AMTI is otherwise employing their proprietary technology without authorization and initiates litigation against AMTI, even if AMTI believes such claims are without merit, a court of competent jurisdiction could hold that such patents are valid, enforceable and infringed by AMTI’s product candidates or other technologies. In this case, the holders of such patents may be able to block AMTI’s ability to commercialize the applicable product candidate or technology unless AMTI obtains a license under the applicable patents, or until such patents expire or are finally determined to be held invalid or unenforceable. Such a license may not be available on commercially reasonable terms or at all. Even if AMTI is able to obtain a license, the license would likely obligate AMTI to pay license fees or royalties or both, and the rights granted to AMTI might be nonexclusive, which could result in AMTI’s competitors gaining access to the same intellectual property. If AMTI is unable to obtain a necessary license to a third-party patent on commercially reasonable terms, AMTI may be unable to commercialize AMTI’s product candidates or other technologies, or such commercialization efforts may be significantly delayed, which could in turn significantly harm AMTI’s business.

 

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Defense of infringement claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from AMTI’s business, and may impact AMTI’s reputation. In the event of a successful claim of infringement against AMTI, AMTI may be enjoined from further developing or commercializing AMTI’s infringing product candidates or other technologies. In addition, AMTI may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties, and/or redesign AMTI’s infringing product candidates or technologies, which may be impossible or require substantial time and monetary expenditure. In that event, AMTI would be unable to further develop and commercialize AMTI’s product candidates or other technologies, which could harm AMTI’s business significantly.

 

Engaging in litigation to defend against third parties alleging that AMTI have infringed, misappropriated, or otherwise violated their patents or other intellectual property rights is very expensive, particularly for a company of AMTI’s size, and time-consuming. Some of AMTI’s competitors may be able to sustain the costs of litigation or administrative proceedings more effectively than AMTI can because of greater financial resources. Patent litigation and other proceedings may also absorb significant management time. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings against AMTI could impair AMTI’s ability to compete in the marketplace. The occurrence of any of the foregoing could have a material adverse effect on AMTI’s business, financial condition, results of operations, and prospects.

 

AMTI may become involved in lawsuits to protect or enforce AMTIs patents and other intellectual property rights, which could be expensive, time consuming, and unsuccessful.

 

Competitors may infringe AMTI’s patents or AMTI may be required to defend against claims of infringement. In addition, AMTI’s patents may become involved in inventorship, priority, or validity disputes. To counter or defend against such claims can be expensive and time consuming. In an infringement proceeding, a court may decide that a patent in which AMTI has an interest is invalid or unenforceable, the other party’s use of AMTI’s patented technology falls under the safe harbor to patent infringement under 35 U.S.C. §271(e)(1), or may refuse to stop the other party from using the technology at issue on the grounds that AMTI’s patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of AMTI’s patents at risk of being invalidated or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of AMTI’s confidential information could be compromised by disclosure during this type of litigation.

 

Even if resolved in AMTI’s favor, litigation or other legal proceedings relating to intellectual property claims may cause AMTI to incur significant expenses and could distract AMTI’s personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of AMTI’s common stock. Such litigation or proceedings could substantially increase AMTI’s operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities. AMTI may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of AMTI’s competitors may be able to sustain the costs of such litigation or proceedings more effectively than AMTI can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on AMTI’s ability to compete in the marketplace.

 

Patent terms may be inadequate to protect AMTIs competitive position on AMTIs products and services for an adequate amount of time.

 

Patents have a limited lifespan. In the United States and abroad, if all maintenance fees/annuity fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest non-provisional filing date. The protection a patent affords is limited. Even if patents covering AMTI’s products are obtained, once the patent life has expired, AMTI may be open to competition from competitive products. Given the amount of time required for the development, testing, and regulatory review of new products, patents protecting such products might expire before or shortly after such products are commercialized. As a result, AMTI’s owned and licensed patent portfolio may not provide AMTI with sufficient rights to exclude others from commercializing products similar or identical to AMTI’s.

 

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AMTI may be subject to claims challenging the inventorship or ownership of AMTIs patents and other intellectual property.

 

AMTI may be subject to claims that former employees or other third parties have an interest in AMTI’s patents, trade secrets, or other intellectual property as an inventor or co-inventor. For example, AMTI’s Co-Founder, Dr. Randall Mrsny, was an employee of both AMTI and the University of Bath and currently remains an employee of the University of Bath, and as such, AMTI must ensure that AMTI owns its intellectual property that was conceived or developed by Dr. Mrsny while he was AMTI’s employee and that he is under obligation to assign to AMTI. AMTI may have inventorship or ownership disputes arise from conflicting obligations of AMTI’s founders, employees, consultants, or others who are involved in developing AMTI’s product candidates or other technologies, such as with the University of Bath. Litigation may be necessary to defend against any claims challenging inventorship or ownership of AMTI’s patents, trade secrets, or other intellectual property. If the defense of any such claims fails, in addition to paying monetary damages, AMTI may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to AMTI’s product candidates and other technologies. Even if AMTI is successful in defending against any such claims, litigation could result in substantial costs and be a distraction to management and other employees. Any of the foregoing could have a material adverse effect on AMTI’s business, financial condition, results of operations, and prospects.

 

If AMTI does not obtain patent term extension and data exclusivity for any product candidates AMTI may develop, AMTIs business may be materially harmed.

 

Depending upon the timing, duration, and specifics of any FDA marketing approval of any product candidates AMTI may develop, one or more of AMTI’s U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984 (“Hatch-Waxman Act”). The Hatch-Waxman Act permits a patent term extension of up to five years as compensation for patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. Similar extensions as compensation for patent term lost during regulatory review processes are also available in certain foreign countries and territories, such as in Europe under a Supplementary Patent Certificate. However, AMTI may not be granted an extension in the United States and/or foreign countries and territories because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents, or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than AMTI requests. If AMTI is unable to obtain patent term extension or the term of any such extension is shorter than what AMTI requests, AMTI’s competitors may obtain approval of competing products following AMTI’s patent expiration, and AMTI’s business, financial condition, results of operations, and prospects could be materially harmed.

 

If AMTI is unable to protect the confidentiality of AMTIs trade secrets, AMTIs business and competitive position would be harmed.

 

In addition to seeking patents for AMTI’s product candidates and other technologies, AMTI also relies on trade secrets and confidentiality agreements to protect AMTI’s unpatented know-how, technology, and other proprietary information and to maintain AMTI’s competitive position. AMTI considers trade secrets and know-how to be one of AMTI’s primary sources of intellectual property. Trade secrets and know-how can be difficult to protect. AMTI expects AMTI’s trade secrets and know-how to over time be disseminated within the industry through independent development, the publication of journal articles describing the methodology, and the movement of personnel from academic to industry scientific positions.

 

While AMTI seeks to protect these trade secrets and other proprietary technology, AMTI cannot guarantee that AMTI has entered into non-disclosure, confidentiality, invention, or patent assignment agreements with each party that may have or have had access to AMTI’s trade secrets or proprietary technology and processes. Despite AMTI’s efforts, any of these parties may breach the agreements and disclose AMTI’s proprietary information, including AMTI’s trade secrets, and AMTI may not be able to obtain adequate remedies for such breaches. Over the last 18 months, AMTI has terminated a significant portion of AMTI’s workforce, many of whom held technical positions. As a result, there may be an increased risk that AMTI’s proprietary information, including AMTI’s trade secrets, may be inadvertently or intentionally disclosed to a third party. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of AMTI’s trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, AMTI would have no right to prevent them from using that technology or information to compete with AMTI. If any of AMTI’s trade secrets were to be disclosed to or independently developed by a competitor or other third party, AMTI’s competitive position would be materially and adversely harmed.

 

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If any of AMTIs patent applications do not issue as patents in any jurisdiction, AMTI may not be able to compete effectively.

 

Changes in either the patent laws or their interpretation in the United States and other countries may diminish AMTI’s ability to protect AMTI’s inventions, obtain, maintain, and enforce AMTI’s intellectual property rights and, more generally, could affect the value of AMTI’s intellectual property or narrow the scope of AMTI’s patents with respect to AMTI’s product candidates. With respect to AMTI’s intellectual property related to AMTI’s product candidates, AMTI cannot predict whether the patent applications AMTI is currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties.

 

The patent prosecution process is expensive, time-consuming, and complex, and AMTI may not be able to file, prosecute, maintain, enforce, or license all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that AMTI will fail to identify patentable aspects of AMTI’s research and development output in time to obtain patent protection. AMTI may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the rights to patents licensed to third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of AMTI’s business. Any parties who enter into nondisclosure and confidentiality agreements with AMTI who have access to confidential or patentable aspects of AMTI’s research and development output, such as AMTI’s employees, CROs, CDMOs, consultants, advisors, and other third parties, may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing AMTI’s ability to seek patent protection. In addition, AMTI’s ability to obtain and maintain valid and enforceable patents depends on whether the differences between AMTI’s inventions and the prior art allow AMTI’s inventions to be patentable over the prior art. Furthermore, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, AMTI cannot be certain that AMTI was the first to make the inventions claimed in any of AMTI’s patents or pending patent applications, or that AMTI were the first to file for patent protection of such inventions.

 

Intellectual property rights do not necessarily address all potential threats.

 

The degree of future protection afforded by AMTI’s intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect AMTI’s business or permit AMTI to maintain AMTI’s competitive advantage. For example:

 

 

others may be able to make products that are similar to AMTI’s product candidates or utilize similar technology but that are not covered by the claims of the patents that AMTI licenses or may own;

 

 

others may be able to develop a platform that is similar to, or better than, AMTI’s in a way that is not covered by the claims of AMTI’s patents;

 

 

AMTI, or AMTI’s future licensors or collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that AMTI licenses or owns now or in the future;

 

 

AMTI, or AMTI’s future licensors or collaborators, might not have been the first to file patent applications covering certain of AMTI’s or their inventions;

 

 

others may independently develop similar or alternative technologies or duplicate any of AMTI’s technologies without infringing AMTI’s owned or licensed intellectual property rights;

 

 

it is possible that AMTI’s current or future pending owned or licensed patent applications will not lead to issued patents;

 

 

issued patents that AMTI holds rights to may be held invalid or unenforceable, including as a result of legal challenges by AMTI’s competitors or other third parties;

 

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AMTI’s competitors or other third parties might conduct research and development activities in countries where AMTI does not have patent rights and then use the information learned from such activities to develop competitive products for sale in AMTI’s major commercial markets;

 

 

AMTI may not develop additional proprietary technologies that are patentable;

 

 

the patents of others may harm AMTI’s business; and

 

 

AMTI may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third-party may subsequently file a patent covering such intellectual property.

 

Should any of these events occur, it or they could have a material adverse effect on AMTI’s business, financial condition, results of operations, and prospects.

 

Obtaining and maintaining AMTIs patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by government patent agencies, and AMTIs patent protection could be reduced or eliminated for non-compliance with these requirements.

 

Periodic maintenance fees, renewal fees, annuity fees, and various other government fees on patents and applications will be due to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of AMTI’s owned or licensed patents and applications. The USPTO and various non-U.S. government agencies require compliance with several procedural, documentary, fee payment, and other similar provisions during the patent application process. There are situations, however, in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in a partial or complete loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on AMTI’s business, financial condition, results of operations, and prospects.

 

Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing AMTIs ability to protect AMTIs products.

 

Changes in either the patent laws or interpretation of the patent laws in the United States or other jurisdictions could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. Assuming that other requirements for patentability are met, prior to March 16, 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. On or after March 16, 2013, under the Leahy-Smith America Invents Act (America Invents Act) enacted on September 16, 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. A third-party that files a patent application in the USPTO on or after March 16, 2013, but before AMTI could therefore be awarded a patent covering an invention of AMTI’s even if AMTI had made the invention before it was made by such third party. This will require AMTI to be cognizant going forward of the time from invention to filing of a patent application. Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, AMTI cannot be certain that AMTI was the first to either (i) file any patent application related to AMTI’s product candidates or other technologies or (ii) invent any of the inventions claimed in AMTI’s patents or patent applications.

 

The America Invents Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third-party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third-party may attempt to use the USPTO procedures to invalidate AMTI’s patent claims that would not have been invalidated if first challenged by the third-party as a defendant in a district court action. Therefore, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of AMTI’s patent applications and the enforcement or defense of AMTI’s issued patents, all of which could have a material adverse effect on AMTI’s business, financial condition, results of operations, and prospects.

 

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In addition, the patent positions of companies in the development and commercialization of biopharmaceuticals are particularly uncertain. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. This combination of events has created uncertainty with respect to the validity and enforceability of patents, once obtained. Depending on future actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could have a material adverse effect on AMTI’s existing patent portfolio and AMTI’s ability to protect and enforce AMTI’s intellectual property in the future.

 

U.S. government sanctions on Russia and Russian government decrees in response thereto, may prevent us from obtaining, maintaining and/or enforcing AMTIs intellectual property rights in Russia.

 

The U.S. government has enacted a myriad of new sanctions through executive orders that prohibit U.S. companies from engaging in a wide range of activities with numerous government-related and private entities and individuals in Russia. Although the U.S. government has now authorized certain intellectual property-related transactions in Russia, including the filing and prosecution of any application to obtain a patent, trademark, or copyright, as well as the payment of renewal and maintenance fees, the sanctions on Russia may still impede AMTI’s ability to file, prosecute, and maintain patents or other intellectual property rights in Russia. For example, the sanctions may make it difficult or impossible to pay for third-party intermediaries who facilitate and/or advise AMTI regarding obtaining, maintaining and/or enforcing AMTI’s intellectual property rights in Russia, which could result in a loss or lapse of patent rights. In addition, the Russian government has decreed that owners of Russian patents from designated “unfriendly” countries, which includes the U.S., will not be entitled to any compensation for use of their patents. This may prevent AMTI from enforcing AMTI’s Russian patents against Russian entities or individuals who are infringing AMTI’s patents in Russia. Thus, even if a Russian patent can be maintained, it may not be possible to enforce the patent until the decree and/or sanctions are lifted.

 

AMTI may be subject to claims that AMTIs employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what AMTI regard as AMTIs own intellectual property.

 

Many of AMTI’s employees, consultants, and advisors are currently or were previously employed at universities or other biotechnology or pharmaceutical companies, including AMTI’s competitors and potential competitors. Although AMTI tries to ensure that AMTI’s employees, consultants, and advisors do not use the proprietary information or know-how of others in their work for AMTI, AMTI may be subject to claims that AMTI or these individuals have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend against these claims. If AMTI fails in defending any such claims, in addition to paying monetary damages, AMTI may lose valuable intellectual property rights or personnel. Even if AMTI is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

 

In addition, while it is AMTI’s policy to require AMTI’s employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to AMTI, AMTI may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that AMTI regards as AMTI’s own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and AMTI may be forced to bring claims against third parties, or defend claims that they may bring against AMTI, to determine the ownership of what AMTI regards as AMTI’s intellectual property. Such claims could have a material adverse effect on AMTI’s business, financial condition, results of operations, and prospects.

 

If AMTIs trademarks and trade names are not adequately protected, then AMTI may not be able to build name recognition in AMTIs markets of interest and AMTIs business may be adversely affected.

 

AMTI’s registered or unregistered trademarks or trade names may be challenged, infringed, circumvented, or declared generic or determined to be infringing on other marks. AMTI may not be able to protect AMTI’s rights to these trademarks and trade names, which AMTI needs to build name recognition among potential partners or customers in AMTI’s markets of interest. At times, competitors or other third parties may adopt trade names or trademarks similar to AMTI’s, thereby impeding AMTI’s ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of AMTI’s registered or unregistered trademarks or trade names. Over the long term, if AMTI is unable to establish name recognition based on AMTI’s trademarks and trade names, then AMTI may not be able to compete effectively and AMTI’s business may be adversely affected. AMTI’s efforts to enforce or protect AMTI’s proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect AMTI’s business, financial condition, results of operations, and prospects. In addition, opposition or cancellation proceedings may be filed against AMTI’s trademark applications and registrations, and AMTI’s trademarks may not survive such proceedings. In certain countries outside of the United States, trademark registration is required to enforce trademark rights. If AMTI does not secure registrations for AMTI’s trademarks, AMTI may encounter more difficulty in enforcing them against third parties than AMTI otherwise would.

 

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Risks Related to AMTIs Operations

 

AMTI is highly dependent on its key personnel, and if AMTI is not successful in attracting, motivating, and retaining highly qualified personnel, AMTI may not be able to successfully implement AMTIs business strategy or execute a strategic transaction.

 

AMTI’s ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon AMTI’s ability to attract, motivate, and retain highly qualified managerial, scientific, and clinical development personnel. AMTI is highly dependent on AMTI’s management. AMTI has had to reduce AMTI’s workforce in the past and AMTI may need to reduce its workforce again. The loss of the services provided by any of AMTI’s executive officers or other key employees and AMTI’s inability to find suitable replacements, could result in delays in the development of AMTI’s product candidates and harm AMTI’s business.

 

To succeed, AMTI must recruit, retain, manage, and motivate qualified clinical, scientific, manufacturing, and sales and marketing personnel, and AMTI faces significant competition for experienced personnel. In addition, AMTI will need to expand and effectively manage its managerial, operational, financial, development and other resources in order to successfully pursue AMTI’s research, development and commercialization efforts for AMTI’s existing and future product candidates. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited talent pool in AMTI’s industry due to the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize products. Competition for skilled personnel is intense and the turnover rate can be high, which may limit AMTI’s ability to hire and retain highly qualified personnel on acceptable terms or at all. AMTI expects that AMTI may need to recruit talent from outside of AMTI’s region, and doing so may be costly and difficult.

 

Many of the other biotechnology companies that AMTI competes against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than AMTI does. They also may provide more diverse opportunities and better prospects for career advancement. Some of these characteristics may be more appealing to high-quality candidates than what AMTI can offer. AMTI also experiences competition for the hiring of scientific and clinical personnel from universities and research institutions. AMTI could in the future have difficulty attracting experienced personnel to AMTI and may be required to expend significant financial resources in its employee recruitment and retention efforts. To induce valuable employees to remain at AMTI, in addition to salary and cash incentives, AMTI has provided equity grants that vest over time. The value to employees of these equity grants that vest over time have been and may continue to be significantly affected by movements in AMTI’s stock price that are beyond AMTI’s control, and may at any time be insufficient to counteract more lucrative offers from other companies or require AMTI to pay additional compensation to employees to incentivize them to join or stay with AMTI. Although AMTI has employment agreements with AMTI’s key employees, these employment agreements provide for at-will employment, which means that any of AMTI’s employees could leave AMTI’s employment at any time, with or without notice. If AMTI is unable to attract and incentivize quality personnel on acceptable terms, or at all, it may cause AMTI’s business and operating results to suffer.

 

AMTI may in the future engage in strategic transactions, acquisitions, collaborations, or partnerships, which may increase AMTIs capital requirements, dilute AMTIs stockholders, cause AMTI to incur debt or assume contingent liabilities, require AMTI to relinquish rights to certain of AMTIs technologies or product candidates that AMTI would otherwise seek to develop or commercialize itself, and subject us to other risks.

 

AMTI may engage in various strategic transactions, acquisitions, collaborations, and partnerships in the future, including licensing, acquiring or selling complementary products, intellectual property rights, technologies, or businesses. Any strategic transaction, acquisition, collaboration, or partnership may entail numerous risks, including:

 

 

increased operating expenses and cash requirements;

 

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volatility with respect to the financial reporting related to such arrangements;

 

 

assumption of indebtedness or contingent liabilities;

 

 

issuance of AMTI’s equity securities which would result in dilution to AMTI’s stockholders;

 

 

assimilation of operations, intellectual property, products, and product candidates of an acquired company, including difficulties associated with integrating new personnel;

 

 

relinquishment of rights to certain of AMTI’s technologies or product candidates as a result of transaction structures that AMTI would otherwise seek to develop or commercialize itself;

 

 

diversion of AMTI’s management’s attention from AMTI’s existing product programs and initiatives in pursuing such an acquisition or strategic partnership;

 

 

retention of key employees, the loss of key personnel, and uncertainties in AMTI’s ability to maintain key business relationships;

 

 

risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and regulatory approvals;

 

 

AMTI’s inability to generate revenue from acquired intellectual property, technology, and/or products sufficient to meet AMTI’s objectives or even to offset the associated transaction and maintenance costs; and

 

 

because AMTI’s product candidates are all based on the same proprietary technology platform, decisions made by a strategic partner, such as decisions regarding regulatory strategy or reimbursements, could negatively impact AMTI’s other products or product candidates that are outside the scope of the strategic partnership.

 

In addition, if AMTI undertakes such a transaction, AMTI may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses, and acquire intangible assets that could result in significant future amortization expense.

 

Future strategic transactions, partnerships and collaborations may be important to AMTI. AMTI will face significant competition in seeking new strategic partners.

 

AMTI had limited capabilities for manufacturing and does not yet have any capability for sales, marketing or distribution. For some of AMTI’s product candidates, AMTI may in the future determine to collaborate with strategic partners for the development and potential commercialization of therapeutic products. The competition for strategic partners is intense. AMTI’s ability to reach a definitive agreement will depend, among other things, upon AMTI’s assessment of the strategic partner’s resources and expertise, the terms and conditions of the proposed transaction, partnership or collaboration and the proposed strategic partner’s evaluation of a number of factors. These factors may include the design or results of clinical trials, the likelihood of approval by the FDA or comparable foreign regulatory authorities, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to AMTI’s ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. The strategic partner may also consider alternative product candidates or technologies for similar indications that may be available for collaboration and whether such collaboration could be more attractive than the one with AMTI for AMTI’s product candidate.

 

Strategic transactions are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future strategic partners. Even if AMTI is successful in entering into a strategic transaction, the terms and conditions of that transaction may restrict AMTI from entering into future agreements with other potential collaborators.

 

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If AMTI is unable to reach agreements with suitable strategic partners on a timely basis, on acceptable terms, or at all, AMTI may have to curtail the development of a product candidate or reduce or delay one or more of AMTI’s other development programs. If AMTI elects to fund and undertake development or commercialization activities on its own, AMTI may need to obtain additional expertise and additional capital, which may not be available to AMTI on acceptable terms or at all. If AMTI fails to enter into strategic transactions, partnerships or collaborations, and AMTI does not have sufficient funds or expertise to undertake the necessary development and commercialization activities, AMTI may not be able to further develop AMTI’s product candidates or bring them to market or continue to develop AMTI’s technology platform and AMTI’s business may be materially and adversely affected. Any transaction may be on terms that are not optimal for AMTI, and AMTI may not be able to maintain any new transaction if, for example, development or approval of a product candidate is delayed, sales of an approved product candidate do not meet expectations or the partner terminates the collaboration. Any such collaboration, or other strategic transaction, may require AMTI to incur non-recurring or other charges, and increase AMTI’s near- and long-term expenditures and pose significant integration or implementation challenges or disrupt AMTI’s management or business. Accordingly, although there can be no assurance that AMTI will undertake or successfully complete any transactions of the nature described above, any transactions that AMTI does complete may be subject to the foregoing or other risks and have a material and adverse effect on AMTI’s business, financial condition, results of operations, and prospects. Conversely, any failure to enter any collaboration or other strategic transaction that would be beneficial to AMTI could delay the development and potential commercialization of AMTI’s product candidates and have a negative impact on the competitiveness of any product candidate that reaches the market.

 

If AMTI is unable to maintain future strategic partnerships or enter into strategic transactions or collaborations, AMTI’s business could be adversely affected.

 

Any future strategic partnerships AMTI enters into may pose a number of risks, including the following:

 

 

AMTI may not be able to enter into critical strategic partnerships or enter them on favorable terms;

 

 

strategic partners have significant discretion in determining the effort and resources that they will apply to such a partnership, and they may not perform their obligations as agreed or expected;

 

 

strategic partners may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the partners’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities;

 

 

strategic partners may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

 

 

strategic partners could independently develop, or develop with third parties, products that compete directly or indirectly with AMTI’s product candidates if the strategic partners believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than AMTI’s product candidates;

 

 

product candidates discovered in collaboration with AMTI may be viewed by AMTI’s strategic partners as competitive with their own product candidates or products, which may cause strategic partners to cease to devote resources to the commercialization of AMTI’s product candidates;

 

 

a strategic partner with marketing and distribution rights to one or more of AMTI’s product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product candidates;

 

 

disagreements with strategic partners, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for AMTI with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive;

 

 

strategic partners may not properly maintain or defend AMTI’s intellectual property rights or may use AMTI’s proprietary information in such a way as to invite litigation that could jeopardize or invalidate AMTI’s intellectual property or proprietary information or expose AMTI to potential litigation;

 

 

strategic partners may infringe the intellectual property rights of third parties, which may expose AMTI to litigation and potential liability; and

 

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strategic partnerships may be terminated for the convenience of the partner and, if terminated, AMTI could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.

 

Any legal proceedings or claims against AMTI could be costly and time-consuming to defend and could harm AMTIs reputation regardless of the outcome.

 

AMTI may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, including intellectual property, product liability, employment, class action, whistleblower and other litigation claims, and governmental and other regulatory investigations and proceedings. In March 2023, AMTI implemented reductions in workforce and the attendant layoffs increased the risk of claims being made by or on behalf of affected employees. Such matters can be time-consuming, divert management’s attention and resources, cause AMTI to incur significant expenses or liability, or require AMTI to change AMTI’s business practices. In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change, and could adversely affect AMTI’s financial condition and results of operations. Because of the potential risks, expenses, and uncertainties of litigation, AMTI may, from time to time, settle disputes, even where AMTI has meritorious claims or defenses, by agreeing to settlement agreements. Any of the foregoing could adversely affect AMTI’s business, financial condition, and results of operations.

 

AMTIs business is subject to economic, political, regulatory, and other risks associated with international operations.

 

AMTI’s business is subject to risks associated with conducting business internationally. Some of AMTI’s CDMOs have been located outside the United States. Accordingly, AMTI’s future results could be harmed by a variety of factors, including:

 

 

economic weakness, including inflation, or political instability in certain non-U.S. economies and markets. For example, inflationary pressures have increased and could increase costs for AMTI’s clinical trials;

 

 

differing and changing regulatory requirements in non-U.S. countries, including drug pricing and reimbursement requirements;

 

 

challenges enforcing AMTI’s contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States;

 

 

difficulties in compliance with non-U.S. laws and regulations;

 

 

changes in non-U.S. regulations and customs, tariffs, and trade barriers;

 

 

changes in non-U.S. currency exchange rates and currency controls;

 

 

changes in a specific country’s or region’s political or economic environment;

 

 

trade protection measures, import or export licensing requirements, or other restrictive actions by U.S. or non-U.S. governments;

 

 

negative consequences from changes in tax laws;

 

 

compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad;

 

 

workforce uncertainty in countries where labor unrest is more common than in the United States;

 

 

difficulties associated with staffing and managing international operations, including differing labor relations;

 

 

potential liability under the FCPA, U.K. Bribery Act, or comparable foreign laws; and

 

 

business interruptions resulting from geopolitical actions, including war and terrorism, natural disasters including earthquakes, typhoons, floods, and fires, or outbreaks of health epidemics such as the COVID-19 pandemic.

 

These and other risks associated with AMTI’s planned international operations may materially adversely affect AMTI’s ability to attain profitable operations.

 

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Inflation in the global economy could negatively impact AMTIs business and results of operations.

 

General inflation in the United States, Europe and other geographies has risen to levels not experienced in recent decades. General inflation, including rising prices for AMTI’s clinical trial drug supply, CROs, CDMOs and rising salaries negatively impact AMTI’s business by increasing AMTI’s operating expenses. To the extent general inflation results in rising interest rates and has other adverse effects on the market, it may adversely affect AMTI’s business, financial condition and results of operations.

 

AMTIs internal computer systems, or those used by AMTIs CROs or other contractors or consultants, may fail or suffer other breakdowns, cyberattacks, or information security breaches or incidents that could compromise the confidentiality, integrity, and availability of such systems and data, and affect AMTIs reputation.

 

Despite the implementation of security measures, AMTI’s internal computer systems and those of AMTI’s future CROs and other contractors may be vulnerable to damage, compromise, disruption and unauthorized access owing to a variety of causes, including system malfunction, natural disasters, terrorism, war and telecommunication and electrical failure, and inadvertent or intentional actions by AMTI’s employees, CROs and other contractors, and/or other third parties, or cyber-attacks by malicious third parties. As the cyber-threat landscape evolves, such cyberattacks are growing in frequency, sophistication, and intensity, and are becoming increasingly difficult to detect. Such attacks could include the use of key loggers or other harmful and virulent malware, including ransomware or other denials of service, and can be deployed through malicious websites, the use of social engineering, and/or other means. These risks may increase as a result of COVID-19, owing to an increase in AMTI’s and AMTI’s CROs’ and other contractors’ personnel working remotely or utilizing personal devices. Additionally, cybersecurity researchers have observed increased cyberattack activity, and warned of heightened risks of cyberattacks, in connection with the conflicts between Russia and Ukraine or Israel and Hamas. If a breakdown, disruption, cyberattack, or other information security breach or security incident were to occur and cause interruptions in AMTI’s operations or loss, corruption, or unavailability of data, or if any of the foregoing were perceived to have occurred, it could subject AMTI to claims, proceedings, or other liabilities and may result in a material disruption of AMTI’s development programs and AMTI’s business operations, which could lead to significant delays or setbacks in AMTI’s research and other further development and commercialization of AMTI’s product candidates. For example, the loss of clinical trial data from completed, ongoing, or future clinical trials could result in delays in AMTI’s regulatory approval efforts and significantly increase AMTI’s costs to recover or reproduce the data. Furthermore, disruptions of, or security breaches or other incidents of, AMTI’s information technology systems or those of AMTI’s future CROs and other contractors and consultants could result in the loss, misappropriation, and/or unauthorized access, use, or disclosure or dissemination of, or the prevention of access to, data (including trade secrets or other confidential information, intellectual property, proprietary business information, and personal information), which could result in financial, legal, business, and reputational harm to AMTI. For example, any such event that leads to loss, damage, or unavailability of, or unauthorized access to, or use, alteration, or disclosure or dissemination of, personal information or other data AMTI or AMTI’s contractors or consultants process or maintain, including personal information regarding clinical trial subjects or employees, could harm AMTI’s reputation directly, compel AMTI to comply with federal and/or state breach notification laws and foreign law equivalents, subject AMTI to mandatory corrective action, and otherwise subject AMTI to liability under laws and regulations that protect the privacy and security of personal information, which could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on AMTI’s business.

 

AMTI also relies on third parties to manufacture AMTI’s product candidates, and similar events relating to their information technology systems could also have a material adverse effect on AMTI’s business. There can be no assurance that AMTI, AMTI’s CROs or other contractors, or AMTI’s business counterparts will be successful in efforts to detect, prevent, or fully recover systems or data, including data or information that AMTI processes or maintains or that is processed or maintained by AMTI’s CROs, other contractors, or business counterparts, from all breakdowns, service interruptions, or attacks on, or breaches or incidents of systems that could adversely affect AMTI’s business and operations and/or result in the loss, corruption, or unavailability of data or other information, or inappropriate disclosure or dissemination of any such information, or events or circumstances leading to the perception that any of these have occurred, which could result in financial, legal, business, or reputational harm to AMTI, including claims, litigation, governmental investigations and proceedings, and fines, penalties, and other liabilities. Further, notification and follow-up actions related to a security incident could impact AMTI’s reputation and cause AMTI to incur significant costs, including legal expenses and remediation costs. AMTI expects to incur significant costs in an effort to detect and prevent security breaches and incidents, and AMTI may face increased costs and requirements to expend substantial resources in the event of an actual or perceived security breach or other security incident.

 

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The insurance AMTI maintains may not be adequate to compensate AMTI for the potential losses arising from any such disruption in or, failure or security breach or incident of or impacting, AMTI’s systems or third-party systems where information important to AMTI’s business operations or commercial development is stored. In addition, such insurance may not be available to AMTI in the future on economically reasonable terms, or at all. Further, AMTI’s insurance may not cover all claims made against AMTI and could have high deductibles in any event, and defending a suit, regardless of its merit, could be costly and divert management attention.

 

AMTIs General Risk Factors

 

Changes in interpretation or application of generally accepted accounting principles may adversely affect AMTIs operating results.

 

AMTI prepares its financial statements to conform to GAAP. These principles are subject to interpretation by the Financial Accounting Standards Board, American Institute of Certified Public Accountants, the PCAOB, the SEC and various other regulatory or accounting bodies. A change in interpretations of, or AMTI’s application of, these principles can have a significant effect on AMTI’s reported results and may even affect AMTI’s reporting of transactions completed before a change is announced. Additionally, as AMTI is required to adopt new accounting standards, AMTI’s methods of accounting for certain items may change, which could cause AMTI’s results of operations to fluctuate from period to period.

 

Business disruptions could seriously harm AMTIs future revenue and financial condition and increase AMTIs costs and expenses.

 

AMTI’s operations, and those of its CROs, CDMOs, suppliers, and other contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical or health epidemics, and other natural or man-made disasters or business interruptions, for which AMTI is partly uninsured. The occurrence of any of these business disruptions could seriously harm AMTI’s operations and financial condition and increase AMTI’s costs and expenses. AMTI relies on third-party manufacturers to produce and process AMTI’s product candidates. AMTI’s ability to obtain clinical supplies of AMTI’s product candidates could be disrupted if the operations of these suppliers are affected by a man-made or natural disaster or other business interruption.

 

AMTI does not expect to pay any dividends for the foreseeable future. Investors may never obtain a return on their investment.

 

You should not rely on an investment in AMTI’s common stock to provide dividend income. AMTI does not anticipate that AMTI will pay any dividends to holders of AMTI’s common stock in the foreseeable future. Instead, AMTI plans to retain any earnings to maintain and expand AMTI’s existing operations. In addition, any future credit facility may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on AMTI’s common stock. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase AMTI’s common stock.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This joint proxy statement/prospectus, the documents incorporated by reference into this joint proxy statement/prospectus, and the documents to which Cyclo and AMTI refer you to in this joint proxy statement/prospectus, as well as oral statements made or to be made by Cyclo and AMTI, may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements may contain words such as “believes,” “anticipates,” “estimates,” “expects,” “intends,” “aims,” “potential,” “will,” “would,” “could,” “considered,” “likely” and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. All statements, other than historical facts, including statements regarding the expected timing of the closing of the Merger and Cyclo’s or AMTI’s expected financial condition, results of operations and business performance, including without limitation, any forecasts, financial projections and descriptions of anticipated cost savings or other synergies or expected benefits of the Merger, are forward-looking statements. These statements are based on management’s current expectations, assumptions, estimates and beliefs. While Cyclo and AMTI believe these expectations, assumptions, estimates, and beliefs are reasonable, such forward-looking statements are only predictions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

 

The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements:

 

 

expected timing, completion, effects, and potential benefits of the Merger;

 

 

statements of the plans, strategies, and objectives of management with respect to the approval and closing of the Merger;

 

 

the ability of AMTI to solicit a sufficient number of proxies to approve the AMTI merger proposal;

 

 

the impact of any inability to complete the Merger on Cyclo and AMTI;

 

 

the ability of Cyclo to solicit a sufficient number of proxies to approve the Cyclo charter amendment proposal;

 

 

the ability of Cyclo to solicit a sufficient number of proxies to approve the Cyclo share issuance proposal;

 

 

the expected relative ownership percentages of the securityholders of Cyclo and AMTI in the combined company following the closing of the Merger;

 

 

any statements regarding future economic conditions, growth rate, market opportunity or performance of the combined company;

 

 

research and development plans, including planned preclinical studies and clinical trials;

 

 

the ability to maintain the listing of Cyclo common stock on Nasdaq following the Merger;

 

 

the respective officers and directors of Cyclo and AMTI potentially having conflicts of interest with approving the Merger;

 

 

economic, business, competitive, and/or regulatory factors affecting the business of Cyclo and AMTI;

 

 

the occurrence of any other event, change or other circumstances that could give rise to the termination of the Merger Agreement;

 

 

satisfaction or waiver (if applicable) of the conditions to closing the Merger;

 

 

statements of belief and any statement of assumptions underlying any of the foregoing; and

 

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the risks described in Cyclo’s and AMTI’s respective Annual Reports on Form 10-K for the year ended December 31, 2022, as updated by any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

 

Forward-looking statements contained in this joint proxy statement/prospectus include, but are not limited to, statements about:

 

 

AMTI’s expectations regarding the length of time that its existing capital resources will be sufficient to enable it to fund its planned operations, including its ability to continue as a going concern;

 

 

AMTI’s public securities’ potential liquidity and trading;

 

 

AMTI’s ability to maintain the listing of its public securities on Nasdaq;

 

 

AMTI’s projected financial performance and market opportunity;

 

 

estimates of AMTI’s expenses, capital requirements, and need for additional financing;

 

 

the impact of certain geo-political events, macroeconomic conditions, and the COVID-19 pandemic;

 

 

AMTI’s expectations regarding the anticipated benefits of the Merger;

 

 

the outcome of any legal proceedings that may be instituted against AMTI related to the Merger; and

 

 

the impact of the ACA and other existing regulations and regulatory developments in the United States and other jurisdictions.

 

For a discussion of the factors that may cause Cyclo’s, AMTI’s or the combined company’s actual results, performance or achievements following the closing of the Merger to differ materially from any future results, performance or achievements expressed or implied in such forward-looking statements, or for a discussion of risks associated with the ability of Cyclo and AMTI to complete the Merger and the effect of the Merger on the business of Cyclo, AMTI and the combined company following the completion of the Merger, see the section entitled “Risk Factors” in this joint proxy statement/prospectus as well as Cyclo’s and AMTI’s respective Annual Reports on Form 10-K for the year ended December 31, 2022, as updated by any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. See the section entitled “Where You Can Find More Information” in this joint proxy statement/prospectus. There can be no assurance that the Merger will be completed, or if it is completed, that it will close within the anticipated time period or that the expected benefits of the Merger will be realized.

 

If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, the results of Cyclo, AMTI or the combined company following completion of the Merger could differ materially from the forward-looking statements. All forward-looking statements in this joint proxy statement/prospectus are current only as of the date on which the statements were made. Cyclo and AMTI do not undertake any obligation (and expressly disclaim any such obligation) to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events, except as required by applicable law.

 

In addition, statements that “Cyclo believes” or “AMTI believes” and similar statements reflect to their respective beliefs and opinions on the relevant subject. These statements are based upon information available to Cyclo or AMTI, as the case may be, as of the date of this joint proxy statement/prospectus, and while Cyclo or AMTI, as the case may be, believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that such party has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

 

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INFORMATION ABOUT THE COMPANIES

 

Information about AMTI

 

AMTI is a clinical-stage biopharmaceutical company that has a proprietary technology platform that enables the design of novel biologic product candidates in patient-friendly oral dosage forms. AMTI has decided to discontinue research activities.

 

In March 2023, AMTI announced that it had commenced a process to explore strategic alternatives that resulted in AMTI entering into the Merger Agreement with Cyclo on September 21, 2023. In addition, AMTI is actively seeking to sell, assign, license, or otherwise dispose of, in one or more transactions, some or all of the assets that relate to AMTI’s platform technology at any time prior to, or concurrently with, the closing of the Merger. AMTI was incorporated in the State of Delaware in November 2016. AMTI operates under a fully-remote model and does not have a principal executive office.

 

On August 10, 2023, AMTI received a letter from the Nasdaq Staff indicating that, in accordance with Nasdaq Listing Rule 5100, the Nasdaq Staff believes that AMTI is a “public shell” and that the continued listing of AMTI’s securities is no longer warranted. AMTI disagrees with the Nasdaq Staff’s determination and submitted an appeal of the Nasdaq Staff’s determination to the Nasdaq Panel on August 17, 2023, which stayed any delisting action by the Nasdaq Staff pending the Nasdaq Panel’s decision. A Nasdaq Panel hearing occurred on October 19, 2023, and on October 23, 2023, the Nasdaq Panel granted AMTI’s request for continued listing on Nasdaq, subject to the Company’s completion of the Merger on or before February 6, 2024.

 

More information about AMTI can be found in AMTI’s Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, as updated from time to time by AMTI’s subsequent filings with the SEC.

 

Information about Cyclo

 

Cyclo is a clinical stage biotechnology company that develops cyclodextrin-based products for the treatment of neurodegenerative diseases. Cyclo filed a Type II Drug Master File with the FDA in 2014 for its lead drug candidate, Trappsol® Cyclo™ (hydroxypropyl beta cyclodextrin) as a treatment for NPC. NPC is a rare and fatal autosomal recessive genetic disease resulting in disrupted cholesterol metabolism that impacts the brain, lungs, liver, spleen, and other organs. In 2015, Cyclo launched an International Clinical Program for Trappsol® Cyclo™ as a treatment for NPC. In 2016, Cyclo filed an IND with the FDA, which described its Phase I clinical plans for a randomized, double blind, parallel group study at a single clinical site in the U.S. The Phase I study evaluated the safety and pharmacokinetics of Trappsol® Cyclo™ along with markers of cholesterol metabolism and markers of NPC during a 12-week treatment period of intravenous administration of Trappsol® Cyclo™ every two weeks to participants 18 years of age and older. The IND was approved by the FDA in September 2016, and in January 2017 the FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in September 2017, and in May 2020 Cyclo announced Top Line data showing a favorable safety and tolerability profile for Trappsol® Cyclo™ in this study.

 

Cyclo has also completed a Phase I/II clinical study approved by European regulatory bodies with clinical trial centers in the United Kingdom, Sweden, and in Israel. The Phase I/II study evaluated the safety, tolerability, and efficacy of Trappsol® Cyclo™ through a range of clinical outcomes, including neurologic, respiratory, and measurements of cholesterol metabolism and markers of NPC. Consistent with the 12-week phase 1 study (single US site), the European/Israel study administered Trappsol® Cyclo™ intravenously to NPC patients every two weeks in a double-blind, randomized trial, but differs in that the study period was for 48 weeks (24 doses). In March of 2021, Cyclo announced that 100% of patients who completed the trial (9 out of 12) improved or remained stable, and 89% met the efficacy outcome measure of improvement in at least two domains of the 17-domain NPC severity scale.

 

Additionally, in February 2020 Cyclo had a face-to-face “Type C” meeting with the FDA with respect to the initiation of its pivotal Phase III clinical trial of Trappsol® Cyclo™ based on the clinical data obtained to date. At that meeting, Cyclo also discussed with the FDA submitting an NDA under Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act for the treatment of NPC in pediatric and adult patients with Trappsol® Cyclo™. A similar request was submitted to the EMA in February 2020, seeking scientific advice and protocol assistance from the EMA for proceeding with a Phase III clinical trial in Europe. In October 2020, Cyclo received a “Study May Proceed” notification from the FDA with respect to the proposed Phase III clinical trial, and in June of 2021, Cyclo commenced enrollment in TransportNPC, a pivotal Phase III study of Trappsol® Cyclo™ for the treatment of NPC.

 

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Preliminary data from Cyclo’s completed clinical studies suggest that Trappsol® Cyclo™ clears toxic deposits of cholesterol and other lipids from cells, has a consistent pharmacokinetic profile peripherally, and crosses the blood-brain-barrier in individuals suffering from NPC, and results in neurological and neurocognitive benefits and other clinical improvements in NPC patients. The full significance of these findings will be determined as part of the final analysis of data derived from Cyclo’s clinical trials (both completed and ongoing).

 

On May 17, 2010, the FDA designated Trappsol® Cyclo™ as an orphan drug for the treatment of NPC, which would provide Cyclo with the exclusive right to sell Trappsol® Cyclo™ for the treatment of NPC for seven years following FDA drug approval. In April 2015, Cyclo also obtained Orphan Drug Designation for Trappsol® Cyclo™ in Europe, which will provide Cyclo with 10 years of market exclusivity following regulatory approval, which period will be extended to 12 years upon acceptance by the EMA’s Pediatric Committee of Cyclo’s pediatric investigation plan (PIP) demonstrating that Trappsol® Cyclo™ addresses the pediatric population. On January 12, 2017, Cyclo received Fast Track Designation from the FDA, and on December 1, 2017, the FDA designated NPC a Rare Pediatric Disease.

 

Cyclo is also exploring the use of cyclodextrins in the treatment of Alzheimer’s disease. In January 2018, the FDA authorized a single patient IND expanded access program using Trappsol® Cyclo™ for the treatment of Alzheimer’s disease. After 18 months of treatment in this geriatric patient with late-onset disease, the disease was stabilized and the drug was well tolerated. The patient also exhibited signs of improvement with less volatility and shorter latency in word-finding. Cyclo prepared a synopsis for an early stage protocol using Trappsol® Cyclo™ intravenously to treat Alzheimer’s disease that was presented to the FDA in January of 2021. Cyclo received feedback from the FDA on this synopsis in April 2021 and incorporated the feedback into an IND for a Phase II study for the treatment of Alzheimer’s disease with of Trappsol® Cyclo™ that Cyclo submitted to the FDA in November 2021. In December of 2021, Cyclo received IND clearance from the FDA, allowing it to proceed with its Phase II study of Trappsol® Cyclo™ for the treatment of Alzheimer’s disease. U.S. sites for the study were activated during the second half of 2022, with patient dosing beginning in the first quarter of 2023.

 

Cyclo filed an international patent application in October 2019 under the Patent Cooperation Treaty directed to the treatment of Alzheimer’s disease with cyclodextrins and is pursuing national and regional stage applications based on this international application. The terms of any patents resulting from these national or regional stage applications would be expected to expire in 2039 if all the requisite maintenance fees are paid.

 

Cyclo also continues to operate its legacy fine chemical business, consisting of the sale of cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs. However, Cyclo’s core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin- based biopharmaceuticals for the treatment of disease from a business that had been primarily reselling basic cyclodextrin products.

 

Nasdaq Listing

 

Cyclo’s common stock is currently traded on Nasdaq under the symbol “CYTH.” It is a closing condition that the shares of Cyclo’s common stock to be issued in the Merger pursuant to the Merger Agreement are approved for listing on Nasdaq.

 

On May 14, 2023, Cyclo received a letter from Nasdaq Staff stating that Cyclo was not in compliance with the Stockholders’ Equity Rule because its stockholders’ equity of $(438,876) as of March 31, 2023, as reported in Cyclo’s Quarterly Report on Form 10-Q filed with the SEC on May 12, 2023, was below the minimum requirement of $2.5 million.

 

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Pursuant to Nasdaq’s Listing Rules, Cyclo submitted a Compliance Plan to Nasdaq in June 2023. On August 1, 2023, Nasdaq notified Cyclo that based on its review of the Compliance Plan. Cyclo has been granted an extension to regain compliance with the Rule. As of August 1, 2023, Cyclo completed a private placement of its securities in which it raised $5 million. Based on the completion of this private offering, Cyclo believed its stockholders equity exceeded $2.5 million as of August 1, 2023 and it had regained compliance with the Stockholders’ Equity Rule.

 

Pursuant to Nasdaq Listing Rules, Cyclo must evidence compliance with the Stockholders’ Equity Rule upon the filing of its Quarterly Report on Form 10-Q for the period ended September 30, 2023, which is due on or before November 14, 2023. If Cyclo is unable to evidence compliance with the Stockholders’ Equity Rule as of November 14, 2023, it may receive a delisting notice from the Nasdaq Staff. Cyclo believes that it will be in compliance with the Stockholders’ Equity Rule when it closes the Merger, because the anticipated AMTI net cash on the Closing Date is estimated to be approximately $12.4 million.

 

Information about Merger Sub

 

Merger Sub is a direct, wholly owned subsidiary of Cyclo and was formed solely for the purpose of carrying out the Merger. Merger Sub has not conducted any business operations other than in connection with the transactions contemplated by the Merger Agreement. Upon consummation of the Merger, Merger Sub will cease to exist, with AMTI surviving the Merger as a direct wholly owned subsidiary of Cyclo under the name “Applied Molecular Transport Inc.”

 

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THE AMTI SPECIAL MEETING

 

This joint proxy statement/prospectus is being mailed on or about November 27, 2023, to holders of record of AMTI common stock as of the close of business on November 17, 2023, and constitutes notice of the AMTI special meeting in conformity with the requirements of the DGCL.

 

This joint proxy statement/prospectus is being provided to AMTI stockholders as part of a solicitation of proxies by the AMTI Board for use at the AMTI special meeting and at any adjournments or postponements thereof. AMTI stockholders are encouraged to read the entire document carefully, including the annexes to and documents incorporated by reference into this document, for more detailed information regarding the Merger Agreement.

 

Date, Time, and Place of the AMTI Special Meeting

 

The AMTI special meeting will be held via live webcast on December 26, 2023, starting at 10:00 a.m. (Pacific Time). There will be no physical meeting location. In order to attend the AMTI special meeting, as well as vote and submit your questions during the live webcast of the meeting, you will need to visit www.virtualshareholdermeeting.com/AMTI2023SM. Please be sure to follow the instructions found on your proxy card and/or voting authorization form.

 

Purpose of the AMTI Special Meeting

 

At the AMTI special meeting, AMTI stockholders will be asked to consider and vote upon the following proposals (together, the “AMTI Proposals”):

 

 

AMTI Proposal No. 1: To approve the AMTI merger proposal;

 

 

AMTI Proposal No. 2: To approve the AMTI advisory compensation proposal; and

 

 

AMTI Proposal No. 3: To approve the AMTI adjournment proposal.

 

Recommendation of the AMTI Board

 

At a meeting of the AMTI Board held on September 20, 2023, the AMTI Board (i) determined that the Merger Agreement and all related transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of AMTI and its stockholders; (ii) approved the execution and delivery of the Merger Agreement by AMTI, the performance by AMTI of its covenants and other obligations thereunder, and the consummation of the Merger upon the terms and subject to the conditions set forth therein; (iii) recommended that the stockholders of AMTI adopt the Merger Agreement and approve the transactions contemplated thereby; and (iv) directed that the adoption of the Merger Agreement be submitted for consideration by the stockholders of AMTI at a meeting thereof.

 

The AMTI Board recommends that AMTI stockholders vote FOR the AMTI merger proposal, FOR the AMTI advisory compensation proposal, and, if necessary, FOR the AMTI adjournment proposal.

 

See also the section entitled “The MergerRecommendation of the AMTI Board and AMTIs Reasons for the Merger.”

 

Record Date for the AMTI Special Meeting; Stock Entitled to Vote

 

Only holders of record of shares of AMTI common stock at the close of business on the AMTI record date will be entitled to notice of, and to vote at, the AMTI special meeting and any postponements or adjournments thereof. Holders of AMTI common stock at the close of business on the AMTI record date may cast one vote for each share of AMTI common stock that the holder owned as of the AMTI record date, including (i) shares held directly in the name of the holder of record and (ii) shares held on behalf of the holder as the beneficial owner in street name through a bank, broker or other nominee.

 

On the AMTI record date, there were outstanding a total of 41,848,990 shares of AMTI common stock entitled to vote at the AMTI special meeting. Holders of AMTI common stock at the close of business on the AMTI record date may cast one vote for each share of AMTI common stock that the holder owned as of the AMTI record date, including (i) shares held directly in the name of the holder of record and (ii) shares held on behalf of the holder as the beneficial owner in street name through a bank, broker, or other nominee.

 

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Solicitation of Proxies

 

The cost of proxy solicitation for the AMTI special meeting will be borne by AMTI. In addition to the use of the mail, proxies may be solicited by officers and directors and regular employees of AMTI, without additional remuneration, by personal interview, telephone, electronic communication or otherwise. AMTI will also request brokerage firms, nominees, custodians, and fiduciaries to forward proxy materials to the beneficial owners of shares held of record on the AMTI record date and will provide customary reimbursement to such firms for the cost of forwarding these materials.

 

Quorum

 

The holders of a majority of the AMTI common stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum. Shares of AMTI common stock represented at the AMTI special meeting by attendance via the virtual special meeting website or by proxy and entitled to vote, but not voted, including shares for which a stockholder directs an abstention from voting, will be counted for the purposes of determining a quorum. However, because all of the proposals for consideration at the AMTI special meeting are considered non-routine matters, shares held in street name will not be counted as present for the purpose of determining the existence of a quorum unless the stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals before the AMTI special meeting. It is therefore critical that you cast your vote by instructing your bank, broker or other nominee on how to vote.

 

Vote Required

 

 

AMTI merger proposal. Approval of the AMTI merger proposal requires the affirmative vote of AMTI stockholders representing a majority of the outstanding shares of AMTI common stock entitled to vote thereon.

 

 

AMTI advisory compensation proposal. Approval of the AMTI advisory compensation proposal requires the affirmative vote of AMTI stockholders representing a majority of the voting power of the shares of AMTI common stock present in person or represented by proxy and entitled to vote thereon.

 

 

AMTI adjournment proposal. Approval of the AMTI adjournment proposal requires the affirmative vote of AMTI stockholders representing a majority of the voting power of the shares of AMTI common stock present in person or represented by proxy and entitled to vote thereon.

 

Abstentions and Broker Non-Votes

 

Failure to vote at the AMTI special meeting or vote by proxy at the AMTI special meeting, abstentions, and broker non-votes (if any) will have the same effect as a vote against the AMTI merger proposal. For the AMTI advisory compensation proposal and the AMTI adjournment proposal, abstentions will have the same effect as a vote against the proposal, and broker non-votes will have no effect on the outcome of the proposal. Shares of AMTI common stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon. If you are an AMTI stockholder of record and you sign and return your proxy card without indicating how to vote on any particular proposal, the shares of AMTI common stock represented by your proxy will be counted as present for purposes of determining the presence of a quorum for the AMTI special meeting and will be voted FOR that proposal.

 

Voting Power of AMTIs Directors and Executive Officers

 

On the AMTI record date, 11.3% of the AMTI common stock outstanding and entitled to vote was held by AMTI directors and executive officers and their respective affiliates. AMTI’s directors and officers have entered into Voting Agreements agreeing to, among other things, vote all of the shares of AMTI common stock beneficially owned by them in favor of the AMTI merger proposal and the AMTI adjournment proposal. For additional details about the Voting Agreements, see Annex B and the section entitled “The Voting Agreements” of this joint proxy statement/prospectus.

 

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Attending the AMTI Special Meeting

 

All holders of AMTI common stock as of the AMTI record date, including stockholders of record and stockholders who hold shares through banks, brokers or other nominees, are invited to virtually attend the AMTI special meeting; however, only stockholders of record can vote at the AMTI special meeting. In order to attend the AMTI special meeting, as well as vote and submit your questions during the live webcast of the meeting, you will need to visit www.virtualshareholdermeeting.com/AMTI2023SM. Please be sure to follow the instructions found on your proxy card and/or voting authorization form.

 

Voting of Proxies by