Item
1. Business.
Overview
Anixa
Biosciences, Inc. is a biotechnology company developing vaccines and therapies that are focused on critical unmet needs in oncology and
infectious disease. Our vaccine programs include (i) the development of a preventative vaccine against triple negative breast cancer
(“TNBC”), the most lethal form of breast cancer, as well other forms of breast cancer and (ii) the development of a preventative
vaccine against ovarian cancer. Our therapeutics programs include (i) the development of a chimeric endocrine receptor T-cell therapy,
a novel form of chimeric antigen receptor T-cell (“CAR-T”) technology, initially focused on treating ovarian cancer, which
is being developed at our subsidiary, Certainty Therapeutics, Inc. (“Certainty”), and (ii) the development of anti-viral
drug candidates for the treatment of COVID-19 focused on inhibiting certain protein functions of the virus.
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. Utilizing
this technology, we are working in collaboration with Cleveland Clinic to develop a method to vaccinate women against contracting breast
cancer, focused specifically on TNBC. The focus of this vaccine is a specific protein, α-lactalbumin, that is only expressed during
lactation in a healthy mother’s mammary tissue. This protein disappears when the mother is no longer lactating, but reappears in
many forms of breast cancer, especially TNBC. Studies have shown that vaccinating against this protein prevents breast cancer in mice.
Following
the U.S. Food and Drug Administration’s (“FDA”) authorization to proceed with clinical trials in December 2020, in
October 2021, we commenced dosing patients in a Phase 1 clinical trial of our breast cancer vaccine. This study, which is being funded
by a U.S. Department of Defense grant, is a multiple-ascending dose Phase 1 trial to determine the maximum tolerated dose (“MTD”)
of the vaccine in patients with early-stage, triple-negative breast cancer as well as monitor immune response. The study is being conducted
at Cleveland Clinic and will consist of 18 to 24 patients who have completed treatment for early-stage, triple-negative breast cancer
within the past three years and are currently tumor-free but at high risk for recurrence. During the course of the study, participants
will receive three vaccinations, each two weeks apart, and will be closely monitored for side effects and immune response. Initial indications
from preliminary analyses suggest that an immune response is being observed. In December 2022, we announced that we had reached the MTD.
We are now expanding the MTD cohort and are vaccinating additional participants at that dose level. Upon completion of vaccination and
follow-up tests of the expanded cohort, we will compile and analyze the data, and we anticipate presenting the complete immunological
data from the trial at a scientific conference or similar setting in the second calendar quarter of 2023.
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. We entered into a joint
development agreement with Cleveland Clinic to advance this vaccine toward human clinical testing.
In
May 2021, Cleveland Clinic was granted an award for our ovarian cancer vaccine technology by the National Cancer Institute’s (“NCI”)
PREVENT program. The NCI is a part of the National Institutes of Health. The PREVENT program is a peer-reviewed agent development program
designed to support pre-clinical development of innovative interventions and biomarkers for cancer prevention and interception towards
clinical trials. The scientific and financial resources of the PREVENT program will be used for our ovarian cancer vaccine technology
to perform virtually all pre-clinical research and development, manufacturing and IND-enabling studies. This work is being performed
at NCI facilities, by NCI scientific staff and with NCI financial resources and will require no material financial expenditures by the
Company, nor the transfer of any rights to the Company’s assets.
Our
subsidiary, 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 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 of the CAR-T technology licensed by Certainty from Wistar aimed initially at treating ovarian cancer. We received authorization
from the FDA in August 2021, to commence enrollment and treatment of patients in a Phase 1 clinical trial. We began patient recruitment
for the trial in March 2022, and in August 2022, we treated the first patient in the trial. The treatment appears to have been well-tolerated
by the patient, and we continue to monitor her condition. The process of recruiting additional patients is ongoing. This study is a dose-escalation
trial with two arms based on injection method—intraperitoneal or intravenous—to determine the maximum tolerated dose in patients
with recurrent epithelial ovarian cancer and to assess persistence, expansion and efficacy of the modified T-cells. The study is being
conducted at Moffitt and will consist of 24 to 48 patients who have received at least two prior lines of chemotherapy. The study is estimated
to be completed in two to four years depending on multiple factors including when maximum tolerated dose is reached, the rate of patient
recruitment, and how long we maintain the two different injection methods.
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 the identification of multiple compounds that could potentially disrupt critical enzymes of the virus,
including the virus’ main protease, Mpro. Several of these compounds were synthesized and tested in in vitro
biological assays. Upon completion of these biological assays, we identified two of the most promising compounds and tested them in animal
models. In these animal studies, the two compounds were compared to Remdesivir, which at the time the assays were performed was the only
anti-viral drug authorized by the FDA for COVID-19. The data showed that administration of the drugs to infected hamsters did not cause
any noticeable adverse effects, and monitoring of weight and general animal behavior demonstrated comparable efficacy between each of
our compounds and Remdesivir. Based on this promising data in the animal study, we directed our team to proceed to the next stage of
drug development and we selected one of the compounds around which our team is performing combinatorial synthetic medicinal chemistry
to evaluate whether potency can be increased and pharmacokinetics optimized. This work is ongoing.
In
May 2021, after completion of the aforementioned animal studies, OntoChem assigned its rights and obligations related to this collaboration
to MolGenie GmbH (“MolGenie”), a company spun-out from OntoChem focused on drug discovery and development. As a result of
the MolGenie spin-out, there was no change in the personnel working on our project, and the assignment caused no interruptions to the
program’s development.
While
use of preventative vaccines is widespread throughout much of the developed world, we believe that there is and will continue to be a
need for effective treatments for COVID-19. We believe that there are a number of factors that have limited 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 perceptions
of long-term safety resulting in vaccine resistance. Furthermore, there are currently new anti-viral treatments, such as Pfizer’s
Paxlovid, which is a combination therapy consisting of the protease-inhibitor nirmatrelvir and the antiretroviral ritonavir, that have
been authorized for use in the U.S. As the main component of Pfizer’s treatment is a protease-inhibitor targeting Mpro,
it is most similar to our compounds, and we therefore conducted a head-to-head analysis via a Fluorescence Resonance Energy Transfer
(FRET) assay that tested the ability of the compounds to inhibit the function of Mpro. The results of this head-to-head in
vitro analysis suggested that our compounds may be five times more effective at inhibiting Mpro than Pfizer’s nirmatrelvir.
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 its liquid biopsy platform and 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. Our strategy is 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.
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 many cases of epithelial ovarian 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.
In
October 2021, Cleveland Clinic began treating patients in a Phase 1 clinical trial of our breast cancer vaccine. In addition, we and
our partners at Cleveland Clinic continue working with the NCI who are or will be performing pre-clinical research and development, manufacturing
and IND-enabling studies to advance our ovarian cancer vaccine technology toward human clinical testing.
The
Breast Cancer Market
According
to American Cancer Society statistics, breast cancer accounts for over 30% of all female cancer cases, and 15% of cancer deaths in women.
It is estimated that in 2022, 288,000 new cases of breast cancer will be diagnosed in the U.S. and 43,000 women will die from this disease.
Despite continuous advances made in the field of cancer research every year, invasive female breast cancer incidence rates have been
increasing by approximately 0.5% per year over the past 15 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., 288,000 women are estimated to be diagnosed with breast cancer this year, there are approximately 82 million women age 40
and over—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% of all female cancer cases, but nearly 5% of cancer
deaths in women due to the disease’s low survival rate. It is estimated that in 2022, 20,000 new cases of ovarian cancer will
be diagnosed and 13,000 American women will die from this disease. Despite continuous advances made in the field of cancer research
every year, we believe there remains a significant unmet medical need, as the overall five-year relative survival rate for ovarian
cancer patients is 49%. However, ovarian cancer survival varies substantially by age, with the overall five-year survival rate for
women 65 and older of only 33%.
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., 20,000 women are estimated to be diagnosed with ovarian cancer this year, there are approximately 41 million women age 60 and
over—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.
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 have analyzed data from clinical trials
of this technology against ovarian cancer.
We
have been working with researchers at Moffitt to develop our CAR-T therapy. 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
performed numerous studies in preparation for human clinical studies. 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:
| ● | 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. |
| ● | The
treated mice did not show any weight loss. Control mice also did not show any weight loss. |
| ● | 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. |
| ● | 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. |
| ● | 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. |
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
August 2022, we treated the first patient in the trial. The treatment appears to have been well-tolerated by the patient, and we continue
to monitor her condition. The process of recruiting additional patients is ongoing. This study is a dose-escalation trial with two arms
based on injection method—intraperitoneal or intravenous—to determine the maximum tolerated dose in patients with recurrent
epithelial ovarian cancer and to assess persistence, expansion and efficacy of the modified T-cells. The study is being conducted at
Moffitt and will consist of 24 to 48 patients who have received at least two prior lines of chemotherapy. The study is estimated to be
completed in two to four years depending on multiple factors including when maximum tolerated dose is reached, the rate of patient recruitment,
and how long we maintain the two different injection methods.
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% of all female cancer
cases, but nearly 5% of cancer deaths in women due to the disease’s low survival rate. It is estimated that in 2022, approximately
20,000 new cases of ovarian cancer will be diagnosed and 13,000 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 49%. However, ovarian cancer survival varies substantially by age, with the overall five-year survival
rate for women 65 and older of only 33%.
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 few broadly effective treatment options. Further, nearly all treatments currently in use or 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, who subsequently assigned its rights and obligations under the collaboration
agreement to MolGenie, for the purpose of discovering and ultimately developing anti-viral drug candidates for COVID-19. Our collaboration
has primarily focused on the virus’ 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 has focused on identifying
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.
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 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.
The
screening process resulted in the identification of multiple compounds that could potentially disrupt critical enzymes of the virus.
Several of these compounds were synthesized and tested in in vitro biological assays. Upon completion of these biological assays,
we identified two of the most promising compounds and tested them in animal models. In these animal studies, the two compounds were compared
to Remdesivir, which at the time the assays were performed was the only anti-viral drug authorized by the FDA for COVID-19. The data
showed that administration of the drugs to infected hamsters did not cause any noticeable adverse effects, and monitoring of weight and
general animal behavior demonstrated comparable efficacy between each of our compounds and Remdesivir. Based on this promising data in
the animal study, we directed our collaboration partners to proceed to the next stage of drug development and we selected one of the
compounds around which our partners and other third-party service providers are performing combinatorial synthetic medicinal chemistry
to evaluate whether potency can be increased and pharmacokinetics optimized. This work is ongoing.
As
SARS-CoV-2 has continued to mutate over the course of the pandemic, we have performed genomic variant analysis to determine whether our
compounds may be effective against multiple variants. To date, the results of such analyses have shown that either no significant mutations
have been found in or near the active site of the Mpro enzyme or any known mutations do not change the function of the enzyme,
and therefore we believe that our compounds should be effective against multiple variants, including the Omicron variant and its subvariants,
though there is no assurance that this will be the case.
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 100 million cases of COVID-19 and nearly 1.1 million deaths. According to World Health Organization (“WHO”)
data, globally, there have been 650 million cases and over 6.6 million people have died. While the infection and death rates have
reduced significantly since the peak of the pandemic, according to the most recent CDC data, in the U.S. the current 7-day average
of weekly new cases is approximately 65,000, the 7-day average daily hospitalizations is approximately 5,000 and the 7-day average
daily deaths is over 400.
Currently,
there are few broadly effective treatment options for COVID-19. Further, the most common treatments that are currently being employed,
were originally developed for other indications, and were not designed specifically against SARS-CoV-2, and therefore may have limited
effectiveness. In addition, the orally-available anti-viral treatment developed by Pfizer has limitations as it requires a combination
therapy with an antiretroviral drug commonly used to treat HIV and is known to have challenging side effects.
The
market for orally delivered COVID-19 treatments that are effective against multiple variants of the virus, with limited side effects
would be significant.
Competition
Competition
in the COVID-19 treatment and prevention market is fierce, with hundreds of therapies and vaccines currently in development. There are
currently a number of preventative vaccines that have received regulatory approvals globally. While these vaccines have been effective
in reducing the spread of COVID-19, there remain challenges regarding persistence and viral escape as well as the resistance to vaccination
by a significant portion of the population and also the difficulty in vaccinating and boosting the world population. Further, the current
leading treatment is the orally-available combination protease-inhibitor-antiretroviral Paxlovid, developed by Pfizer. 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.
Employees
As
of October 31, 2022, we had five employees, four full-time and one part time, working for our Company and subsidiaries. In addition,
we work with research teams at Moffitt, Cleveland Clinic, and MolGenie, as well as their subcontractors, to develop each of our projects.
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. |
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 and unforeseen delays 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. |
Risks
Related to our Intellectual Property
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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 it may remove or limit our ability to develop and commercialize products and technology covered
by these license agreements and we may be subjected to future litigation. |
Risks
Related to our Common Stock
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The
issuance or sale of shares in the future, including in connection with our current “at the market offering” program,
to raise money or for strategic purposes 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. |
Risks
Related to the COVID-19 Pandemic
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Our
business activities, including our clinical trials, may be delayed or otherwise adversely affected by the ongoing COVID-19 pandemic. |
Other
We
were incorporated on November 5, 1982 under the laws of the State of Delaware. 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.
Item
1A. Risk Factors.
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,
2022, our accumulated deficit was approximately $218,385,000. As of October 31, 2022, we had approximately $29,687,000 in cash, cash
equivalents and short-term investments, and working capital of approximately $28,163,000. In fiscal year 2022, we incurred losses of
approximately $13,771,000 and we experienced negative cash flows from operations of approximately $6,492,000. 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 4, 2023, we believe that our existing cash, cash equivalents and short-term investments
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 and short-term investments 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, including
through our current “at the market offering” program, 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, 2022, the Company had approximately $29,687,000 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, 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 therapeutics and vaccine 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 may 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, as well as whether our current business plan is sound. 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
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; |
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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; |
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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. |
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 broaden our focus from a research and development company to a company capable of supporting clinical trials and commercial activities,
or enter into collaborations with partners that may provide those capabilities. 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 ongoing and 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 potential 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. |
While
we carry product liability insurance, claims could be asserted that could result in damages in excess of such insurance coverage. If
we do not maintain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims,
the lack of sufficient coverage could prevent or inhibit the development and 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 and in the clinical stage with
our CAR-T therapeutic technology and 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. |
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 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. |
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.
There
is no guarantee that our collaboration with MolGenie will produce a successful anti-viral drug for COVID-19.
In
April 2020, we entered into a collaboration agreement with OntoChem, such agreement subsequently assigned to MolGenie, 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 have performed in vitro and in vivo analyses of such compounds, 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.
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 our treatment will be successful against competitors.
While
pre-clinical testing of our product candidates has been positive, we may experience unfavorable results once we commence human clinical
trials.
We
have not initiated clinical trials for our product candidates other than our breast cancer vaccine and our CAR-T ovarian cancer therapeutic,
for which we have limited human clinical data, and we may not be able to commence clinical trials on the time frames we expect. As our
discovery stage product candidates have only been tested in animals and our clinical stage candidates currently have limited human data,
we face significant uncertainty regarding how effective and safe they will be in human patients and the results from pre-clinical studies
may not be indicative of the results of clinical trials. Pre-clinical and clinical data are often susceptible to varying interpretations
and analyses, and many companies that have believed their product candidates performed satisfactorily in pre-clinical 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 studies 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 MolGenie, as
well as other European partners, for our COVID-19 therapy to conduct our pre-clinical studies 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 pre-clinical,
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.
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; |
|
● |
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; |
|
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competing
clinical trials and approved therapies available for patients; and |
|
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the
impact of the ongoing COVID-19 pandemic. |
In
particular, our CAR-T ovarian cancer clinical trial is enrolling 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 is enrolling patients who
have undergone standard of care treatment for TNBC. Our second breast cancer vaccine clinical trial is enrolling 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 must 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 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 cell therapies.
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 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 manufacturing 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 FDA inspections or medical crises, 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 pre-clinical 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 cGCPs, 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. |
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. |
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, including our ability to license any product if we choose to have other
parties commercialize them.
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. |
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. |
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 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 4,
2022 we may issue up to approximately $100 million of common stock, which is currently effective and under which we have not yet sold
any shares, and which may remain available to us in the future. We also 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 or expenses could rise above 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:
|
● |
patient
enrollment rates for our clinical trials; |
|
● |
delays
with respect to our clinical trials; |
|
● |
clinical
trial results relating to our CAR-T cancer therapeutics; |
|
● |
clinical
trial results relating to our breast cancer vaccine; |
|
● |
results
of pre-clinical studies relating to our ovarian cancer vaccine; |
|
● |
results
of pre-clinical studies relating to our COVID-19 therapeutic; |
|
● |
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; and |
|
● |
costs
related to acquisitions, alliances and licenses. |
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:
|
● |
announcements
of developments in the fields of CAR-T therapeutics, cancer vaccines or COVID-19 treatments; |
|
● |
developments
in relationships with third party vendors and laboratories; |
|
● |
developments
or disputes concerning our patents and other intellectual property; |
|
● |
our
or our competitors’ technological innovations; |
|
● |
variations
in our quarterly operating results; |
|
● |
our
failure to meet or exceed securities analysts’ expectations of our financial results; |
|
● |
a
change in financial estimates or securities analysts’ recommendations; |
|
● |
changes
in management’s or securities analysts’ estimates of our financial performance; |
|
● |
announcements
by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital commitments, new
technologies, or patents; and |
|
● |
the
timing of or our failure to complete significant transactions. |
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 11,621,500 shares of our common stock with a weighted
average exercise price of $3.58. Further, as of the date of this Report, our Board of Directors and Compensation Committee have the
authority to issue awards totaling an additional 875,000 shares of our common stock which is replenished on a yearly basis in accordance
with the provisions of our plan. 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.
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 may be adversely affected by the ongoing COVID-19 pandemic.
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;
the effect the pandemic may have on the ability to recruit patients to participate in our clinical trials; and any closures of our and
our business partners’ offices and facilities.
While
the Company and its partners are not currently experiencing significant negative impact of COVID-19, there can be no assurance that the
current situation will continue. 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 any 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.