Overview
Anixa
Biosciences, Inc., incorporated on November 5, 1982 under the laws of the State of Delaware, is a biotechnology company developing
therapies and vaccines that are focused on critical unmet needs in oncology and infectious disease. Our therapeutics programs
include the development of a chimeric endocrine receptor T-cell technology, a novel form of chimeric antigen receptor T-cell (“CAR-T”)
technology, initially focused on treating ovarian cancer, and the discovery and ultimately development of anti-viral drug candidates
for the treatment of COVID-19 focused on inhibiting certain viral protein functions of the virus. Our vaccine programs include
the development of a vaccine against triple negative breast cancer (“TNBC”), the most lethal form of breast cancer,
and a vaccine against ovarian cancer.
Our
subsidiary, Certainty Therapeutics, Inc. (“Certainty”), is developing immuno-therapy drugs against cancer. Certainty
holds an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Wistar Institute
(“Wistar”), the nation’s first independent biomedical research institute and a leading National Cancer Institute
designated cancer research center, relating to Wistar’s chimeric endocrine receptor targeted therapy technology. We have
initially focused on the development of a treatment for ovarian cancer, but we also may pursue future applications of the technology
for the development of treatments for additional solid tumors. The license agreement requires Certainty to make certain cash and
equity payments to Wistar upon achievement of specific development milestones. With respect to Certainty’s equity obligations
to Wistar, Certainty issued to Wistar shares of its common stock equal to five percent (5%) of the common stock of Certainty.
Certainty,
in collaboration with the H. Lee Moffitt Cancer Center and Research Institute, Inc. (“Moffitt”), is advancing toward
human clinical testing the CAR-T technology licensed by Certainty from Wistar aimed initially at treating ovarian cancer. Certainty
is working with researchers at Moffitt to complete and submit an Investigational New Drug (“IND”) application with
the U.S. Food and Drug Administration (“FDA”) and to perform human clinical trials. In collaboration with researchers
at Moffitt, Certainty is currently performing tests on the clinical materials and assuming successful and timely completion of
those tests, we anticipate an IND application will be submitted with the FDA during the first calendar quarter of 2021.
In
April 2020, we entered into a collaboration with OntoChem GmbH (“OntoChem”) to discover and ultimately develop anti-viral
drug candidates against COVID-19. Through this collaboration, we utilized advanced computational methods, machine learning, and
molecular modeling techniques to perform in silico screening of over 1.2 billion compounds in chemical libraries (including
publicly available compounds and OntoChem’s proprietary libraries) to evaluate if any of these compounds could disrupt one
of two key enzymes of SARS-CoV-2, the virus that causes the disease COVID-19.
The
screening process resulted in identifiying over 30 potentially effective compounds that could disrupt either the function of a
viral enzyme called an endoribonuclease, known as Non-Structural Protein-15 (“NSP-15”), or the main protease (“Mpro”)
of the virus. Our in silico molecular modeling indicates that any of the NSP-15 or Mpro inhibitors might disrupt
the virus’ ability to replicate in humans. Several of the most promising compounds have been synthesized and in vitro
biological assays of the compounds are ongoing. If the biological activity of any of these compounds is verified, they will
be tested in animal studies to further evaluate their candidacy as COVID-19 therapeutics.
While
a number of preventative vaccines have recently been or will soon be approved for emergency use by the FDA, we believe that there
is and will continue to be a need for effective treatments for COVID-19. There are a number of factors that may limit the effectiveness,
both in the near and long term, of the vaccines currently in use, including, but not limited to, vaccine persistence, viral escape
and long-term safety. Furthermore, all current treatments require administration in a hospital setting, thus potentially continuing
to overburden the healthcare system, while we anticipate our treatment to use an oral formulation and to be available at pharmacies.
We
hold an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Cleveland
Clinic Foundation (“Cleveland Clinic”) relating to certain breast cancer vaccine technology developed at Cleveland
Clinic. This technology pertains to the use of vaccines for the treatment or prevention of TNBC and other breast cancers which
express the α-lactalbumin protein. The α-lactalbumin protein is only expressed during lactation in healthy women,
but may also be expressed in individuals with certain breast cancers, most notably TNBC.
Working
with researchers at Cleveland Clinic, in November 2020, we submitted an IND application with the FDA to begin human clinical trials
of the vaccine. In December 2020, we received authorization from the FDA to commence enrollment and treatment of patients in a
Phase 1a clinical trial. We have commenced activities necessary to prepare for treatment of patients in the Phase 1a trial, and
we anticipate being prepared to treat the first enrolled patient in the spring of 2021.
In
November 2020, we executed a license agreement with Cleveland Clinic pursuant to which the Company was granted an exclusive worldwide,
royalty-bearing license to use certain intellectual property owned or controlled by Cleveland Clinic relating to certain ovarian
cancer vaccine technology. This technology pertains to among other things, the use of vaccines for the treatment or prevention
of ovarian cancers which express the anti-Mullerian hormone receptor 2 protein containing an extracellular domain (“AMHR2-ED”).
In healthy tissue, this protein regulates growth and development of egg-containing follicles in the ovary. While expression of
AMHR2-ED naturally and markedly declines after menopause, this protein is expressed at high levels in the ovaries of postmenopausal
women with ovarian cancer. Researchers at Cleveland Clinic believe that a vaccine targeting AMHR2-ED could prevent the occurrence
of ovarian cancer.
On
July 2, 2020, we implemented a strategic realignment of our business and redirected resources to exclusively focus on the development
of therapeutics and vaccines. Accordingly, we suspended operations of our subsidiary, Anixa Diagnostics Corporation, and the development
of the Cchek™ artificial intelligence driven platform of non-invasive blood tests for the early detection of cancer.
Over
the next several quarters, we expect the development of our breast and ovarian cancer vaccines, our COVID-19 therapeutic discovery
program and Certainty’s CAR-T technology to be the primary focus of the Company. As part of our legacy operations, the Company
remains engaged in limited patent licensing activities regarding the Cchek™ liquid biopsy platform, as well as in the area
of encrypted audio/video conference calling. We do not expect these activities to be a significant part of the Company’s
ongoing operations nor do we expect these activities to require material financial resources or attention of senior management.
Over
the past several years, our revenue was derived from technology licensing and the sale of patented technologies, including revenue
from the settlement of litigation. We have not generated any revenue to date from our therapeutics or vaccine programs. In addition,
while we pursue our therapeutics and vaccine programs, we may also make investments in and form new companies to develop additional
emerging technologies. We do not expect to begin generating revenue with respect to any of our current therapy or vaccine programs
in the near term. We hope to achieve a profitable outcome by eventually licensing our technologies to large pharmaceutical companies
that have the resources and infrastructure in place to manufacture, market and sell our technologies as therapeutics or vaccines.
The eventual licensing of any of our technologies may take several years, if it is to occur at all, and may depend on positive
results from human clinical trials.
CAR-T
therapeutics
Certainty
was formed to develop immuno-therapy drugs against cancer, and in November 2017, we entered into a license with Wistar whereby
we obtained rights to certain intellectual property surrounding Wistar’s chimeric endocrine receptor targeted therapy technology.
CAR-T
therapeutics have demonstrated positive results in B-cell cancers, but very little progress has been made on solid tumors. Our
CAR-T technology is initially focused on ovarian cancer and is based on engineering killer T-cells with the Follicle Stimulating
Hormone (“FSH”) to target ovarian cells that express the FSH-Receptor. Data on this technology, including the animal
studies showing efficacy, was published in January 2017 in the journal, Clinical Cancer Research. The FSH-Receptor has been shown
to be a very exclusive protein found on a large percentage of ovarian cancer cells, but not on a significant number of non-ovarian
healthy tissues in adult females.
Studies
have shown that the FSH-Receptor is also expressed in endothelial cells of the vasculature of neoplasias We anticipate performing
further studies to evaluate the ability of our CAR-T to disrupt the vasculature of other cancers, after we commence clinical trials
of this technology against ovarian cancer.
We
are working with researchers at Moffitt to complete studies necessary to submit an IND application with the FDA. We then anticipate
taking this therapy into human clinical testing for patients suffering from ovarian cancer. Moffitt is one of the top cancer centers
in the country with pre-clinical and clinical expertise with CAR-T technology. Moffitt has conducted many of the highest profile
CAR-T trials in the world.
We
have performed numerous studies in preparation for an IND application. In those studies, several groups of tumor free, female
mice were intra-peritoneally infused with increasing concentrations of the murine CAR-T construct and their health status was
monitored for up to five months. The following summarizes the results of these studies:
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No
treated mice showed any signs of pain/stress, difficulty breathing or increased respiratory rate, reduced movement, reduced
grooming or feeding, dehydration, anorexia or any other sign of distress. Control mice also did not show any distress.
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The
treated mice did not show any weight loss. Control mice also did not show any weight loss.
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One
cohort of treated mice also had blood drawn periodically for measurement of markers for liver function (AST-Aspartate transaminase/ALT-Alanine
transaminase), kidney function (creatinine), and metabolic function (glucose). No abnormal values were observed, as was the
case for control mice.
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Serum
IL-6 (interleukin-6) increased in the treated mice, as well as mice treated with control T-cells. This indicated that the
T-cells were inducing the expected inflammatory response.
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Histological
analysis of the ovaries showed that 60% of the treated mice had significant reduction in ovarian mass, while the control mice
exhibited no reduction. This observation confirms that the CAR-T was successfully attacking the ovaries, as we hoped and expected.
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While
these results are positive, there are many uncertainties in drug development, and most drugs fail to reach commercialization.
In the future, we hope to achieve a profitable outcome by eventually licensing our technology to a large pharmaceutical company
that has the resources and infrastructure in place to manufacture, market and sell our technology as a cancer treatment.
In
October 2018, we attended a pre-IND meeting with the FDA to discuss numerous aspects of the planned clinical trial of our CAR-T
therapy for ovarian cancer. The FDA answered a number of questions, providing a good understanding of the design for the clinical
trial in our IND application.
We
have completed the manufacturing of the clinical grade vector and are in the process of testing the materials and completing the
IND application. We anticipate filing the IND in the first calendar quarter of 2021. The IND application, after review and approval
by the FDA, will enable us to begin testing our therapy in ovarian cancer patients. Assuming the FDA approves our IND application,
we anticipate beginning the human clinical trial as early as mid-2021.
The
Market
We
believe that our CAR-T technology may be used as an effective treatment against multiple solid tumor types, however, we have initially
focused on ovarian cancer. According to American Cancer Society statistics, ovarian cancer accounts for just 2.4% of all female
cancer cases, but 5% of cancer deaths in women due to the disease’s low survival rate. It is estimated that in 2020, 22,000
new cases of ovarian cancer will be diagnosed and 14,000 American women will die from this disease. Despite continuous advances
made in the field of cancer research every year, there remains a significant unmet medical need, as the overall five-year relative
survival rate for ovarian cancer patients is 48%. However, ovarian cancer survival varies substantially by age, with the overall
five-year survival rate for women 65 and older of only 31%.
Competition
The
biopharmaceutical industry is characterized by intense and dynamic competition to develop new technologies and proprietary therapies.
Any product candidates that we successfully develop and commercialize will have to compete with existing therapies and new therapies
that may become available in the future. While we believe that our proprietary FSH-Receptor targeted immuno-therapy platform for
treating solid tumors and scientific expertise in the field of cell therapy provide us with competitive advantages, we face potential
competition from various sources, including larger and better-funded pharmaceutical and biotechnology companies, as well as from
academic institutions, governmental agencies and public and private research institutions.
Many
of our competitors, either alone or with their strategic partners, have substantially greater financial, technical and human resources
than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other
regulatory approvals of treatments and commercializing those treatments. Accordingly, our competitors may be more successful than
us in obtaining approval for treatments and achieving widespread market acceptance. Our competitors’ treatments may be more
effective, or more effectively marketed and sold, than any treatment we may commercialize and may render our treatments obsolete
or non-competitive before we can recover the expenses of developing and commercializing any of our treatments.
Mergers
and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among
a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified scientific and
management personnel and establishing clinical study sites and subject registration for clinical studies, as well as in acquiring
technologies complementary to, or necessary for, our program. Smaller or early-stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with large and established companies.
We
anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become
available. We expect any treatments that we develop and commercialize to compete on the basis of, among other things, efficacy,
safety, convenience of administration and delivery, price and the availability of reimbursement from government and other third-party
payers.
Our
commercial opportunity could be reduced or eliminated if our 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 we may develop.
Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for
ours, which could result in our competitors establishing a strong market position before we are able to enter the market.
COVID-19
therapeutics
Coronavirus
disease 2019 (“COVID-19”) is an infectious disease caused by the severe acute respiratory syndrome coronavirus 2 (“SARS-CoV-2”).
The disease was first identified in December 2019 in Wuhan, the capital of China’s Hubei province, and has since spread
globally, resulting in the ongoing coronavirus pandemic. SARS-CoV-2 is highly infectious, and while in the majority of cases results
in mild symptoms, in many cases the symptoms progress to viral pneumonia and multi-organ failure.
There
are currently no proven broadly effective treatments. Further, all treatments that are currently being employed require administration
in a hospital setting, thus continuing to overburden the healthcare system. In addition, nearly all treatments currently in clinical
trials were originally developed for other indications, and were not designed specifically against SARS-CoV-2, and therefore may
have limited effectiveness. We believe that newly designed drugs that are purposefully developed to specifically target SARS-CoV-2,
enabled by recent studies of the molecular biology of the virus, will have the potential to be far more effective than repurposing
existing drugs.
In
April 2020, we entered into a collaboration agreement with OntoChem for the purpose of discovering and ultimately developing anti-viral
drug candidates for COVID-19. Our collaboration has focused on two specific proteins of the coronavirus. The first protein is
the main protease (“Mpro”), which is an enzyme of the virus that severs a large poly-peptide into functional
proteins that enable the virus to replicate in a human host. Our program will attempt to identify molecules that inhibit the function
of this enzyme, and potentially stop or slow the virus’ ability to replicate and cause disease. Since this protease does
not have human analogs, potential inhibitors may not affect any human proteins and therefore toxic side effects may be minimized.
The
second target is an endoribonuclease, Non-Structural Protein-15 (“NSP-15”), which plays a role in breaking up the
ribonucleic acid, or the genetic content, of the virus. Recent studies have demonstrated that the endoribonuclease of many viruses,
including the SARS virus of 2003 and, it is believed the SARS-CoV-2, binds to a human host protein. This protein-protein interaction
appears to dramatically increase the infectivity of the virus. Because this interaction between a viral protein and a human protein
appears to be common to many viruses, compounds that are able to effectively disrupt this interaction, could function as broad
spectrum anti-virals in addition to addressing COVID-19.
Through
our collaboration, we utilized advanced computational methods, machine learning and molecular modeling techniques to perform in
silico screening of over 1.2 billion compounds in OntoChem’s chemistry and gene ontology database (including publicly
available compounds and OntoChem’s proprietary libraries) to evaluate if any of these compounds could disrupt Mpro
or NSP-15 and to evaluate the molecules’ potential side effects, as well as their drug-like characteristics. This
screening process resulted in identifying a large number of compounds that could potentially be safe and effective against COVID-19.
We
selected the ten most promising compounds for synthesis and biological analysis. Biological testing of these compounds requires
use of live virus, which limits the laboratories qualified to perform the necessary assays to Biosafety Level 3 (“BSL-3”)
or Biosafety Level 4 labs. While availability of these labs is limited, we successfully established a relationship with a BSL-3
government lab in Europe, where biological assays, including binding assays, cellular assays, and viral activity assays, are currently
being performed. Further, this lab has animal facilities and upon completion of the biological testing, will be prepared to test
the compounds in animals to determine which compound may be appropriate for clinical evaluation.
The
Market
According
to U.S. Centers for Disease Control and Prevention (“CDC”) data, as of the date of this Report, in the U.S., there
have been over 20 million cases of COVID-19 and over 350,000 deaths. According to World Health Organization (“WHO”)
data, globally, there have been over 85 million cases and approximately 1.9 million people have died. Furthermore,
over the last three months, infections and deaths have increased.
Currently,
there are no broadly effective treatments for COVID-19. Further, the treatments that are currently being employed, such as Remdesivir
and various steroid and antibody treatments, are all in-patient therapeutics and require hospitalization, adding to the burden
on the healthcare system. A better approach, which we are employing, would be a therapeutic that can be formulated as a pill and
taken as soon as there is a positive test for COVID-19.
The
market for an orally delivered COVID-19 treatment that would dramatically reduce hospitalization rates would be significant given
the current infection rates. The most recent CDC predictions indicate that in the U.S. alone new infections will remain at over
1.3 million cases per week and deaths will be nearly 20,000 per week through January 2021.
Competition
Competition
in the COVID-19 treatment and prevention market is fierce, with hundreds of therapies and vaccines currently in development. Recently,
a number of preventative vaccines have received regulatory approvals in the U.S. and Europe. There are still many questions
about these vaccines, such as persistence and viral escape, and it will take time before it is known how well and for how long
they will provide protection from infection. Any product candidates that we successfully develop and commercialize will have to
compete with existing therapies and vaccines and new therapies and vaccines that may become available in the future. While we
believe that our proprietary compounds for treating COVID-19 and scientific expertise in the field of synthetic chemistry provide
us with competitive advantages, we face potential competition from various sources, including larger and better-funded pharmaceutical
and biotechnology companies, as well as from academic institutions, governmental agencies and public and private research institutions.
Many
of our competitors, either alone or with their strategic partners, have substantially greater financial, technical and human resources
than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other
regulatory approvals of treatments and commercializing those treatments. Accordingly, our competitors may be more successful than
us in obtaining approval for treatments and achieving widespread market acceptance. Our competitors’ treatments may be more
effective, or more effectively marketed and sold, than any treatment we may commercialize and may render our treatments obsolete
or non-competitive before we can recover the expenses of developing and commercializing any of our treatments.
Mergers
and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among
a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified scientific and
management personnel and establishing clinical study sites and subject registration for clinical studies, as well as in acquiring
technologies complementary to, or necessary for, our program. Smaller or early-stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with large and established companies.
We
anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become
available. We expect any treatments that we develop and commercialize to compete on the basis of, among other things, efficacy,
safety, convenience of administration and delivery, price and the availability of reimbursement from government and other third-party
payers.
Our
commercial opportunity could be reduced or eliminated if our 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 we may develop.
Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for
ours, which could result in our competitors establishing a strong market position before we are able to enter the market.
Breast
and Ovarian Cancer vaccines
We
licensed certain technology from Cleveland Clinic to develop vaccines for the treatment or prevention of TNBC and other breast
cancers which express the α-lactalbumin protein. This protein is only expressed during lactation in healthy women, but may
also be expressed in individuals with certain breast cancers, most notably TNBC, the most lethal form of breast cancer. Further,
we have licensed certain technology from Cleveland Clinic to develop vaccines for the treatment or prevention of ovarian cancers
which express AMHR2-ED. This protein regulates growth and development of egg-containing follicles in the ovary and its expression
naturally and markedly declines after menopause. However, AMHR2-ED is expressed at high levels in the ovaries of postmenopausal
women with ovarian cancer.
Typically,
vaccines harness the immune system to protect people from infectious diseases. Broad-based vaccination programs have essentially
eliminated some of the most deadly and debilitating diseases in history, small pox and polio among them. However, there has been
little success developing a preventative (prophylactic) vaccine against cancer.
Vaccines
work by exposing a benign form of a disease agent to an individual’s immune system. The immune system identifies the agent
and learns to attack and destroy it, retaining a memory of the agent so the immune system knows to react quickly if an individual
is exposed to the disease agent months or years later.
Most
vaccines attack pathogens, such as viruses and bacteria. The immune system is better able to assail these agents because they
come from outside the body. Cancer, however, is caused by aberrant cells that arise out of our resident cells, which can make
it difficult for our immune system to find the diseased cells, especially as advancing age weakens our immune system. Once these
aberrant cells gain critical mass, they become cancer.
Despite
the lack of success with cancer vaccines, recently gained knowledge about the human immune system has led to the development,
approval and commercialization of revolutionary immuno-therapy drugs. These drugs do not attack cancer directly, but rather modulate
the immune system in ways that enable it to destroy or dramatically impair cancer cells.
The
breast cancer vaccine technology licensed from Cleveland Clinic has identified a protein, alpha-lactalbumin, that is present in
healthy breast tissue only when a woman is lactating and disappears when she stops nursing her child. Alpha-lactalbumin is never
present on any other cell in the body. However, it does show up in many types of breast cancer, including TNBC, an aggressive
and deadly form of the disease. By developing a vaccine that targets alpha-lactalbumin, we feel the immune system can destroy
these breast cancer cells as they arise and ultimately prevent breast tumors from forming.
Cleveland
Clinic researchers have demonstrated in animal studies that vaccination against alpha-lactalbumin completely prevented breast
cancer in mice that were specifically bred to develop breast cancer. Data on this technology, including the animal studies showing
efficacy, was published in March 2016 in the journal, Cancers.
The
ovarian cancer vaccine technology licensed from Cleveland Clinic has identified the AMHR2-ED protein, the expression of which
is involved in egg production in the ovaries and is no longer expressed after menopause. AMHR2-ED is not meaningfully present
on any other cell in the body. However, it does appear in nearly all cases of ovarian epithelial cancers, the most common type
of ovarian cancer. By developing a vaccine that targets AMHR2-ED, we feel the immune system can destroy these ovarian cancer cells
as they arise and ultimately prevent tumors from forming. Data on this technology, including animal studies showing efficacy,
was published in November 2017 in the journal, Cancer Prevention Research.
While
the data thus far for both of our cancer vaccines has been positive, there are many uncertainties in drug development, and most
drugs fail to reach commercialization.
We
have been working with researchers at Cleveland Clinic to advance the breast cancer vaccine technology toward human clinical testing,
and recently submitted an IND application to the FDA. In December 2020, we received authorization from the FDA to commence enrollment
and treatment of patients in a Phase 1a clinical trial.
The
Breast Cancer Market
According
to American Cancer Society statistics, breast cancer accounts for 30% of all female cancer cases, and 15% of cancer deaths in
women. It is estimated that in 2020, 276,000 new cases of breast cancer will be diagnosed in the U.S. and 42,000 women will die
from this disease. Despite continuous advances made in the field of cancer research every year, there has been little change in
breast cancer incidence rate over the last ten years.
The
market for prophylactic cancer vaccines is sizable—bigger in fact than the market for any type of cancer therapeutic. After
all, doctors administer cancer drugs only after a patient has been diagnosed, while a prophylactic vaccine may be administered
to all people who have a possibility of developing the disease.
While
in the U.S., 276,000 women are estimated to be diagnosed with breast cancer this year, there are approximately 80 million women
over the age of 40—the time in life when women face an increased risk of developing breast cancer. Worldwide, the number
is dramatically larger.
The
Ovarian Cancer Market
According
to American Cancer Society statistics, ovarian cancer accounts for just 2.4% of all female cancer cases, but 5% of cancer deaths
in women due to the disease’s low survival rate. It is estimated that in 2020, 22,000 new cases of ovarian cancer will be
diagnosed and 14,000 American women will die from this disease. Despite continuous advances made in the field of cancer research
every year, there remains a significant unmet medical need, as the overall five-year relative survival rate for ovarian cancer
patients is 48%. However, ovarian cancer survival varies substantially by age, with the overall five-year survival rate for women
65 and older of only 31%.
The
market for prophylactic cancer vaccines is sizable—bigger in fact than the market for any type of cancer therapeutic. While
in the U.S., 22,000 women are estimated to be diagnosed with ovarian cancer this year, there are approximately 40 million women
over the age of 60—the time in life when women face an increased risk of developing ovarian cancer. Worldwide, the number
is dramatically larger.
Competition
The
biopharmaceutical industry is characterized by intense and dynamic competition to develop new technologies and proprietary therapies.
Any product candidates that we successfully develop and commercialize will have to compete with existing therapies and new therapies
that may become available in the future. While we believe that our proprietary breast and ovarian cancer vaccine technologies
and scientific expertise in the field of cell therapy provide us with competitive advantages, we face potential competition from
various sources, including larger and better-funded pharmaceutical and biotechnology companies, as well as from academic institutions,
governmental agencies and public and private research institutions.
Many
of our competitors, either alone or with their strategic partners, have substantially greater financial, technical and human resources
than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other
regulatory approvals of vaccines and commercializing those vaccines. Accordingly, our competitors may be more successful than
us in obtaining approval for vaccines and achieving widespread market acceptance. Our competitors’ vaccines may be more
effective, or more effectively marketed and sold, than any vaccine we may commercialize and may render our vaccines obsolete or
non-competitive before we can recover the expenses of developing and commercializing any of our vaccines.
Mergers
and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among
a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified scientific and
management personnel and establishing clinical study sites and subject registration for clinical studies, as well as in acquiring
technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with large and established companies.
We
anticipate that we will face intense and increasing competition as new drugs and vaccines enter the market and advanced technologies
become available. We expect any vaccines that we develop and commercialize to compete on the basis of, among other things, efficacy,
safety, convenience of administration and delivery, price and the availability of reimbursement from government and other third-party
payers.
Our
commercial opportunities could be reduced or eliminated if our 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 we may
develop. Our competitors also may obtain FDA or other regulatory approvals for their products more rapidly than we may obtain
approvals for ours, which could result in our competitors establishing a strong market position before we are able to enter the
market.
Employees
As
of October 31, 2020, we had four employees, three full-time and one part time, working for our Company and subsidiaries.
Summary
Risk Factors
The
risk factors described below are a summary of the principal risk factors associated with an investment in us. These are not the
only risks we face. You should carefully consider these risk factors, together with the risk factors set forth in Item 1A. of
this Report and the other reports and documents filed by us with the SEC.
Risks
Relating to Our Financial Condition and Operations
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We
have a history of losses and may incur additional losses in the future.
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We
will need additional funding in the future which may not be available on acceptable terms, or at all, and, if available, may
result in dilution to our stockholders.
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We
may have difficulty in raising capital and may consume resources faster than expected.
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Our
business activities are expected to be adversely affected by the global COVID-19 pandemic.
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Risks
Related to our Research & Development, Clinical and Commercialization Activities
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Our
therapeutic and vaccine programs are pre-revenue, and subject to the risks of an early stage biotechnology company.
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Our
current business model relies on strategic collaborations with commercial partners to provide the resources and infrastructure
to manufacture and ultimately market and/or sell our technologies. We may have difficulty in timing the establishment of these
partnerships to achieve the greatest economic benefit for the Company, or in establishing these partnerships at all.
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If
product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization
of our product candidates.
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We
have never generated any revenue from biotechnology and pharmaceutical product sales and our biotechnology and pharmaceutical
products may never be profitable.
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The
therapeutics and vaccines that we are developing are novel and present significant challenges to successfully reaching market.
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While
pre-clinical testing of our product candidates has been positive, we may experience unfavorable results once we commence human
clinical trials.
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We
are dependent on third parties to conduct our pre-clinical and clinical trials.
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If
we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed
or otherwise adversely affected.
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We
face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer
if we fail to compete effectively.
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Risks
Related to our Intellectual Propery
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We
rely on licenses from Wistar for our CAR-T technology and Cleveland Clinic for our breast and ovarian cancer vaccine technologies,
and if we lose any of these licenses we may be subjected to future litigation.
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Risks
Related to our Common Stock
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The
issuance or sale of shares in the future to raise money or for strategic purposes, including through our current ATM program,
could reduce the market price of our common stock.
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We
have issued a significant number of securities pursuant to our incentive plans and may continue to do so in the future. The
vesting and, if applicable, exercise of these securities and the sale of the shares of common stock issuable thereunder may
dilute your percentage ownership interest and may also result in downward pressure on the price of our common stock.
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Other
Our
principal executive offices are located at 3150 Almaden Expressway, San Jose, California 95118, our telephone number is (408)
708-9808 and our Internet website address is www.anixa.com. We make available free of charge on or through our Internet website
our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A,
and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably
practicable after we electronically file such materials with, or furnish them to, the Securities and Exchange Commission (the
“SEC”). Alternatively, you may also access our reports at the SEC’s website at www.sec.gov.
Our
business involves a high degree of risk and uncertainty, including the following risks and uncertainties:
Risks
Related to Our Financial Condition and Operations
We
have a history of losses and may incur additional losses in the future.
On
a cumulative basis we have sustained substantial losses and negative cash flows from operations since our inception. As of October
31, 2020, our accumulated deficit was approximately $191,836,000. As of October 31, 2020, we had approximately $9,057,000 in cash,
cash equivalents and short-term investments, and working capital of approximately $8,180,000. In fiscal year 2020, we incurred
losses of approximately $10,092,000 and we experienced negative cash flows from operations of approximately $6,176,000. We expect
to continue incurring material research and development and general and administrative expenses in connection with our operations.
As a result, we anticipate that we will incur losses in the future.
We
will need additional funding in the future which may not be available on acceptable terms, or at all, and, if available, may result
in dilution to our stockholders.
Based
on currently available information as of January 7, 2021, we believe that our existing cash, cash equivalents, short-term
investments and expected cash flows will be sufficient to fund our activities for the next 12 months. However, our projections
of future cash needs and cash flows may differ from actual results. If current cash on hand, cash equivalents, short term investments
and cash that may be generated from our business operations are insufficient to continue to operate our business, or if we elect
to invest in or acquire a company or companies that are synergistic with or complementary to our technologies, we may be required
to obtain more working capital. We may seek to obtain working capital through sales of our equity securities or through bank credit
facilities or public or private debt from various financial institutions where possible. We cannot be certain that additional
funding will be available on acceptable terms, or at all. If we do identify sources for additional funding, the sale of additional
equity securities or convertible debt could result in dilution to our stockholders. Additionally, the sale of equity securities
or issuance of debt securities may be subject to certain security holder approvals or may result in the downward adjustment of
the exercise or conversion price of our outstanding securities. We can give no assurance that we will generate sufficient cash
flows in the future to satisfy our liquidity requirements or sustain future operations, or that other sources of funding, such
as sales of equity or debt, would be available or would be approved by our security holders, if needed, on favorable terms or
at all. If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact
on our business, results of operations and financial condition. Furthermore, such lack of funds may inhibit our ability to respond
to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly
harm the business and development of operations.
We
may have difficulty in raising capital and may consume resources faster than expected.
We
currently do not generate any revenue from our therapeutics or vaccines nor do we generate any other recurring revenues and as
of October 31, 2020, the Company only had approximately $9,057,000 in cash, cash equivalents and short-term investments. Therefore,
we have a limited source of cash to meet our future capital requirements, which may include the expensive process of obtaining
FDA approvals for our CAR-T ovarian cancer therapeutic, our breast and ovarian cancer vaccines and our COVID-19 therapy. We do
not expect to generate significant revenues for the foreseeable future, and we may not be able to raise funds in the future, which
would leave us without resources to continue our operations and force us to resort to raising additional capital in the form of
equity or debt financings, which may not be available to us. We may have difficulty raising needed capital in the near or longer
term as a result of, among other factors, the very early stage of our therapeutics and vaccine businesses and our lack of revenues
as well as the inherent business risks associated with an early stage, biotechnology company and present and future market conditions.
Also, we may consume available resources more rapidly than currently anticipated, resulting in the need for additional funding
sooner than anticipated. Our inability to raise funds could lead to decreases in the price of our common stock and the failure
of our cancer diagnostic and therapeutics businesses which would have a material adverse effect on the Company.
Failure
to effectively manage our potential growth could place strains on our managerial, operational and financial resources and could
adversely affect our business and operating results.
Our
business strategy and potential growth may place a strain on managerial, operational and financial resources and systems. Although
we may not grow as we expect, if we fail to manage our growth effectively or to develop and expand our managerial, operational
and financial resources and systems, our business and financial results will be materially harmed.
We
may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize
on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.
Because
we have limited resources, we may forego or delay pursuit of opportunities with certain programs or product candidates or for
indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize
on viable commercial products or profitable market opportunities. Our spending on current and future research and development
programs for product candidates may not yield any commercially viable products. If we do not accurately evaluate the commercial
potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through
strategic collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us
to retain sole development and commercialization rights to such product candidate, or we may allocate internal resources to a
product candidate which it would have been more advantageous to enter into a partnering arrangement.
Our
ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
We
have incurred net losses since our inception and we may never achieve or sustain profitability. Generally, losses incurred will
carry forward until such losses expire (for losses generated prior to January 1, 2018) or are used to offset future taxable income,
if any. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”),
if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by
value) in its equity ownership by certain stockholders over a three-year period, the corporation’s ability to use its pre-change
net operating loss, or NOL, carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change
income or taxes may be limited. We have not completed a study to assess whether an ownership change for purposes of Section 382
or 383 has occurred, or whether there have been multiple ownership changes since our inception. We may have experienced ownership
changes in the past and may experience ownership changes in the future as a result of shifts in our stock ownership (some of which
shifts are outside our control). As a result, if we earn net taxable income, our ability to use our pre-change NOL carryforwards
to offset such taxable income will be subject to limitations. Similar provisions of state tax law may also apply to limit our
use of accumulated state tax attributes. As a result, even if we attain profitability, we may be unable to use a material portion
of our NOL carryforwards and other tax attributes, which could adversely affect our future cash flows.
Risks
Related to our Research & Development, Clinical and Commercialization Activities
Our
therapeutic and vaccine programs are pre-revenue, and subject to the risks of an early stage biotechnology company.
Since
the Company’s primary focus for the foreseeable future will likely be our therapeutics and vaccine businesses, shareholders
should understand that we are primarily an early stage biotechnology company with no history of revenue-generating operations,
and our only assets consist of our proprietary and licensed technologies and the know-how of our officers and employees. Therefore
we are subject to all the risks and uncertainties inherent in a new business, in particular new businesses engaged in CAR-T cancer
therapeutics, cancer vaccines and anti-viral therapeutics. Our CAR-T ovarian cancer therapeutic, our breast and ovarian cancer
vaccines and our COVID-19 treatment are in their early stages of development, and we still must establish and implement many important
functions necessary to commercialize the technologies.
Accordingly,
you should consider the Company’s prospects in light of the costs, uncertainties, delays and difficulties frequently encountered
by companies in their pre-revenue generating stages, particularly those in the biotechnology field. Shareholders should carefully
consider the risks and uncertainties that a business with no operating history will face. In particular, shareholders should consider
that there is a significant risk that we will not be able to:
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complete
studies that successfully identify one or more clinical candidates to treat COVID-19;
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successfully
complete animal studies necessary to submit an IND application to the FDA for our COVID-19 treatment;
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successfully
complete testing of clinical materials necessary to submit an IND application to the FDA for our CAR-T ovarian cancer therapeutic;
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obtain
FDA approval to commence human clinical trials of our CAR-T ovarian cancer therapeutic;
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successfully
enroll sufficient numbers of qualified patients to participate in our clinical trials;
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obtain
sufficient quantity and quality of materials manufactured for use in our clinical trials;
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successfully
meet the primary endpoints in our clinical trials;
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implement
or execute our current business plan, or that our current business plan is sound;
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raise
sufficient funds in the capital markets or otherwise to fully effectuate our business plan;
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maintain
our management team, including the members of our scientific advisory board;
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determine
that the processes and technologies that we have developed or will develop are commercially viable; and/or
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attract,
enter into or maintain contracts with potential commercial partners such as licensors of technology and suppliers or licensees
of our technologies.
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Any
of the foregoing risks may adversely affect the Company and result in the failure of our business. In addition, we expect to encounter
unforeseen expenses, difficulties, complications, delays and other known and unknown factors. Over the next several quarters,
we will need to transition from a company with a research and development focus to a company capable of supporting clinical trials
and commercial activities. We may not be able to reach such achievements, which would have a material adverse effect on our Company.
Our
current business model relies on strategic collaborations with commercial partners to provide the resources and infrastructure
to manufacture and ultimately market and/or sell our technologies. We may have difficulty in timing the establishment of these
partnerships to achieve the greatest economic benefit for the Company, or in establishing these partnerships at all.
We
do not currently have the resources and infrastructure to manufacture, market or sell our products or technologies. While our
technologies have generated interest from multiple potential strategic partners, due to the early stage of development of our
technologies, we can give no assurance that we will be able to successfully establish any strategic partnerships. Further, even
if we elect to engage with a potential strategic partner, development of these partnerships can take an extended period of time
in which significant analysis is performed by the potential strategic partner on our technologies and our intellectual property,
as well as on the market opportunities and how well our technologies may fit strategically with the partner’s existing business.
Accordingly, it will be difficult for us to time the establishment of a strategic partnership to achieve the greatest economic
benefit for the Company.
If
product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization
of our product candidates.
We
will face an inherent risk of product liability as a result of the upcoming human clinical testing and commercialization of our
product candidates. For example, we may be sued if our product candidates cause or are perceived to cause injury or are found
to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. 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 acts. If we cannot successfully
defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit or cease commercialization
of our product candidates. Even successful defense would require significant financial and management resources. Regardless of
the merits or eventual outcome, liability claims may result in:
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decreased
demand for our product candidates;
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injury
to our reputation;
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withdrawal
of clinical trial participants;
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initiation
of investigations by regulators;
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costs
to defend the related litigation;
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a
diversion of management’s time and our resources;
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substantial
monetary awards to clinical trial participants or patients;
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product
recalls, withdrawals or labeling, marketing or promotional restrictions;
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loss
of revenue;
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exhaustion
of any available insurance and our capital resources;
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the
inability to commercialize any product candidate; and
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a
decline in our share price.
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We
do not currently carry product liability insurance, but intend to obtain such coverage prior to commencement of our clinical trials.
Our 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 any products we develop, alone or with corporate collaborators.
If
we cannot license rights to use technologies on reasonable terms, we may not be able to commercialize new products in the future.
In
the future, we may identify third-party technology we need, including to develop or commercialize new products or services. In
return for the use of a third party’s technology, we may agree to pay the licensor royalties based on sales of our products
or services. Royalties are a component of cost of products or services and affect the margins on our products or services. We
may also need to negotiate licenses to patents or patent applications before or after introducing a commercial product. We may
not be able to obtain necessary licenses to patents or patent applications, and our business may suffer if we are unable to enter
into the necessary licenses on acceptable terms or at all, if any necessary licenses are subsequently terminated, if the licensors
fail to abide by the terms of the licenses or fail to prevent infringement by third parties, or if the licensed patents or other
rights are found to be invalid or unenforceable.
Biotechnology
and pharmaceutical product development is a highly speculative undertaking and involves a substantial degree of uncertainty. We
have never generated any revenue from biotechnology and pharmaceutical product sales and our biotechnology and pharmaceutical
products may never be profitable.
We
are in the discovery stage of developing our COVID-19 treatment and our ovarian cancer vaccine technology, in the pre-clinical
stage of developing our CAR-T therapeutic technology and about to enter the clinical stage with our breast cancer vaccine technology.
Our ability to generate revenue depends in large part on our ability, alone or with partners, to successfully complete the development
of, obtain the necessary regulatory approvals for, and commercialize, product candidates. We do not anticipate generating revenues
from sales of such products for the foreseeable future. Our ability to generate future revenues from product sales of our technologies
depends heavily on our success in:
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progressing
our discovery stage programs into pre-clinical testing;
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progressing
our pre-clinical programs into human clinical trials;
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completing
requisite clinical trials through all phases of clinical development of our product candidates;
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seeking
and obtaining marketing approvals for our product candidates that successfully complete clinical trials, if any;
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launching
and commercializing our product candidates for which we obtain marketing approval, if any, with a partner or, if launched
independently, successfully establishing a manufacturing, sales force, marketing and distribution infrastructure;
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identifying
and developing new product candidates;
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establishing
and maintaining supply and manufacturing relationships with third parties;
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maintaining,
protecting, expanding and enforcing our intellectual property; and
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attracting,
hiring and retaining qualified personnel.
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Because
of the numerous risks and uncertainties associated with biologic and pharmaceutical product development, we are unable to predict
the likelihood or timing for when we may receive regulatory approval of our product candidates or when we will be able to achieve
or maintain profitability, if ever. If we are unable to establish a development and or commercialization partnership, or do not
receive regulatory approvals, our business, prospects, financial condition and results of operations will be adversely affected.
Even if we or a partner obtain the regulatory approvals to market and sell one or more of our product candidates, we may never
generate significant revenues from any commercial sales for several reasons, including because the market for our products may
be smaller than we anticipate, or products may not be adopted by physicians and payors or because our products may not be as efficacious
or safe as other treatment options. If we fail to successfully commercialize one or more products, by ourselves or through a partner,
we may be unable to generate sufficient revenues to sustain and grow our business and our business, prospects, financial condition
and results of operations will be adversely affected.
Cancer
vaccines are novel and present significant challenges.
The
development of preventive and therapeutic cancer vaccines is difficult, with very few cancer vaccines successfully reaching the
market. The only vaccines shown to be effective in preventing cancer have been vaccines against cancer causing agents, not the
cancer itself. Vaccines work by exposing a benign form of a disease agent to an individual’s immune system. The immune system
identifies the agent and learns to attack and destroy it, retaining a memory of the agent so the immune system knows to react
quickly if an individual is exposed to the disease agent months or years later. Most vaccines attack pathogens, such as viruses
and bacteria. The immune system is better able to assail these agents because they come from outside the body. Cancer, however,
is caused by aberrant cells that arise out of our resident cells, which can make it difficult for our immune system to find the
diseased cells, especially as advancing age weakens our immune system. Once these aberrant cells gain critical mass, they become
cancer.
CAR-T
cell therapies are novel and present significant challenges.
CAR-T
product candidates represent a relatively new field of cellular immunotherapy. Advancing this novel and personalized therapy creates
significant challenges for us, or a partner, including:
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obtaining
regulatory approval, as the FDA and other regulatory authorities have limited experience with commercial development of T-cell
therapies for cancer;
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sourcing
clinical and, if approved, commercial supplies for the materials used to manufacture and process our product candidates;
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developing
a consistent and reliable process, while limiting contamination risks, for engineering and manufacturing T cells ex vivo and
infusing the engineered T cells into the patient;
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educating
medical personnel regarding the potential safety benefits, as well as the challenges, of incorporating our product candidates
into their treatment regimens;
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establishing
sales and marketing capabilities upon obtaining any regulatory approval to gain market acceptance of a novel therapy; and
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the
availability of coverage and adequate reimbursement from third-party payors for our novel and personalized therapy.
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Our
inability to successfully develop CAR-T cell therapies or develop processes related to the manufacture, sales and marketing of
these therapies would adversely affect our business, results of operations and prospects.
While
CAR-T technology has shown positive results in B-cell cancers by others, its safety and efficacy has not been seen in solid tumors
and we cannot guarantee our CAR-T technology will be safe or effective in ovarian or other cancers.
CAR-T
therapies function through the binding of a genetically engineered killer T-cell to a cancer cell. However, these engineered T-cells
destroy the cell they are bound to whether it is a cancer cell or a healthy cell. Therefore, the engineered T-cells must be designed
to only bind to either cancer cells or other target cells to minimize toxicity. Our CAR-T technology relies on the natural affinity
of FSH to FSH-Receptor. Research by others has shown that in women the FSH-Receptor protein is found on ovary cells and generally
in no other healthy tissue, and therefore, we engineer our T-cells with FSH. However, as the research in this field is still new,
we cannot guarantee that there is no FSH-Receptor on any other healthy tissue in the human body.
While
our CAR-T technology has shown favorable results from in-vitro and in-vivo testing, including in large numbers of animals under
the Good Laboratory Practice (“GLP”) conditions necessary for inclusion in an IND application, we cannot guarantee
that these results will be sufficient for the FDA to allow us to commence human clinical trials.
While
studies on our CAR-T ovarian cancer therapeutic have generated promising results in large numbers of mice under GLP conditions,
and toxicity studies have been performed and have had favorable results, there can be no assurance that the FDA will find these
results sufficient to allow us to commence testing of our ovarian cancer therapy in human patients. If we are unable to commence
human clinical trials for our product candidate, or if commencement of such trial is significantly delayed, we may be required
to expend significant additional resources, which may not be available to us, and our business, prospects, financial condition
and results of operations may be adversely affected.
There
is no guarantee that our collaboration with OntoChem will produce a successful anti-viral drug for COVID-19.
On
April 14, 2020, we entered into a collaboration agreement with OntoChem for the purpose of discovering and ultimately developing
anti-viral drug candidates for COVID-19. Through this collaboration, we utilized advanced computational methods, machine learning
and molecular modeling techniques to perform in silico screening of over 1.2 billion compounds in OntoChem’s chemistry
and gene ontology database (including publicly available compounds and OntoChem’s proprietary libraries) to evaluate if
any of these compounds could disrupt one of two key enzymes of COVID-19. While, to date, we have synthesized several potential
COVID-19 compounds and are in the process of performing biological assays, there is no guarantee that any of these compounds (or
any other future compounds that we may identify) will demonstrate sufficient potency as predicted by the molecular modeling algorithms.
Further, even if these compounds do demonstrate sufficient potency, there is no guarantee that the compounds will be effective
in animal or human testing and that they will ultimately be effective anti-viral drugs for COVID-19. In addition, based on the
current stage of development, while considering the streamlined regulatory processes for COVID-19 therapies, it may take up to
two or more years before we could obtain Emergency Use Authorization from the FDA.
There
is significant competition in the search for a treatment for COVID-19.
There
is significant competition, including from other companies and governmental organizations, to find treatments for COVID-19. Many
of these entities have substantially greater resources (including capital and personnel) than we do and many of these entities
are much further ahead in pursuit of a treatment than we are. Even if we are successful in identifying a compound that may act
as an effective treatment for COVID-19, there is no guarantee that we will have the only effective treatment for COVID-19 or that
we will be able to get our treatment to market prior to our competitors.
A
successful preventative vaccine will likely limit the market for a COVID-19 treatment.
A
number of preventative vaccines have recently been approved for use in human populations by regulatory agencies in the U.S. and
Europe. The anticipated effectiveness of these vaccines will likely limit the spread of COVID-19 and potentially reduce the market
size for a COVID-19 treatment.
While
pre-clinical testing of our product candidates have been positive, we may experience unfavorable results once we commence human
clinical trials.
We
have not initiated clinical trials for any of our product candidates and we may not be able to commence clinical trials on the
time frames we expect. As these product candidates have only been tested in animals, we face significant uncertainty regarding
how effective and safe they will be in human patients and the results from preclinical studies may not be indicative of the results
of clinical trials. Preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies
that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless
failed to obtain marketing approval for their products.
Even
if clinical trials are successfully completed, the FDA or foreign regulatory authorities may not interpret the results as we do,
and more clinical trials could be required before we submit our product candidates for approval. To the extent that the results
of our clinical trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application,
approval of our product candidates may be significantly delayed, or we may be required to expend significant additional resources,
which may not be available to us, to conduct additional clinical trials in support of potential approval of our product candidates.
We
are dependent on third parties to conduct our pre-clinical and clinical trials.
We
depend and will continue to depend upon independent investigators and collaborators, such as universities, medical institutions,
and strategic partners such as Moffitt for our CAR-T therapy, Cleveland Clinic for our breast and ovarian cancer vaccines and
OntoChem, as well as other European partners, for our COVID-19 therapy to conduct our preclinical and clinical trials under agreements
with us. Negotiations of budgets and contracts with study sites may result in delays to our development timelines and increased
costs. We will rely heavily on these third parties over the course of our clinical trials, and we control only certain aspects
of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with applicable
protocol, legal, regulatory and scientific standards, and our reliance on third parties does not relieve us of our regulatory
responsibilities. We and these third parties are required to comply with current good clinical practices, or cGCPs, which are
regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for product candidates in clinical
development. Regulatory authorities enforce these cGCPs through periodic inspections of clinical trial sponsors, principal investigators
and clinical trial sites. If we or any of these third parties fail to comply with applicable cGCP regulations, the clinical data
generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities could require
us to perform additional clinical trials before approving our marketing applications. It is possible that, upon inspection, such
regulatory authorities could determine that any of our clinical trials fail to comply with the cGCP regulations. In addition,
our clinical trials must be conducted with biologic product produced under current good manufacturing practices, or cGMPs, and
will require a large number of test patients. Our failure or any failure by these third parties to comply with these regulations
or to recruit a sufficient number of patients may require us to repeat clinical trials, which would delay the regulatory approval
process. Moreover, our business may be implicated if any of these third parties violates federal or state fraud and abuse or false
claims laws and regulations or healthcare privacy and security laws.
Any
third parties conducting our clinical trials are not and will not be our employees and, except for remedies available to us under
our agreements with these third parties, we cannot control whether they devote sufficient time and resources to our ongoing preclinical,
clinical and nonclinical programs. These third parties may also have relationships with other commercial entities, including our
competitors, for whom they may also be conducting clinical trials or other drug development activities, which could affect their
performance on our behalf. If these third parties do not successfully carry out their contractual duties or obligations or meet
expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised
due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may
be extended, delayed or terminated and we may not be able to complete development of, obtain regulatory approval of or successfully
commercialize our product candidates. As a result, our financial results and the commercial prospects for our product candidates
would be harmed, our costs could increase and our ability to generate revenue could be delayed.
Switching
or adding third parties to conduct our clinical trials involves substantial cost and requires extensive management time and focus.
In addition, there is a natural transition period when a new third party commences work. As a result, delays occur, which can
materially impact our ability to meet our desired clinical development timelines.
If
we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise
adversely affected.
Even
if we are permitted to conduct clinical trials for our product candidates, we may experience difficulties in patient enrollment
in our clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols depends,
among other things, on our ability to enroll a sufficient number of patients who remain in the study until its conclusion. The
enrollment of patients depends on many factors, including:
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the
patient eligibility criteria defined in the clinical trial protocol;
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the
size of the patient population required for analysis of the trial’s primary endpoints;
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the
proximity of patients to the study site;
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the
design of the clinical trial;
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our
ability to retain clinical trial investigators with the appropriate competencies and experience;
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our
ability to obtain and maintain patient consents;
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the
risk that patients enrolled in clinical trials will drop out of the clinical trials before completion; and
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competing
clinical trials and approved therapies available for patients.
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In
particular, our CAR-T ovarian cancer clinical trial will look to enroll patients with late stage ovarian cancer who have failed
conventional treatment, and are willing and able to be treated at Moffitt. Our first breast cancer vaccine clinical trial will
look to enroll patients who have undergone standard of care treatment for TNBC. Our second breast cancer vaccine clinical trial
will look to enroll healthy women who, as a result of testing positive for the BRCA1 gene mutation which is a leading predictor
of future incidence of breast cancer, have elected to have prophylactic mastectomies. These potential trial participants have
to be willing and able to undergo treatment at the Cleveland Clinic.
Our
clinical trials will compete with other companies’ clinical trials for product candidates that are in the same therapeutic
areas as our product candidates, and this competition will reduce the number and types of patients available to us, because some
patients who might have opted to enroll in our clinical trials may instead opt to enroll in a trial being conducted by one of
our competitors. We expect to conduct our clinical trials at the same clinical trial sites that some of our competitors may use,
which will reduce the number of patients who are available for our clinical trial in these clinical trial sites. Moreover, because
our product candidates represent a departure from more commonly used methods for cancer treatment, potential patients and their
doctors may be inclined to use experimental therapies that use conventional technologies, such as chemotherapy and antibody therapy,
rather than enroll patients in our future clinical trials. Patients may also be unwilling to participate in our clinical trials
because of negative publicity from adverse events in the biotechnology or gene therapy industries.
Additionally,
due to the design of our breast cancer vaccine trials it is unlikely that any of the trial participants will experience a positive
therapeutic effect which may further reduce the number of patients who may enroll in our trials.
Delays
in patient enrollment may result in increased costs or may affect the timing or outcome of our planned clinical trials, which
could prevent completion of the clinical trials and adversely affect our ability to advance the development of our ovarian cancer
CAR-T therapy and our breast cancer vaccine.
Any
adverse developments that occur during any clinical trials conducted by academic investigators, our collaborators or other entities
conducting clinical trials under independent INDs may negatively affect the conduct of our clinical trials or our ability to obtain
regulatory approvals or commercialize our product candidates.
CAR-T,
vaccines and other immuno-therapy technologies are being used by third parties in clinical trials for which we are collaborating
or in clinical trials which are completely independent of our development programs. We have little to no control over the conduct
of those clinical trials. If serious adverse events occur during these or any other clinical trials using technologies similar
to ours, the FDA and other regulatory authorities may delay our clinical trial, or could delay, limit or deny approval of our
product candidates or require us to conduct additional clinical trials as a condition to marketing approval, which would increase
our costs. If we receive regulatory approval for any product candidate and a new and serious safety issue is identified in connection
with clinical trials conducted by third parties, the applicable regulatory authorities may withdraw their approval of our products
or otherwise restrict our ability to market and sell our products. In addition, treating physicians may be less willing to administer
our products due to concerns over such adverse events, which would limit our ability to commercialize our products.
Adverse
side effects or other safety risks associated with our product candidates could cause us to suspend or discontinue clinical trials
or delay or preclude approval.
In
third party clinical trials involving CAR-T cell therapies, the most prominent acute toxicities included symptoms thought to be
associated with the release of cytokines, such as fever, low blood pressure and kidney dysfunction. Some patients also experienced
toxicity of the central nervous system, such as confusion, cranial nerve dysfunction and speech impairment. Adverse side effects
attributed to CAR-T therapies were severe and life-threatening in some patients. The life-threatening events were related to kidney
dysfunction and toxicities of the central nervous system or other organ failure. Severe and life-threatening toxicities occurred
primarily in the first two weeks after cell infusion and generally resolved within three weeks. In the past, several patients
have also died in clinical trials by others involving CAR-T cells.
Side
effects of our breast cancer vaccine may include mild effects such as injection site pain or irritation, or more severe side effects
such as fever, inflammation, organ failure or other adverse effects.
Undesirable
side effects observed in our clinical trials, whether or not they are caused by our product candidates, could result in the delay,
suspension or termination of clinical trials, by the FDA or other regulatory authorities or us for a number of reasons. In addition,
because the patients who will be enrolled in our clinical trials may be suffering from a life-threatening disease and may often
be suffering from multiple complicating conditions it may be difficult to accurately assess the relationship between our product
candidate and adverse events experienced by very ill patients. If we elect or are required to delay, suspend or terminate any
of our clinical trials, the commercial prospects of such therapy will be harmed and our ability to generate product revenues from
such therapy will be delayed or eliminated. In addition, serious adverse events observed in clinical trials could hinder or prevent
market acceptance of the product candidate at issue. Any of these occurrences may harm our business, prospects, financial condition
and results of operations significantly.
Clinical
trials are expensive, time-consuming and difficult to design and implement.
Human
clinical trials are expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements.
Because our CAR-T ovarian cancer therapy is based on relatively new technology and engineered on a patient-by-patient basis, we
expect that it will require extensive research and development and have substantial manufacturing and processing costs. In addition,
costs to treat patients with relapsed/refractory cancer and to treat potential side effects that may result from therapies such
as our current and future product candidates can be significant. Accordingly, our clinical trial costs are likely to be significantly
higher than for more conventional therapeutic technologies or drug products. In addition, our proposed personalized product candidates
involve several complex and costly manufacturing and processing steps, the costs of which will be borne by us.
In
one of our planned breast cancer vaccine clinical trials, we will treat healthy women who, as a result of testing positive for
the BRCA1 gene mutation, have elected to have prophylactic mastectomies. Delivering an experimental treatment to a healthy individual
is more complex and subject to more rigorous regulatory requirements and is more difficult to design and implement. In addition,
in future clinical trials we will need to determine efficacy of the breast cancer vaccine as a cancer prevention which will be
a considerably more complex clinical trial and will have significantly greater costs.
The
costs of our clinical trials may increase if the FDA does not agree with our clinical development plans or requires us to conduct
additional clinical trials to demonstrate the safety and efficacy of our product candidates.
We
face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we
fail to compete effectively.
The
biopharmaceutical industry is characterized by intense competition and rapid innovation. Our competitors may be able to develop
other compounds or drugs that are able to achieve similar or better results. Our potential competitors include major multinational
pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies and universities and other research
institutions. Many of our competitors have substantially greater financial, technical and other resources, such as larger research
and development staff and experienced marketing and manufacturing organizations and well-established sales forces. Smaller or
early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large,
established companies. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources
being concentrated in our competitors. Competition may increase further as a result of advances in the commercial applicability
of technologies and greater availability of capital for investment in these industries. Our competitors, either alone or with
collaborative partners, may succeed in developing, acquiring or licensing on an exclusive basis drug or biologic products that
are more effective, safer, more easily commercialized or less costly than our product candidates or may develop proprietary technologies
or secure patent protection that we may need for the development of our technologies and products.
Cell-based
therapies rely on the availability of specialty raw materials, which may not be available to us on acceptable terms or at all.
Gene-modified
cell therapy manufacture requires many specialty raw materials, some of which are manufactured by small companies with limited
resources and experience to support a commercial product. Some suppliers typically support biomedical researchers or blood-based
hospital businesses and may not have the capacity to support commercial products manufactured under cGMP by biopharmaceutical
firms. The suppliers may be ill-equipped to support our needs, especially in non-routine circumstances like a FDA inspection or
medical crisis, such as widespread contamination. We also do not have commercial supply arrangements with many of these suppliers,
and may not be able to contract with them on acceptable terms or at all. Accordingly, we may experience delays in receiving key
raw materials to support clinical or commercial manufacturing.
In
addition, some raw materials are currently available from a single supplier, or a small number of suppliers. We cannot be sure
that these suppliers will remain in business, or that they will not be purchased by one of our competitors or another company
that is not interested in continuing to produce these materials for our intended purpose.
We
may form or seek strategic alliances or enter into additional licensing arrangements in the future, and we may not realize the
benefits of such alliances or licensing arrangements.
We
may form or seek strategic alliances, create joint ventures or collaborations and enter into additional licensing arrangements
with third parties that we believe will complement or augment our development and commercialization efforts with respect to our
product candidates and any future product candidates that we may develop. Any of these relationships may require us to incur non-recurring
and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders or disrupt
our management and business. In addition, we face significant competition in seeking appropriate strategic partners and the negotiation
process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership
or other alternative arrangements for our product candidates because they may be deemed to be at too early of a stage of development
for collaborative effort and third parties may not view our product candidates as having the requisite potential to demonstrate
safety and efficacy. If we license products or businesses, we may not be able to realize the benefit of such transactions if we
are unable to successfully integrate them with our existing operations and company culture. It is possible that, following a strategic
transaction or license, we may not achieve the revenue or specific net income that justifies such transaction. Any delays in entering
into new strategic partnership agreements related to our product candidates could delay the development and commercialization
of our product candidates in certain geographies for certain indications, which would harm our business prospects, financial condition
and results of operations.
The
FDA regulatory approval process is lengthy and time-consuming, and we may experience significant delays in the clinical development
and regulatory approval of our product candidates.
We
have not previously submitted a Biologics License Application (“BLA”) or a New Drug Application (“NDA”)
to the FDA, or similar approval filings to other foreign authorities. A BLA or NDA must include extensive preclinical and clinical
data and supporting information to establish the product candidate’s safety, purity and potency for each desired indication.
It must also include significant information regarding the chemistry, manufacturing and controls for the product. We expect the
novel nature of our product candidates to create further challenges in obtaining regulatory approval. For example, the FDA has
limited experience with commercial development of T-cell therapies and vaccines for cancer. The regulatory approval pathway for
our product candidates may be uncertain, complex, expensive and lengthy, and approval may not be obtained.
We
may also experience delays in completing planned clinical trials for a variety of reasons, including delays related to:
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the
availability of financial resources to commence and complete our planned clinical trials;
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reaching
agreement on acceptable terms with prospective clinical trial sites, the terms of which can be subject to extensive negotiation
and may vary significantly among different clinical trial sites;
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recruiting
suitable patients to participate in a clinical trial;
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having
patients complete a clinical trial or return for post-treatment follow-up;
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clinical
trial sites deviating from clinical trial protocol, failing to follow GCPs, or dropping out of a clinical trial;
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adding
new clinical trial sites; or
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manufacturing
sufficient quantities of qualified materials under cGMPs and applying them on a subject by subject basis for use in clinical
trials.
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Also,
before a clinical trial can begin at an NIH-funded institution, that institution’s independent institutional review board,
or IRB, and its Institutional Biosafety Committee must review the proposed clinical trial to assess the safety of the trial. In
addition, adverse developments in clinical trials of gene therapy products conducted by others may cause the FDA or other regulatory
bodies to change the requirements for approval of any of our product candidates.
We
could also encounter delays if physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials
of our product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles. Further,
a clinical trial may be suspended or terminated by us, the IRBs for the institutions in which such clinical trials are being conducted,
the Data Monitoring Committee for such clinical trial, or by the FDA or other regulatory authorities due to a number of factors,
including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection
of the clinical trial operations or clinical trial site by the FDA 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. If we
experience termination of, or delays in the completion of, any clinical trial of our product candidates, the commercial prospects
for our product candidates will be harmed, and our ability to generate product revenue will be delayed. In addition, any delays
in completing our clinical trials will increase our costs, slow down our product development and approval process and jeopardize
our ability to commence product sales and generate revenue.
Many
of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may ultimately lead to the
denial of regulatory approval of our product candidates.
Even
if we obtain regulatory approval of our product candidates, the products may not gain market acceptance among physicians, patients,
hospitals, cancer treatment centers, third-party payors and others in the medical community.
The
use of engineered T-cells as a potential cancer treatment and the use of therapeutic and prophylactic cancer vaccines are recently
developed technologies and may not become broadly accepted by physicians, patients, hospitals, cancer treatment centers, third-party
payors and others in the medical community. Many factors will influence whether our product candidates are accepted in the market,
including:
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the
clinical indications for which our product candidates are approved;
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physicians,
hospitals, cancer treatment centers and patients considering our product candidates as a safe and effective treatment;
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the
potential and perceived advantages of our product candidates over alternative treatments;
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the
prevalence and severity of any side effects;
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product
labeling or product insert requirements of the FDA or other regulatory authorities;
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limitations
or warnings contained in the labeling approved by the FDA or other regulatory authorities;
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the
extent and quality of the clinical evidence supporting the efficacy and safety of our product candidates;
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the
timing of market introduction of our product candidates as well as competitive products;
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the
cost of treatment in relation to alternative treatments;
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the
availability of adequate reimbursement and pricing by third-party payors and government authorities;
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the
willingness and ability of patients to pay out-of-pocket in the absence of coverage by third-party payors, including government
authorities;
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relative
convenience and ease of administration, including as compared to alternative treatments and competitive therapies; and
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the
effectiveness of our or any of our strategic partners’ sales and marketing efforts.
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If
our product candidates are approved but fail to achieve market acceptance among physicians, patients, hospitals, cancer treatment
centers or others in the medical community, we will not be able to generate significant revenue. Even if our products achieve
market acceptance, we may not be able to maintain that market acceptance over time if new products or technologies are introduced
that are more favorably received than our products, are more cost effective or render our products obsolete.
Risks
Related to Our Intellectual Property
If
we are unable to obtain and maintain intellectual property protection, our competitive position will be harmed.
Our
ability to compete and to achieve sustained profitability will be impacted by our ability to protect our CAR-T cancer therapeutics
technologies, our breast cancer vaccine technologies, our ovarian cancer vaccine technologies, our COVID-19 therapeutic technologies
and other proprietary discoveries and technologies. We expect to rely on a combination of patent protection, copyrights, trademarks,
trade secrets, know-how, and regulatory approvals to protect our technologies. Our intellectual property strategy is intended
to help develop and maintain our competitive position. While we have been granted multiple patents related to our technologies,
there is no assurance that we will be able to obtain further patent protection for our technologies or any other technologies,
nor can we be certain that the steps we will have taken will prevent the misappropriation and unauthorized use of our technologies.
If we are not able to obtain and maintain patent protection our competitive position may be harmed.
Third
parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which
would be uncertain and could have a material adverse effect on the success of our business.
Our
commercial success depends upon our ability to develop, manufacture, market and sell our CAR-T therapeutics, our breast cancer
vaccine, our ovarian cancer vaccine, our COVID-19 treatment and other proprietary discoveries and technologies without infringing,
misappropriating or otherwise violating the proprietary rights or intellectual property of third parties. We may become party
to, or be threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to
our CAR-T therapeutics, our breast cancer vaccine, our ovarian cancer vaccine, our COVID-19 treatment and other proprietary discoveries
and technologies. Third parties may assert infringement claims against us based on existing patents or patents that may be granted
in the future. If we are found to infringe a third-party’s intellectual property rights, we could be required to obtain
a license from such third-party to continue developing our CAR-T therapeutics, our breast cancer vaccine, our ovarian cancer vaccine,
our COVID-19 treatment and other proprietary discoveries and technologies. However, we may not be able to obtain any required
license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby
giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease
developing the infringing technology or product. In addition, we could be found liable for monetary damages. Claims that we have
misappropriated the confidential information or trade secrets of third parties can have a similar negative impact on our business.
We
rely on licenses from Wistar for our CAR-T technology and Cleveland Clinic for our breast and ovarian cancer vaccine technologies,
and if we lose any of these licenses we may be subjected to future litigation.
We
are party to royalty-bearing license agreements that grant us rights to use certain intellectual property, including patents and
patent applications. We may need to obtain additional licenses from others to advance our research, development and commercialization
activities. Our license agreement imposes, and we expect that future license agreements if necessary will impose, various development,
diligence, commercialization and other obligations on us.
In
spite of our efforts, our licensors might conclude that we have materially breached our obligations under such license agreements
and might therefore terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products
and technology covered by these license agreements. If these in-licenses are terminated, or if the underlying patents fail to
provide the intended exclusivity, competitors or other third parties might have the freedom to seek regulatory approval of, and
to market, products identical to ours and we may be required to cease our development and commercialization activities. Any of
the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations
and prospects.
Moreover,
disputes may arise with respect to any one of our licensing agreements, including:
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the
scope of rights granted under the license agreement and other interpretation-related issues;
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the
extent to which our product candidates, technology and processes infringe on intellectual property of the licensor that is
not subject to the licensing agreement;
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the
sublicensing of patent and other rights under the licensing agreement and our collaborative development relationships;
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our
diligence obligations under the license 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
our licensors and us and our partners; and
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the
priority of invention of patented technology.
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If
we do not prevail in such disputes, we may lose any of such license agreements.
In
addition, the agreements under which we currently license intellectual property or technology from third parties 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 we believe to be the scope of our rights to the relevant intellectual property or
technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which
could have a material adverse effect on our business, financial condition, results of operations and prospects. Moreover, if disputes
over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements
on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates,
which could have a material adverse effect on our business, financial conditions, results of operations and prospects.
Our
failure to maintain such licenses could have a material adverse effect on our business, financial condition and results of operations.
Any of these licenses could be terminated, such as if either party fails to abide by the terms of the license, or if the licensor
fails to prevent infringement by third parties or if the licensed patents or other rights are found to be invalid or unenforceable.
Absent the license agreements, we may infringe patents subject to those agreements, and if the license agreements are terminated,
we may be subject to litigation by the licensor. Litigation could result in substantial costs and be a distraction to management.
If we do not prevail, we may be required to pay damages, including treble damages, attorneys’ fees, costs and expenses,
royalties or, be enjoined from selling our products, which could adversely affect our ability to offer products, our ability to
continue operations and our financial condition.
If
our efforts to protect the proprietary nature of our technologies are not adequate, we may not be able to compete effectively
in our market.
Any
disclosure to or misappropriation by third parties of our confidential proprietary information could enable competitors to quickly
duplicate or surpass our technological achievements, thus eroding our competitive position in our markets. Certain intellectual
property which is covered by our in-license agreements has been developed at academic institutions which have retained non-commercial
rights to such intellectual property.
There
are several pending U.S. and foreign patent applications in our portfolio, and we anticipate additional patent applications will
be filed both in the U.S. and in other countries, as appropriate. However, we cannot predict:
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if
and when patents will issue;
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the
degree and range of protection any issued patents will afford us against competitors including whether third parties will
find ways to invalidate or otherwise circumvent our patents;
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whether
or not others will obtain patents claiming aspects similar to those covered by our patents and patent applications; or
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whether
we will need to initiate litigation or administrative proceedings which may be costly whether we win or lose.
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Composition
of matter patents for biological and pharmaceutical products are generally considered to be the strongest form of intellectual
property. We cannot be certain that the claims in our pending patent applications directed to compositions of matter for our product
candidates will be considered patentable by the U.S. Patent and Trademark Office (the “USPTO”) or by patent offices
in foreign countries, or that the claims in any of our issued patents will be considered valid by courts in the U.S. or foreign
countries. Method of use patents have claims directed to the use of a product for the specified method. This type of patent does
not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside
the scope of the patented method. Moreover, even if competitors do not actively promote their product for our targeted indications,
physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to
the infringement of method of use patents, the practice is common and such infringement is difficult to prevent or prosecute.
The
strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain.
The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates
or uses thereof in the U.S. or in other foreign countries. Even if the patents do successfully issue, third parties may challenge
the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable.
Furthermore, even if they are unchallenged, patents in our portfolio may not adequately exclude third parties from practicing
relevant technology or prevent others from designing around our claims. If the breadth or strength of our intellectual property
position with respect to our product candidates is threatened, it could dissuade companies from collaborating with us to develop,
and threaten our ability to commercialize, our product candidates. Further, if we encounter delays in our clinical trials, the
period of time during which we could market our product candidates under patent protection would be reduced. Since patent applications
in the U.S. and most other countries are confidential for a period of time after filing, it is possible that patent applications
in our portfolio may not be the first filed patent applications related to our product candidates. Furthermore, for U.S. applications
in which all claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third-party
or instituted by the USPTO, to determine who was the first to invent any of the subject matter covered by the patent claims of
our applications. For U.S. applications containing a claim not entitled to priority before March 16, 2013, there is a greater
level of uncertainty in the patent law with the passage of the America Invents Act (2012) which brings into effect significant
changes to the U.S. patent laws that are yet untried and untested, and which introduces new procedures for challenging pending
patent applications and issued patents. A primary change under this reform is the creation of a “first to file” system
in the U.S. This will require us to be cognizant going forward of the time from invention to filing of a patent application.
Obtaining
and maintaining our patents depends on compliance with various procedural, document submission, fee payment and other requirements
imposed by governmental patent agencies, and our patent position could be reduced or eliminated for non-compliance with these
requirements.
Periodic
maintenance fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime
of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary,
fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be
cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance
can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights
in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application
include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and
failure to properly legalize and submit formal documents. Such noncompliance events are outside of our direct control for (1)
non-U.S. patents and patent applications owned by us, and (2) patents and patent applications licensed to us by another entity.
In such an event, our competitors might be able to enter the market, which would have a material adverse effect on our business.
Issued
patents covering our product candidates could be found invalid or unenforceable if challenged in court or the USPTO.
If
we or one of our licensing partners initiate legal proceedings against a third party to enforce a patent covering one of our product
candidates, the defendant could counterclaim that the patent covering our product candidate, as applicable, is invalid and/or
unenforceable. In patent litigation in the U.S., defendant counterclaims alleging invalidity and/or unenforceability are commonplace,
and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent. Third parties may
also raise similar claims before administrative bodies in the U.S. or abroad, even outside the context of litigation. Such mechanisms
include re-examination, post grant review, and equivalent proceedings in foreign jurisdictions, for example, opposition proceedings.
Any such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover our product
candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity
question, for example, we cannot be certain that there is no invalidating prior art and that prior art that was cited during prosecution,
but not relied on by the patent examiner, will not be revisited. If a defendant were to prevail on a legal assertion of invalidity
and/or unenforceability, we would lose at least part, and perhaps all, of the patents directed to our product candidates. A loss
of patent rights could have a material adverse impact on our business.
Changes
in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
As
is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents.
Obtaining and enforcing patents in the biopharmaceutical industry involve both technological and legal complexity, and is therefore
costly, time-consuming and inherently uncertain. In addition, the U.S. has recently enacted and is currently implementing wide-ranging
patent reform legislation. 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. In addition to increasing uncertainty with regard
to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of
patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations
governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing
patents and patents that we might obtain in the future. For example, in the case, Assoc. for Molecular Pathology v. Myriad Genetics,
Inc., the U.S. Supreme Court held that certain claims to DNA molecules are not patentable. While we do not believe that any of
the patents owned or licensed by us will be found invalid based on this decision, we cannot predict how future decisions by the
courts, the U.S. Congress or the USPTO may impact the value of our patents.
We
have limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout the
world.
We
have limited intellectual property rights outside the U.S. Filing, prosecuting and defending patents on product candidates in
all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside
the U.S. can be less extensive than those in the U.S. In addition, the laws of some foreign countries do not protect intellectual
property to the same extent as federal and state laws in the U.S. Consequently, we may not be able to prevent third parties from
practicing our inventions in all countries outside the U.S., or from selling or importing products made using our inventions in
and into the U.S. or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patents
to develop their own products and further, may export otherwise infringing products to territories where we have patents, but
enforcement is not as strong as that in the U.S. These products may compete with our products and our 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 in foreign jurisdictions. The
legal systems of certain countries, particularly China and certain other developing countries, do not favor the enforcement of
patents, trade secrets and other intellectual property, particularly those relating to biopharmaceutical products, which could
make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary
rights generally. To date, we have not sought to enforce any issued patents in these foreign jurisdictions. Proceedings to enforce
our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects
of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk
of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate,
and the damages or other remedies awarded, if any, may not be commercially meaningful. The requirements for patentability may
differ in certain countries, particularly developing countries. Furthermore, generic drug manufacturers or other competitors may
challenge the scope, validity or enforceability of our or our licensors’ patents, requiring us or our licensors to engage
in complex, lengthy and costly litigation or other proceedings. Certain countries in Europe and developing countries, including
China and India, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties.
In those countries, we and our licensors may have limited remedies if patents are infringed or if we or our licensors are compelled
to grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential
revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate
to obtain a significant commercial advantage from the intellectual property that we develop or license.
Risks
Related to Our Common Stock
The
issuance or sale of shares in the future to raise money or for strategic purposes could reduce the market price of our common
stock.
In
the future, we may issue securities to raise cash for operations, to pay down then existing indebtedness, as consideration for
the acquisition of assets, as consideration for receipt of goods or services, to pay for the development of our CAR-T cancer therapeutics,
to pay for the development of our breast cancer vaccine, to pay for the development of our ovarian cancer vaccine, to pay for
the development of our COVID-19 therapeutic and for acquisitions of companies. We have an at-the-market equity offering under
which, as of January 7, 2021 we may issue up to approximately $35 million of common stock, which is currently effective
and under which we commenced selling shares in November 2019, and which may remain available to us in the future. We have and
in the future may issue securities convertible into our common stock. Any of these events may dilute stockholders’ ownership
interests in our company and have an adverse impact on the price of our common stock.
In
addition, sales of a substantial amount of our common stock in the public market, or the perception that these sales may occur,
could reduce the market price of our common stock. This could also impair our ability to raise additional capital through the
sale of our securities.
Any
actual or anticipated sales of shares by our stockholders may cause the trading price of our common stock to decline. The sale
of a substantial number of shares of our common stock by our stockholders, or anticipation of such sales, could make it more difficult
for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect
sales.
We
may fail to meet market expectations because of fluctuations in quarterly operating results, which could cause the price of our
common stock to decline.
Our
reported revenues and operating results have fluctuated in the past and may continue to fluctuate significantly from quarter to
quarter in the future, specifically as we continue to devote our resources towards our CAR-T cancer therapeutics, our breast and
ovarian cancer vaccines and our COVID-19 therapeutic. It is possible that in future periods, we will have no revenue or, in any
event, revenues could fall below the expectations of securities analysts or investors, which could cause the market price of our
common stock to decline. The following are among the factors that could cause our operating results to fluctuate significantly
from period to period:
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patient
enrollment rates for our clinical trials;
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delays
with respect to our clinical trials;
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clinical
trial results relating to our CAR-T cancer therapeutics;
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clinical
trial results relating to our breast cancer vaccine;
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progress
with regulatory authorities towards the certification/approval of our CAR-T cancer therapeutics, our breast cancer vaccine,
our ovarian cancer vaccine or our COVID-19 therapeutic;
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costs
related to acquisitions, alliances and licenses.
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Biotechnology
company stock prices are especially volatile, and this volatility may depress the price of our common stock.
The
stock market has experienced significant price and volume fluctuations, and the market prices of biotechnology companies have
been highly volatile. We believe that various factors may cause the market price of our common stock to fluctuate, perhaps substantially,
including, among others, the following:
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announcements
of developments in the fields of CAR-T therapeutics, cancer vaccines or COVID-19 treatments;
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developments
in relationships with third party vendors and laboratories;
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developments
or disputes concerning our patents and other intellectual property;
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our
or our competitors’ technological innovations;
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variations
in our quarterly operating results;
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our
failure to meet or exceed securities analysts’ expectations of our financial results;
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a
change in financial estimates or securities analysts’ recommendations;
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changes
in management’s or securities analysts’ estimates of our financial performance;
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announcements
by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital commitments,
new technologies, or patents; and
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the
timing of or our failure to complete significant transactions.
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In
addition, we believe that fluctuations in our stock price during applicable periods can also be impacted by changes in governmental
regulations in the drug development industry and/or court rulings and/or other developments in our remaining patent licensing
and enforcement actions.
In
the past, companies that have experienced volatility in the market price of their stock have been the objects of securities class
action litigation. If our common stock was the object of securities class action litigation due to volatility in the market price
of our stock, it could result in substantial costs and a diversion of management’s attention and resources, which could
materially harm our business and financial results.
Our
common stock is currently listed on NASDAQ Capital Market, however if our common stock is delisted for any reason, it will become
subject to the SEC’s penny stock rules which may make our shares more difficult to sell.
If
our common stock is delisted from NASDAQ Capital Market, our common stock will then fit the definition of a penny stock and therefore
would be subject to the rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks.
The SEC rules may have the effect of reducing trading activity in our common stock making it more difficult for investors to sell
their shares. The SEC’s rules require a broker or dealer proposing to effect a transaction in a penny stock to deliver the
customer a risk disclosure document that provides certain information prescribed by the SEC, including, but not limited to, the
nature and level of risks in the penny stock market. The broker or dealer must also disclose the aggregate amount of any compensation
received or receivable by him in connection with such transaction prior to consummating the transaction. In addition, the SEC’s
rules also require a broker or dealer to make a special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser’s written agreement to the transaction before completion of the transaction. The
existence of the SEC’s rules may result in a lower trading volume of our common stock and lower trading prices.
We
have issued a significant number of securities pursuant to our incentive plans and may continue to do so in the future. The vesting
and, if applicable, exercise of these securities and the sale of the shares of common stock issuable thereunder may dilute your
percentage ownership interest and may also result in downward pressure on the price of our common stock.
As
of the date of this Report, we have issued and outstanding options to purchase 8,641,254 shares of our common stock with a weighted
average exercise price of $3.16 and 1,500,000 restricted stock awards (including options to purchase 1,500,000 shares of our common
stock and a restricted stock award of 1,500,000 shares of our common stock that vest based upon achievement of certain stock price
based milestones issued to Dr. Kumar in May 2018). Further, as of the date of this Report, our Board of Directors and Compensation
Committee have the authority to issue awards totaling an additional 2,000,000 shares of our common stock. Additionally,
we have registered for resale all of the shares of common stock issuable under our incentive plans. Because the market for our
common stock is thinly traded, the sales and/or the perception that those sales may occur, could adversely affect the market price
of our common stock. Furthermore, the mere existence of a significant number of shares of common stock issuable upon vesting and,
if applicable, exercise of these securities may be perceived by the market as having a potential dilutive effect, which could
lead to a decrease in the price of our common stock.
We
are a smaller reporting company and the reduced reporting requirements applicable to smaller reporting companies may make our
common stock less attractive to investors.
We
are a smaller reporting company (“SRC”) and a non-accelerated filer, which allows us to take advantage of exemptions
from various reporting requirements that are applicable to other public companies that are not SRCs or non-accelerated filers,
including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002,
as amended, reduced disclosure obligations regarding executive compensation in our Annual Report and our periodic reports and
proxy statements and providing only two years of audited financial statements in our Annual Report and our periodic reports. We
will remain an SRC until (a) the aggregate market value of our outstanding common stock held by non-affiliates as of the last
business day our most recently completed second fiscal quarter exceeds $250 million or (b) (1) we have over $100 million in annual
revenues and (2) the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day
our most recently completed second fiscal quarter exceeds $700 million. We cannot predict whether investors will find our common
stock less attractive if we rely on certain or all of these exemptions. If some investors find our common stock less attractive
as a result, there may be a less active trading market for our common stock and our stock price may be more volatile and may decline.
Changes
in accounting rules, assumptions and/or judgments could materially and adversely affect us.
Accounting
rules and interpretations for certain aspects of our operations are highly complex and involve significant assumptions and judgment.
These complexities could lead to a delay in the preparation and dissemination of our financial statements. Furthermore, changes
in accounting rules and interpretations or in our accounting assumptions and/or judgments, such as asset impairments, could significantly
impact our financial statements. In some cases, we could be required to apply a new or revised standard retroactively, resulting
in restating prior period financial statements. Any of these circumstances could have a material adverse effect on our business,
prospects, liquidity, financial condition and results of operations.
We
do not anticipate declaring any cash dividends on our common stock which may adversely impact the market price of our stock.
We
have never declared or paid cash dividends on our common stock and do not plan to pay any cash dividends in the near future. Our
current policy is to retain all funds and any earnings for use in the operation and expansion of our business. If we do not pay
dividends, our stock may be less valuable to you because a return on your investment will only occur if our stock price appreciates.
Risks
related to the COVID-19 pandemic
Our
business activities are expected to be adversely affected by the global COVID-19 pandemic.
COVID-19
has spread globally and the World Health Organization (WHO) has declared it a pandemic. While still evolving, the COVID-19 pandemic
has caused significant worldwide economic and financial turmoil, and has fueled concerns that it will lead to a global recession.
On March 13, 2020, the United States declared a national emergency with respect to COVID-19 and the majority of states and U.S.
territories, including the State of California, have since issued orders requiring the closure of non-essential businesses and/or
requiring residents to stay at home. As the pandemic has evolved since March 2020, some restriction have eased, however, with
the recent surge of infection and hospitalization rates, more severe restrictions are being implemented by local government agencies.
The Company is following the recommendations of local health authorities to minimize exposure risk for its team members and visitors,
including requiring its employees to work from home. The continued and prolonged implementation of restrictions by federal, state
and local authorities to slow the spread of COVID-19 have disrupted and, we expect, will continue to disrupt, our business and
operations.
Specifically,
the pandemic has caused periodic shutdowns of the laboratories and other service providers that we rely on to develop our programs,
and those laboratories and service providers that have been operating or that have begun operating recently have been doing so
with limited capacity due to social distancing requirements. As a result, our progress has been slowed and there is no assurance
that we will be able to meet our previously announced timelines regarding the development of our programs.
The
extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving
factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business
and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic
on economic activity and actions taken in response; our ability to continue daily operations, including as a result of travel
restrictions and people working from home; and any closures of our and our business partners’ offices and facilities.
While
the Company is currently implementing solutions designed to reduce the potential impact of COVID-19, there can be no assurance
that our efforts will adequately mitigate the risks of business disruptions and interruptions. Further, events such as natural
disasters and public health emergencies divert our attention away from normal operations and limited resources. Our inability
to timely resume normal operations following the pandemic disruption could adversely affect our business, financial condition
or results of operations in a material manner.
Any
of these events could materially adversely affect our business, financial condition, results of operations and/or stock price.