General
Burzynski Research Institute, Inc. (the “Company”)
was incorporated under the laws of the State of Delaware in 1984 in order to engage in the research, production, marketing, promotion
and sale of certain medical chemical compounds composed of growth-inhibiting peptides, amino acid derivatives and organic acids which
are known under the trade name “Antineoplastons.” The Company believes Antineoplastons are useful in the treatment of human
cancer and is currently reviewing data of its Phase II clinical trials of Antineoplastons relating to the treatment of various cancers.
Antineoplastons have not been approved for sale or use by the Food and Drug Administration of the United States Department of Health and
Human Services (“FDA”) or anywhere in the world. In the event Antineoplastons receive such approval and are registered in
the United States, Canada, or Mexico, of which there can be no assurance, the Company will commence commercial operations, which shall
include the production, marketing, promotion and sale of Antineoplastons in the United States, Canada, or Mexico. In 2004, the FDA approved
the designation of Antineoplastons as an “orphan drug” under the Orphan Drug Act of 1983. See “Orphan Drug Designation”
below for a detailed description of this designation and its meaning. The Company currently provides Antineoplastons solely for use by
Stanislaw R. Burzynski, M.D., Ph.D. (“Dr. Burzynski”) in clinical research.
The Company has not generated any significant operating
revenue since its inception. The Company’s sole source of funding for its operations has been and continues to be payments made
by Dr. Burzynski from funds generated from Dr. Burzynski’s medical practice pursuant to various arrangements between the
Company and Dr. Burzynski. See “Certain Relationships and Related Transactions, and Director Independence.”
The Company reports funds pursuant to such arrangements as additional paid-in capital. See “Management’s Discussion
and Analysis of Financial Condition and Results of Operations.” The Company does not expect to generate significant operating
revenue until such time, if any, as Antineoplastons are approved for use and sale by the FDA. However, the Company may seek additional
funding for operations through the sale of its securities.
Antineoplastons
Dr. Burzynski commenced his cancer research
in 1967 focusing on the isolation of various biochemicals produced by the human body as part of the body’s possible defense against
cancer. In the course of his research, Dr. Burzynski identified certain peptides, amino acid derivatives and organic acids in these
biochemicals which appear to inhibit the growth of cancer cells. These derivatives were given the name “Antineoplastons” by
Dr. Burzynski.
Antineoplastons are found in the bodily fluids
of humans and food and were initially isolated by Dr. Burzynski from normal human blood and urine. Dr. Burzynski believes these
substances counteract the development of cancerous growth through a biochemical process which does not inhibit the growth of normal tissues.
To date, Dr. Burzynski has developed six formulations of natural Antineoplastons and six synthetic formulations of Antineoplastons.
The Phase III clinical trial currently sponsored by the Company (which has not started enrollment) will involve the use of two formulations
of synthetic Antineoplastons known as A10 and AS2-1 injections.
Orphan Drug Designation
On September 3, 2004, the FDA granted the
Company’s request for “orphan drug designation” (“ODD”) for the Company’s Antineoplastons (A10 &
AS2-1 Antineoplaston) for treatment for patients with brain stem glioma and, on October 30, 2008, the FDA granted the Company’s
request for ODD for Antineoplastons (A10 and AS2-1 Antineoplaston) for the treatment of gliomas. In enacting the Orphan Drug Act of 1983,
Congress sought to provide incentives to promote the development of drugs for the treatment of rare diseases. A drug may be considered
for orphan drug designation if the drug is intended to treat a rare disease or condition affecting fewer than 200,000 people in the United
States or, even if the drug treats a disease affecting more than 200,000 people in the United States, the drug is not expected to be profitable
from sales in the United States. Subject to applicable laws and regulations, the first sponsor to obtain FDA marketing approval for a
drug with orphan drug designation for the designated disease or condition receives limited marketing exclusivity for seven years; no other
sponsor may bring to market the “same drug” for the treatment of the same disease or condition for a period of seven years
from the date the application is approved by the FDA. A drug with orphan drug designation must meet the same criteria for safety and efficacy
as a drug without orphan drug designation. Please see “Government Regulation” for a description of the regulatory
approval process with the FDA and other regulatory agencies.
Phase II Clinical Trials
The Company began Phase II clinical studies in
1994 with four studies. At that time, a number of patients were also receiving Antineoplastons at Dr. Burzynski’s clinic in
Houston, Texas (the “Burzynski Clinic”) outside these clinical trials. On February 23, 1996, the FDA requested that all
then-current patients of the Burzynski Clinic desiring to continue Antineoplaston treatment be admitted to a Phase II Study, according
to Protocol CAN-1. This action resulted in the formation of six cohorts of patients in the CAN-1 study, with the largest group suffering
from primary brain tumors.
The Company received IRB approval on February 4,
2015 for FDA reviewed, open label, phase II study of Antineoplaston A10 and AS2-1 in patients with a Diffuse Intrinsic Brainstem Glioma
(DIPG) in five treatment groups based on patients age and prior treatment.
On April 20, 2016, the Company received a
full clinical hold letter from the FDA based on FDA’s inspection of S.R. Burzynski’s manufacturing facility in March 2015.
On April 27, 2016, the Company requested to change the full clinical hold to partial clinical hold to allow patient #1 (“patient
#1”) to continue the Antineoplaston treatment according to protocol BT-55, since the patient was enrolled before the full clinical
hold was imposed. Based on the FDA’s position regarding the Company’s request on April 27, 2016 and the Company’s
teleconference with the FDA on May 3, 2016, the Company removed patient #1 from the study.
A temporary restraining order from the US District
Court of Rhode Island allowed the resumption of patient #1’s Antineoplaston therapy on May 17, 2016. As a result of such temporary
restraining order, a subsequent letter from the FDA dated May 26, 2016 informed the Company that the full clinical hold was replaced
and a partial clinical hold was imposed. As a result, patient #1 restarted treatment under IND 43742.
On June 14, 2016, the FDA issued a letter
to the Company in connection with the FDA’s inspection of S.R. Burzynski’s manufacturing facility (the “SRB Manufacturing”)
in March 2015. The SRB Manufacturing addressed the issues raised in the letter in a response letter submitted to the FDA on July 5,
2016 and in subsequent letters.
On February 20, 2017, BRI informed the FDA
the death of patient #1 on February 19, 2017. No new patients can be enrolled to protocol BT-55 or BT-52 until a partial hold on
IND 43742 is lifted. On August 24, 2017, the FDA imposed a full clinical hold on IND 43742 until deficiencies regarding the SRB Manufacturing
are resolved.
All Phase II clinical trials were for the treatment
of a wide variety of cancers using only a combination of Antineoplastons A10 and AS2-1. Most of the trials involve the use of intravenous
formulations of Antineoplastons; however, a few trials use oral formulations. Dr. Burzynski acts as principal investigator for all
clinical trials pursuant to a Royalty Agreement between the Company and Dr. Burzynski. See “Certain Relationships and Related
Transactions, and Director Independence.” All of the clinical trials were conducted at the Burzynski Clinic. Each trial provided
for the admission of up to 40 patients, except the CAN-1 study, in which 133 patients were enrolled.
Twenty publications by Burzynski Clinic and one
unaffiliated publication resulting from the trials have been published in peer-reviewed medical journals:
(1) Burzynski, S., Janicki, T., Burzynski,
G., Marszalek, A. Long-term survival (>13 years) in a child with recurrent diffuse pontine gliosarcoma: A case report. J Ped Hematol
Oncol 2013; doi: 10.1097/MPH.0000000000000020;
(2) Burzynski, S.R., Janicki, T.J., Burzynski,
G.S. A phase II study of antineoplastons A10 and AS2-1 in adult patients with recurrent glioblastoma multiforme. Final report (Protocol
BT-21). J Cancer Ther 2014;5:946-956;
(3) Burzynski, S.R., Janicki, T.J., Burzynski,
G.S., Marszalek, A., Brookman, S. A phase II study of antineoplastons A10 and AS2-1 in children with recurrent, refractory or progressive
primary brain tumors. Final report (Protocol BT-22). J Cancer Ther 2014;5:977-988;
(4) Burzynski, S.R., Janicki, T.J., Burzynski,
G.S., Marszalek, A. A phase II study of antineoplastons A10 and AS2-1 in children with high-grade glioma. Final report (Protocol BT-06),
and review of recent trials. J Cancer Ther 2014;5:565-577;
(5)Burzynski S.R., Burzynski G.S., Janicki T.J.
Recurrent glioblastoma multiforme - A strategy for long-term survival. Journal of Cancer Therapy, 2014,5,957-976;
(6) Burzynski, S.R., Janicki, T.J., Burzynski,
G.S. A phase II study of antineoplastons A10 and AS2-1 in adult patients with recurrent anaplastic astrocytoma. Final report (Protocol
BT-15). Cancer and Clinical Oncology; Vol. 4, No. 2, 2015;
(7) Burzynski, S.R., Janicki, T.J., Burzynski,
G.S., Marszalek, A. A phase II study of antineoplastons A10 and AS2-1 in patients with brainstem gliomas. The report on non-diffuse intrinsic
pontine glioma (Protocol BT-11). J Cancer Ther 2015;6:334-344;
(8) Burzynski, S.R., Janicki, T.J., Burzynski,
G.S., Marszalek, A. A phase II study of antineoplastons A10 and AS2-1 in adult patients with newly-diagnosed anaplastic astrocytoma. Final
report (Protocol BT-08). Cancer Clin Oncol 2015;4(1):28-38;
(9) Burzynski, S.R., Janicki, T.J., Burzynski,
G.S., Marszalek, A. The response and survival of children with recurrent diffuse intrinsic pontine glioma based on phase II study of antineoplastons
A10 and AS2-1 in patients with brainstem glioma. Child’s Nervous System 2014;30(12):2051-2061;
(10) Burzynski, S.R., Burzynski, Marszalek,
A., Janicki, T.J., Martinez-Canca, J. Long-term survival (over 20 years), complete response and normal childhood development in medulloblastoma
treated with Antineoplastons A10 and AS2-1. J Neurol Stroke 2015, 2(3): 00054;
(11) Burzynski, S.R., Burzynski, G.S., Marszalek,
A., Janicki, T.J., Martinez-Canca, J.F. Long-term survival over 21 years and pathologically confirmed complete response in pediatric anaplastic
astrocytoma: A case report. J Neurol Stroke 2015;2(6):00072;
(12) Burzynski, S.R., Janicki, T.J., Burzynski,
G. Comprehensive genomic profiling of recurrent classic glioblastoma in a patient surviving eleven years following antineoplaston therapy.
Cancer Clin Oncol 2015;4(2)41-52;
(13) Burzynski, S.R., Burzynski, G., Janicki, T.J.,
Marszalek, A. Complete response and Long-term survival (>20 years) of a child with tectal glioma: A case report. Pediatr Neurosurg
DOI: 10.1159/000369907;
(14) Burzynski, S.R., Janicki, T.J., Burzynski,
G. A phase II study of Antineoplastons A10 and AS2-1 adult patients with primary brain tumors. Final Report (Protocol BT-09) Journal of
Cancer Therapy, 2015, 6, 1063-1074;
(15) Burzynski, S.R., Janicki, T.J., Burzynski,
G. Primary CNS tumors and Leptomeningeal, Disseminated and/or Multicentric disease in children treated in Phase II studies with Antineoplastons
A10 and AS2-1. Cancer and Clinical Oncology; Vol. 5, No. 2; 2016;
(16) Burzynski, S.R., Janicki, T.J., Burzynski,
G. A phase II study of antineoplastons A10 and AS2-1 in children with low-grade astrocytomas—Final report (Protocol BT-13). Cancer
Ther 2016; 7(12):837-850;
(17) Burzynski, S.R., Janicki, T.J., Burzynski,
G. Antineoplastons A10 and AS2-1 in the Treatment of children with optic pathway glioma: Final Report for protocol BT-23. Cancer and Clinical
Oncology; Vol. 6, No. 1; 2017;
(18) Burzynski, S.R., Janicki, T.J., Burzynski,
G. A phase II study of Antineoplastons A10 and AS2-1 in children with brain tumors. Final Report (Protocol BT-10). Journal of Cancer Therapy,
2017,8, 173-187;
(19) Burzynski, S.R., Janicki, T.J., Beenken, S.
Treatment of Recurrent Glioblastoma Multiforme (rGBM) with Antineoplaston AS2-1 in Combination with Targeted Therapy. Cancer and Clinical
Oncology; Vol.8, No. 1; 2019; and
(20) Burzynski, S.R., Janicki, T.J., Burzynski,
G.S., Beenken, S. Long-Term Survival (27.7 Years) Following IV Antineoplaston Therapy (ANP) in a 36-Year Old Female with a Progressive
Diffuse Intrinsic Pontine Glioma (DIPG). Radiology and Imaging Technology; 7:073. doi.org/10.23937/2572-3235.1510073; 2021.
One additional publication has been published in
2015 by Kurume University Medical Center in Japan: (21) Ogata, Y., Matono K., Tsuda, H., Ushijima, M., Uchida, S., Akagi, Y., Shirouzu,
K. Randomized Phase II Study of 5-Fluorouracil Hepatic Arterial Infusion with or without Antineoplastons as an Adjuvant Therapy after
Hepatectomy for Liver Metastases from Colorectal Cancer. PLOS One (Public Library of Science) DOI:10.1371/journal.pone.0120064.
Prior to approving a New Drug Application (“NDA”),
the FDA requires that a drug’s safety and efficacy be demonstrated in “well-controlled” clinical trials. The efficacy
of the Company’s trials is determined by the protocol specified endpoint of “objective response” (i.e., significant
shrinkage or disappearance of the tumor). Several types of controls are acceptable to the FDA. One of these is a “Historic Control.”
Under a Historic Control if the course of a disease is well-known, the response of patients taking a drug can be compared to a historic
group of patients with that disease. For example, it is known that the tumors of patients suffering from primary malignant brain tumors
(“PMBT”) will continue to grow, eventually causing the patient’s death. If a drug is administered to a patient with
PMBT and the tumors of the patient disappear or shrink significantly, an assumption is made that there has been a response to the drug.
The results of other clinical trials conducted or published when the Company’s protocol were active are used by us as historical
control.
All of the Company’s clinical trials, except
one, involve the use of Historic Controls. Further, all trials except the CAN-1 study are “prospective clinical trials” (“PCT”).
A PCT is a clinical trial wherein patients are accrued into and follow the clinical trial protocol from the very beginning of the trial.
A retrospective trial is a trial in which data from patients treated prior to the start of a clinical trial is considered. Results of
retrospective trials are, in most instances, not acceptable to the FDA. In addition, there are no clinical trials being conducted that
involve “double blind” studies and all but one clinical trial involve no randomization into multiple treatment groups.
The ultimate goal of any treatment for cancer is
patient survival. However, the FDA has determined that requiring exhaustive data showing improved patient survival may unnecessarily delay
the approval of new cancer drugs. For that reason, the FDA may grant marketing approval for a new drug product on the basis of adequate
and well-controlled clinical trials establishing that the drug has an effect on a surrogate endpoint (“Milestone”) that is
reasonably likely to predict clinical benefit. Each of the Company’s Phase II trials describes such Milestones which are used to
determine the success or failure of the treatment employed. In most of the trials, the Milestones are radiographic evidence of tumor shrinkage
by X-ray, computer aided tomography or magnetic resonance imaging. Where appropriate, tumor markers such as Prostate Specific Antigen,
blood counts, or bone marrow biopsy are used in order to assess a tumor’s growth.
Where tumor size is used as the Milestone, each
clinical trial protocol describes a “complete response” as a complete disappearance of all tumors with no recurrence of tumors
for at least four weeks. A “partial response” is described as at least a 50% reduction in total tumor size, with such reduction
lasting at least four weeks. An “objective response” is described as either a complete or partial response for protocols BT-06,
BT-07, BT-08, BT-09, BT-10, BT-11, BT-12, BT-13, BT-15, BT-21, BT-22 and BT-23. “Stable disease” is described as less than
50% reduction in size but no more than 25% increase in size of the tumor mass lasting for at least twelve weeks and 50% increase in CAN-1
protocol.
The protocols of the Company’s clinical trials
involve a two-stage design, wherein the first stage proceeds until the Company admits 20 patients into the trial. After a specified time
period, if there were zero responses by the first 20 patients, the trial would be discontinued and the drug declared to have less than
desired activity. If there was at least one response, the trial would be continued until forty patients had been accrued. If the study
continued, the following conclusions according to protocols based on 40 patients can be made: If there were three or fewer responses,
then there is less than desired activity. If there were four or more responses, then there was sufficient evidence to conclude that the
Antineoplaston regimen used showed beneficial activity.
Certain prospective Phase II protocols which reached
a Milestone as of February 28, 2021:
|
|
·
|
Protocol BT-06, involving the study of Antineoplastons A10 and AS2-1 in children with high grade glioma (study and special exception patients). Objective responses: 4 patients (2 patients with a complete response and 2 patients with a partial response); Stable disease: 3 patients.
|
|
|
·
|
Protocol BT-07, involving the study of Antineoplastons A10 and AS2-1 in patients with glioblastoma multiforme, not treated with radiation therapy or chemotherapy (study and special exception patients). Objective responses: 5 patients (2 patients with a complete response and 3 patients with a partial response); Stable disease: 5 patients.
|
|
|
·
|
Protocol BT-08, involving the study of Antineoplastons A10 and AS2-1 in patients with anaplastic astrocytoma. Objective responses: 4 patients (3 patients with a complete response and 1 patient with a partial response); Stable disease: 5 patients.
|
|
|
·
|
Protocol BT-09, involving the study of Antineoplastons A10 and AS2-1 in patients with brain tumors. Objective responses: 9 patients (4 patients with a complete response and 5 patients with a partial response); Stable disease: 12 patients.
|
|
|
·
|
Protocol BT-10, involving the study of Antineoplastons A10 and AS2-1 in children with brain tumors. Objective responses: 7 patients (2 patients with a complete response and 5 patients with a partial response); Stable disease: 5 patients.
|
|
|
·
|
Protocol BT-11, involving the study of Antineoplastons A10 and AS2-1 in patients with brainstem glioma. Objective responses: 9 patients (5 patients with a complete response and 4 patients with a partial response); Stable disease: 8 patients.
|
|
|
·
|
Protocol BT-12, involving the study of Antineoplastons A10 and AS2-1 in children with primitive neuroectodermal tumors (PNET). Objective responses: 4 patients (3 patients with a complete response and 1 patient with a partial response); Stable disease: 1 patient.
|
|
|
|
|
|
|
·
|
Protocol BT-13, involving the study of Antineoplastons A10 and AS2-1 in children with low grade astrocytoma. Objective responses: 5 patients (4 patients with a complete response and 1 patient with a partial response); Stable disease: 4 patients.
|
|
|
·
|
Protocol BT-15, involving the study of Antineoplastons A10 and AS2-1 in adult patients with anaplastic astrocytoma. Objective responses: 5 patients (2 patients with a complete response and 3 patients with a partial response); Stable disease: 6 patients.
|
|
|
·
|
Protocol BT-21, involving the study of Antineoplastons A10 and AS2-1 in adults with primary malignant brain tumors. Objective responses: 4 patients (2 patients with a complete response and 2 patients with a partial response); Stable disease: 4 patients.
|
|
|
·
|
Protocol BT-22, involving a study of Antineoplastons A10 and AS2-1 in children with primary malignant brain tumors (study and special exception patients). Objective responses: 5 patients (1 patient with a complete response and 4 patients with a partial response); Stable disease: 7 patients.
|
|
|
·
|
Protocol BT-23, involving a study of Antineoplastons A10 and AS2-1 in children with visual pathway glioma. Objective responses: 4 patients (2 patients with a complete response and 2 patients with a partial response); Stable disease: 3 patients.
|
|
|
·
|
Protocol CAN-1, involving a study of Antineoplastons A-10 and AS2-1 in 35 evaluable brain tumor patients. Complete and partial responses were obtained in patients diagnosed with glioblastoma multiforme, astrocytoma, oligodendroglioma, mixed glioma, medulloblastoma, and malignant meningioma. Objective responses: 17 patients (12 patients with a complete response and 5 patients with a partial response); Stable disease: 11 patients.
|
The results of Protocols BT-06, BT-07, BT-08, BT-09,
BT-10, BT-11, BT-12, BT-13, BT-15, BT-20, BT-21, BT-22 and BT-23 are set forth below (as of November 30, 2020).
Protocol
Number
|
|
Patients
Accrued
|
|
|
Evaluable
Patients
|
|
|
Number and
Percentage of
Patients Showing
Complete
Response**
|
|
|
Number and
Percentage of
Patients Showing
Partial
Response**
|
|
|
Number and
Percentage of
Patients Showing
Stable Disease**
|
|
|
Number and
Percentage of
Patients Showing
Progressive
Disease**
|
|
|
BT-06*
|
|
|
19
|
|
|
|
11
|
|
|
|
2
|
|
|
|
18.2
|
%
|
|
|
2
|
|
|
|
18.2
|
%
|
|
|
3
|
|
|
|
27.3
|
%
|
|
|
4
|
|
|
|
36.4
|
%
|
|
BT-07*
|
|
|
102
|
|
|
|
69
|
|
|
|
2
|
|
|
|
2.9
|
%
|
|
|
3
|
|
|
|
4.3
|
%
|
|
|
5
|
|
|
|
7.2
|
%
|
|
|
59
|
|
|
|
85.5
|
%
|
|
BT-08
|
|
|
19
|
|
|
|
18
|
|
|
|
3
|
|
|
|
16.7
|
%
|
|
|
1
|
|
|
|
5.5
|
%
|
|
|
5
|
|
|
|
27.8
|
%
|
|
|
9
|
|
|
|
50.0
|
%
|
|
BT-09
|
|
|
40
|
|
|
|
31
|
|
|
|
4
|
|
|
|
12.9
|
%
|
|
|
5
|
|
|
|
16.1
|
%
|
|
|
12
|
|
|
|
38.7
|
%
|
|
|
10
|
|
|
|
32.3
|
%
|
|
BT-10
|
|
|
34
|
|
|
|
30
|
|
|
|
2
|
|
|
|
6.7
|
%
|
|
|
5
|
|
|
|
16.7
|
%
|
|
|
5
|
|
|
|
16.7
|
%
|
|
|
18
|
|
|
|
60.0
|
%
|
|
BT-11
|
|
|
40
|
|
|
|
31
|
|
|
|
5
|
|
|
|
16.1
|
%
|
|
|
4
|
|
|
|
12.9
|
%
|
|
|
8
|
|
|
|
25.8
|
%
|
|
|
14
|
|
|
|
45.2
|
%
|
|
BT-12
|
|
|
13
|
|
|
|
12
|
|
|
|
3
|
|
|
|
25.0
|
%
|
|
|
1
|
|
|
|
8.3
|
%
|
|
|
1
|
|
|
|
8.3
|
%
|
|
|
7
|
|
|
|
58.3
|
%
|
|
BT-13
|
|
|
11
|
|
|
|
9
|
|
|
|
4
|
|
|
|
44.4
|
%
|
|
|
1
|
|
|
|
11.1
|
%
|
|
|
4
|
|
|
|
44.4
|
%
|
|
|
0
|
|
|
|
0.0
|
%
|
|
BT-15
|
|
|
27
|
|
|
|
21
|
|
|
|
2
|
|
|
|
9.5
|
%
|
|
|
3
|
|
|
|
14.3
|
%
|
|
|
6
|
|
|
|
28.6
|
%
|
|
|
10
|
|
|
|
47.6
|
%
|
|
BT-21
|
|
|
40
|
|
|
|
27
|
|
|
|
2
|
|
|
|
7.4
|
%
|
|
|
2
|
|
|
|
7.4
|
%
|
|
|
4
|
|
|
|
14.8
|
%
|
|
|
19
|
|
|
|
70.4
|
%
|
|
BT-22*
|
|
|
43
|
|
|
|
32
|
|
|
|
1
|
|
|
|
3.1
|
%
|
|
|
4
|
|
|
|
12.5
|
%
|
|
|
7
|
|
|
|
21.9
|
%
|
|
|
20
|
|
|
|
62.5
|
%
|
|
BT-23
|
|
|
12
|
|
|
|
8
|
|
|
|
2
|
|
|
|
25.0
|
%
|
|
|
2
|
|
|
|
25.0
|
%
|
|
|
3
|
|
|
|
37.5
|
%
|
|
|
1
|
|
|
|
12.5
|
%
|
|
*
|
includes Special Exception patients
|
|
**
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percentage is calculated vs. evaluable patients
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The Phase II Study according to Protocol CAN-1
included 35 evaluable brain tumor patients. Complete and partial responses were obtained in patients diagnosed with glioblastoma multiforme,
astrocytoma, oligodendroglioma, mixed glioma, medulloblastoma, and malignant meningioma. The treatment with Antineoplastons A10 and AS2-1
resulted in 17 (48.6%) cases of objective responses and 11 (31.4%) cases of stable disease defined as less than 50% reduction, or less
than 50% increase in size of the tumor mass, lasting for at least 12 weeks. The largest group of evaluable patients involved in the study
had glioblastoma multiforme. Six of the cases were classified as complete and partial responses, four obtained stabilization and four
developed progression of the disease.
Of the 2,297 patients who have received at least
one dose of Antineoplastons, the serious adverse events (SAEs) which have been experienced are as follows: hemoglobin (grade 3: 3 patients;
grade 4: 1 patient), extravasation (grade 3: 1 patient), pain related to the central venous catheter (grade 3: 1 patient), fatigue (grade
3: 2 patients; grade 4: 1 patient), fever (grade 3: 2 patients), injection site reaction (grade 3: 1 patient), vomiting (grade 3: 2 patients),
hypernatremia (grade 3: 2 patients; grade 4: 28 patients; grade 5: 6 patients-not confirmed by autopsy), confusion (grade 3: 1 patient),
seizure (grade 3: 1 patient), somnolence (grade 3: 8 patients; grade 4: 1 patient), pain: head/headache (grade 3: 2 patients) and pain:
joint (grade 3: 1 patient). 491 out of 2,298 patients experienced hypernatremia that was possibly related to the study drug, regardless
of severity.
Notwithstanding the response results of the trials
that have reached a Milestone, management believes it is likely that the FDA may require additional clinical trials based upon such protocols
to be conducted by an institution not affiliated with the Company or Dr. Burzynski before advising that an NDA filing is warranted.
In addition, the FDA has indicated it will not accept the efficacy data, but will accept toxicity data generated by the Phase II study
according to Protocol CAN-1 because the trial was partially retrospective. At this time, the Company cannot predict if and/or when it
will submit an NDA to the FDA, nor can the Company estimate the number or type of additional trials the FDA may require. Further, there
can be no assurance that an NDA for Antineoplastons, as a treatment for cancer, will ever be approved by the FDA.
No assurance can be given that any new IND for
clinical tests on humans will be approved by the FDA for human clinical trials on cancer or other diseases, that the results of such human
clinical trials will prove that Antineoplastons are safe or effective in the treatment of cancer or other diseases, or that the FDA would
approve the sale of Antineoplastons in the United States.
Phase III Clinical Trials
On January 13, 2009, the Company announced
that it reached an agreement with the FDA that enabled the Company to move forward immediately with a pivotal Phase III clinical trial
of combination Antineoplaston therapy plus radiation therapy in patients with newly-diagnosed, diffuse, intrinsic brainstem glioma. The
agreement was made under the FDA’s Special Protocol Assessment procedure and means that the design and planned analysis of the Phase
III study is acceptable to support a regulatory submission seeking new drug approval. However, the FDA placed a full clinical hold on
IND 43,742 regarding such Phase III clinical trial. Please see the section below entitled “Clinical Hold on Phase II and Phase III
Clinical Trials.”
Clinical Hold on Phase II and Phase III Clinical Trials
In a letter dated June 25, 2012, the Company
informed the FDA of a serious adverse event in which a patient who was receiving Antineoplastons developed grade 4 hypernatremia and subsequently
died. The Antineoplaston-related hypernatremia was categorized by the investigator as possibly related to the study drug. Of the 2297
patients who have received at least one dose of Antineoplastons, the serious adverse events (SAEs) which have been experienced are as
follows: hemoglobin (grade 3: 0.13%; grade 4: 0.04%), extravasation (grade 3: 0.04%), pain (grade 3: 0.04%), fatigue (grade 3: 0.09%;
grade 4: 0.04%), fever (grade 3: 0.09%), injection site reaction (grade 3: 0.04%), vomiting (grade 3: 0.09%), hypernatremia (grade 3:
0.09%; grade 4: 1.12%; grade 5: 0.26%), confusion (grade 3: 0.04%), seizure (grade 3: 0.04%), somnolence (grade 3: 0.35%; grade 4: 0.04%),
pain: head/headache (grade 3: 0.09%) and pain: joint (grade 3: 0.04%).
On July 30, 2012, the FDA placed a partial
clinical hold for enrollment of new pediatric patients under single patient protocols or in any of the active Phase II or Phase III studies
under investigational new drug application (“IND”) 43,742. The FDA imposed this partial clinical hold because, according to
the FDA, insufficient information had been submitted by the Company to allow the FDA to determine whether the potential patient benefit
justifies the potential risks of treatment use, and that the potential risks are not unreasonable in the context of the disease or condition
to be treated. The FDA cited 21 C.F.R. § 312.42(b)(2)(i), 21 C.F.R. § 312.42(b)(1)(iv), and 21 C.F.R. § 312.42(b)(3)(i),
as grounds for imposition of a clinical hold; and 21 C.F.R. § 312.305(a)(2), a criteria for expanded access use. The FDA advised
the Company that until it resolved the matter to FDA’s satisfaction, the Company could not enroll new pediatric patients in any
protocol under such IND. The Company later notified the FDA in a September 24, 2012 letter that it was closing pediatric protocol
BT-10 (under IND 43,742) for enrollment effective September 25, 2012, and that it would also terminate the protocol once all active
patients had completed the study. As of February 17, 2015, all patients discontinued treatment under protocol BT-10 and such protocol
was closed as of March 10, 2015.
In a teleconference on January 9, 2013 between
the FDA and the Company, followed by a letter of the same date, the FDA notified the Company that the agency was placing IND 43,742 on
partial clinical hold, due to a lack of a complete response to the issues raised by the FDA and what the FDA deemed a misleading, erroneous,
and incomplete investigator brochure. The FDA cited 21 C.F.R. § 312.42(b)(2)(i) and 21 C.F.R. § 312.42(b)(1)(iii), as grounds
for imposition of a clinical hold. The FDA further advised the Company that until it resolved the matter to the FDA’s satisfaction,
that the Company could not enroll new adult or pediatric patients in any protocol under such IND. The FDA also placed protocol BT-52 on
clinical hold due to what the FDA deemed to be an unreasonable and significant risk of illness or injury to human subjects. The FDA cited
21 C.F.R. § 312.42(b)(2)(i) and 21 C.F.R.§ 312.42(B)(1)(i), as grounds for imposition of a clinical hold. The FDA advised
the Company that until it resolved the matter to FDA’s satisfaction, the Company could not legally conduct the identified clinical
study under such IND. In a teleconference with the FDA on September 16, 2013 and pursuant to the Company’s notification letter
dated September 17, 2013, the Company notified the FDA that the proposed Phase III protocol BT-54 had been withdrawn from further
consideration.
After several amendments to the IND which were
reviewed by the FDA, the FDA concluded that BT-52 can be initiated and partial clinical hold was removed by the FDA on June 20, 2014.
Additionally, the Company received IRB approval
on February 4, 2015 for FDA reviewed, open label, phase II study of Antineoplaston A10 and AS2-1 in patients with a Diffuse Intrinsic
Brainstem Glioma (DIPG) in five treatment groups based on patients age and prior treatment.
On April 20, 2016, the Company received a
full clinical hold letter from the FDA based on FDA’s inspection of S.R. Burzynski’s manufacturing facility in March 2015.
On April 27, 2016, the Company requested to change the full clinical hold to partial clinical hold to allow patient #1 to continue
the Antineoplaston treatment according to protocol BT-55, since the patient was enrolled before the full clinical hold was imposed. Based
on the FDA’s position regarding the Company’s request on April 27, 2016 and the Company’s teleconference with the
FDA on May 3, 2016, the Company removed patient #1 from the study.
A temporary restraining order from the US District
Court of Rhode Island allowed the resumption of patient #1’s Antineoplaston therapy on May 17, 2016. As a result of such temporary
restraining order, a subsequent letter from the FDA dated May 26, 2016 informed the Company that the full clinical hold was replaced
and a partial clinical hold was imposed. As a result, Patient #1 restarted treatment under IND 43742.
On June 14, 2016, the FDA issued a letter
to the Company in connection with the FDA’s inspection of S.R. Burzynski’s manufacturing facility in March 2015. The
SRB Manufacturing addressed the issues raised in the letter in a response letter submitted to the FDA on July 5, 2016 and in subsequent
letters.
On February 20, 2017, BRI informed the FDA
the death of patient #1 on February 19, 2017. No new patients can be enrolled to protocol BT-55 or BT-52 until a partial hold on
IND 43742 is lifted. On August 24, 2017, the FDA imposed a full clinical hold on IND 43742 until deficiencies regarding the SRB Manufacturing
are resolved.
Complaint Filed by the Texas Medical Board Against Dr. Burzynski
On March 3, 2017, the Texas Medical Board
issued their final ruling regarding the complaint filed on December 11, 2013 and subsequently amended in July 2014 and November 2014,
against Dr. Stanislaw R. Burzynski, who serves as our President and the Chairman of our Board of Directors. The Texas Medical
Board made allegations that Dr. Burzynski had acted unprofessionally and failed to meet standards of care under the state’s
Medical Practice Act. In the final ruling, the Texas Medical Board found that Dr. Burzynski was subject to sanction for various failures
that included supervision of foreign medical graduates, untimely and insufficient informed consent, medical record support documentation,
tumor measurement reporting inaccuracy, and lack of disclosure of ownership interest in a pharmacy. As a result, Dr. Burzynski
was reprimanded. His Texas license was suspended for five years but that suspension was stayed and he was placed under probation
under terms and conditions that include having billing practice monitored by a billing monitor for 12 consecutive monitoring cycles, enrolling
and completing a physicians education program ethics course, following informed consent protocol, passing the Medical Jurisprudence Examination,
and compliance with the Medical Practice Act and other statutes regulating Dr. Burzynski’s practice. As requested as
part of the terms and conditions, Dr. Burzynski has completed payment of an administrative penalty and restitution, submission of
all informed consent forms for review, submission of an ownership interest disclosure form for review, and he has completed continuing
medical education. The Company does not believe that the final order will have an adverse impact on current activities at the Burzynski
clinic. However, if any outcomes or changes arise relating to similar matters or future allegations, this could result in
substantial harm to the Company’s business and operations.
Government Regulation
The FDA imposes substantial requirements upon,
and conditions precedent to, the introduction of therapeutic drug products to the marketplace. Seeking marketing authorization for a new
drug is a lengthy, complex, and costly process. To seek FDA approval for Antineoplastons, the Company must first complete extensive preclinical
and clinical research, and submit data from this research and supporting information to the FDA to demonstrate that the use of Antineoplastons
for the indication sought meets the statutory standards for safety and effectiveness, manufacturing and controls, and labeling.
The approval process takes many years, requires
the expenditure of substantial resources and may involve ongoing requirements for post-marketing studies. Additional government regulation
may be established that could prevent or delay regulatory approval of Antineoplastons. Moreover, there can be no assurance that the Company
can satisfy FDA requirements to gain approval for Antineoplastons in the United States or that FDA approval for the sale of Antineoplastons
in the United States will be obtained. If regulatory approval is granted, the approval may include significant limitations on the indicated
uses for which Antineoplastons may be marketed.
The effect of the FDA drug approval process for
Antineoplastons may impose costly procedures upon the Company’s activities which may furnish a competitive advantage to the other
companies that compete with the Company in the field of cancer treatment drugs. The extent of potentially adverse government regulations
which might arise from future legislation or administrative action cannot be predicted.
The Investigational New Drug Application Process
in the United States is governed by regulations established by the FDA which strictly control the use and distribution of investigational
drugs in the United States. The guidelines require that an IND, filed by a sponsor, contain sufficient information to justify administering
the drug to humans, that the application include relevant information on the chemistry, pharmacology and toxicology of the drug derived
from chemical, laboratory and animal or in vitro testing, and that a protocol be provided for the initial study of the new drug to be
conducted on humans.
In order to conduct a clinical trial of a new drug
on humans, a sponsor must prepare and submit to the FDA a comprehensive IND. Such application must contain an investigator’s brochure,
a description of the composition, manufacture and control of the drug substance and the drug product, sufficient information to assure
the proper identification, quality, purity and strength of the investigational drug, a description of the drug substance, including its
physical, chemical, and biological characteristics, the general method of preparation of the drug substance, a list of all components
including interactive ingredients, adequate information about pharmacological and toxicological studies of the drug involving laboratory
animals or in vitro tests on the basis of which the sponsor has concluded that it is reasonably safe to conduct the proposed clinical
investigation and a summary of any previous human experience with the drug. Where there has been widespread use of the drug outside of
the United States or otherwise, it is possible in some limited circumstances to use well-documented clinical experience in place of some
other pre-clinical work.
The focal point of the IND is on the general investigational
plan and the protocols for specific human studies. The sponsor of the study is subject to numerous requirements for the proper conduct
and oversight of the study, including the protection of human subjects. The plan is carried out in three phases, and earlier phase trials
are not necessarily predictive of results in later clinical trials. Phase I includes the initial introduction of an investigational new
drug into humans and may be conducted in patients or normal volunteer subjects. The studies are closely monitored to determine the metabolism
and pharmacologic actions of the drug in humans and the potential side effects and, if possible, to gain early evidence on effectiveness.
During Phase I testing, sufficient information about the drug is gathered to design well-controlled, scientifically valid Phase II studies.
Phase II includes controlled clinical studies conducted to evaluate the effectiveness of the drug for a particular indication in patients
with the disease or condition under study and to determine the common short-term side effects and risks associated with the drug. Phase
II studies are controlled, closely monitored and conducted in a relatively small number of patients, usually involving no more than several
hundred subjects. Phase III includes expanded controlled and uncontrolled trials and are intended to gather the additional information
about effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of the drug and to provide an adequate
basis for physician labeling. Phase III studies usually include anywhere from several hundred to several thousand subjects.
An IND will automatically become effective 30 days
after receipt by the FDA, unless before that time the FDA raises concerns about issues such as the conduct of the trials as outlined in
the IND. After the IND becomes effective, the investigation is permitted to proceed, during which the sponsor must keep the FDA informed
of new studies, including animal studies, make progress reports on the study or studies covered by the IND, and also be responsible for
informing FDA and clinical investigators immediately of unforeseen serious side effects or injuries. There can be no assurance that Phase
I, Phase II or Phase III testing will be completed successfully by the Company within any specified period of time, if at all. Furthermore,
the Company or the FDA may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are
being exposed to an unacceptable health risk.
Assuming successful completion of the clinical
studies, the results of the studies, together with other detailed information, including, among other information, details concerning
the manufacture and composition of the drug, proposed labeling, environmental impact and the scientific rationale for the drug, its intended
use and the potential benefits of the drug product are submitted to the FDA in the form of an NDA requesting approval to market the drug.
If the FDA finds the NDA submission and the manufacturing process to be acceptable and to meet the criteria for approval, the FDA will
issue an approval letter. If the FDA determines that an NDA cannot be approved as submitted, it will send the applicant a “Complete
Response” letter to indicate that the review cycle for an application is complete, that the application is not ready for approval,
and to describe specific deficiencies. In addition to the postmarketing requirements that apply to all marketed drugs, the FDA may impose,
as a condition of approval, postmarketing requirements such as postmarketing study commitments, or other limitations or restrictions.
Product approvals may be withdrawn by the FDA, following notice of opportunity for a hearing if problems concerning safety or efficacy
of a drug or the sponsor’s compliance with regulatory requirements.
The Company’s use of Milestones to predict
the benefits of Antineoplastons is relevant to the FDA approval process. If surrogate endpoints are used, for regular approval (i.e.,
the longstanding FDA route of drug approval based on the demonstration of clinical benefit) an applicant must show direct evidence of
clinical benefit or improvement in an established surrogate for clinical benefit. For “accelerated approval,” a process potentially
available for pharmaceutical agents that treat serious or life-threatening diseases and conditions, surrogate endpoints must be reasonably
likely to predict clinical benefit. When appropriate, the Company intends to pursue opportunities for accelerated review of its products.
However, the Company has not yet received any accelerated approvals for any of the Company’s product candidates. The Company cannot
predict the ultimate effect of this review process on the timing or likelihood of FDA review of any of its products. Adequacy as a surrogate
endpoint for regular or accelerated approval is highly dependent upon a variety of factors including effect size, effect duration, and
benefits of other available therapy.
A drug’s approval under the accelerated approval
regulations is conditioned on the conduct of postapproval clinical studies to verify and describe the actual clinical benefit. Further,
the FDA may also impose postmarketing restrictions to assure safe use of a drug product that was subject to accelerated approval. For
drugs approved under FDA’s accelerated procedures, the FDA may withdraw approval of the drug on an expedited basis if the applicant
fails to perform the required postmarketing study with due diligence, use of the drugs demonstrates that post-marketing restrictions are
inadequate to assure safe use of the drug, the applicant fails to adhere to the postmarketing restrictions agreed upon, the promotional
materials are false or misleading, or other evidence demonstrates that the drug is not shown to be safe or effective under its conditions
of use.
The testing and approval process requires substantial
time, effort and financial resources, and there can be no assurance that any approval will be granted for any product or that approval
will be granted according to any schedule. Moreover, if regulatory approval of a drug is granted, the approval will be limited to specific
indications. There can be no assurance that any of the Company’s product candidates will receive regulatory approvals for commercialization.
Please see “Orphan Drug Designation”
for a description of the FDA’s orphan drug designation under the Orphan Drug Act of 1983 as it applies to the Company’s Antineoplastons.
Even if the regulatory approvals for the Company’s
products are obtained, its products and its manufacturing facility are subject to ongoing compliance obligations. The FDA will require
postmarketing monitoring and reporting related to the safety of the Company’s products. The Company’s drug manufacturing facility,
and the facility of any third-party contracted to manufacture the products, must comply with the FDA’s current good manufacturing
practice (“GMP”) regulations, which are strictly enforced. Manufacturing facilities will be subject to periodic inspection
by FDA. Full technical compliance requires manufacturers to expend funds, time and effort in the area of production and quality control.
In addition, discovery of problems with a product after approval or failure to comply with applicable FDA or other applicable regulatory
requirements may result in enforcement actions and restrictions on a product, manufacturer, or holder of an approved NDA, including restrictions
on the product, manufacturer or facility, including warning letters, suspension of regulatory approvals, operating restrictions, delays
in obtaining new product approvals, withdrawal of the product from the market, product recalls, fines, injunctions and criminal prosecution.
New government requirements may be established that could delay or prevent regulatory approval of the Company’s products under development
or impose additional compliance obligations before or after approval.
The Company’s research and development involves
the controlled use of hazardous materials, chemicals and various radioactive compounds. Although the Company believes its procedures for
handling and disposing of those materials comply with state and federal regulations, the risk of accidental contamination or injury from
these materials cannot be eliminated. If an accident of this type occurs, the Company could be held liable for resulting damages, which
could be material to its financial condition and business. The Company is also subject to numerous environmental, health and workplace
safety laws and regulations, including those governing laboratory procedures and the handling of biohazardous materials. Additional federal,
state and local laws and regulations affecting the Company may be adopted in the future. Any violation of these laws and regulations,
and the cost of compliance, could materially and adversely affect the Company. For the year ended February 28, 2021, the Company
spent approximately $10,000 on environmental compliance matters. The Company expects to spend approximately $10,000 for repairs and upgrades
during the fiscal year ending February 28, 2022.
Government Notices and Regulations
On March 15, 2013, the Company received a
Notice of Inspectional Observations (FDA Form 483) from the FDA. During an inspection, the FDA observed (1) failure to monitor
the progress of an investigation conducted under the IND and (2) failure to obtain from an investigator sufficient financial information
to allow complete and accurate certification or disclosure statements. In response to the observations, the Company provided explanation
as to the nature of monitoring procedures, initiated new monitoring practices (effective May 2013) engaging scientifically qualified
individuals to conduct Good Clinical Practice (GCP) monitoring and project management, initiated a process to collect financial disclosure
information from sub-investigators and amended protocols to reflect current understanding of response criteria.
On December 3, 2013, the Company received
a Warning Letter from the FDA. The FDA noted concerns regarding the (1) failure to ensure proper monitoring of the investigations
and failure to ensure that the investigations are conducted in accordance with the general investigational plan and protocols contained
in the IND; and (2) failure to obtain from an investigator sufficient financial information to allow the sponsor to submit complete
and accurate certification or disclosure statements. In order to address the FDA concerns, the Company provided information regarding
ongoing review of patient information, agreed to submit protocol amendments to reflect current standard of practice for corticosteroid
use, separated monitoring activities between the Company and the Burzynski Clinic, revised the informed consent and checklist, and updated
financial disclosures.
The Company received IRB approval on February 4,
2015 for FDA reviewed, open label, phase II study of Antineoplaston A10 and AS2-1 in patients with a Diffuse Intrinsic Brainstem Glioma
(DIPG) in five treatment groups based on patients age and prior treatment.
On April 20, 2016, the Company received a
full clinical hold letter from the FDA based on FDA’s inspection of S.R. Burzynski’s manufacturing facility in March 2015.
On April 27, 2016, the Company requested to change the full clinical hold to partial clinical hold to allow patient #1 to continue
the Antineoplaston treatment according to protocol BT-55, since the patient was enrolled before the full clinical hold was imposed. Based
on the FDA’s position regarding the Company’s request on April 27, 2016 and the Company’s teleconference with the
FDA on May 3, 2016, the Company removed patient #1 from the study.
A temporary restraining order from the US District
Court of Rhode Island allowed the resumption of patient #1’s Antineoplaston therapy on May 17, 2016. As a result of such temporary
restraining order, a subsequent letter from the FDA dated May 26, 2016 informed the Company that the full clinical hold was replaced
and a partial clinical hold was imposed. As a result, patient #1 restarted treatment under IND 43742.
On June 14, 2016, the FDA issued a letter
to the Company in connection with the FDA’s inspection of S.R. Burzynski’s manufacturing facility in March 2015. The
Company addressed the issues raised in the letter in a response letter submitted to the FDA on July 5, 2016 and in subsequent letters.
On February 20, 2017, BRI informed the FDA
the death of patient #1 on February 19, 2017. No new patients can be enrolled to protocol BT-55 or BT-52 until full hold on IND 43742
is lifted.
Phase 3 clinical trial will commence upon availability
of funds and until full hold on IND 43742 is lifted.
Research and Development
The Company’s principal research and development
efforts currently focus on Antineoplastons. The anticancer activity of these compounds has been documented in preclinical studies employing
the methods of cell culture, pharmacology, cell biology, molecular biology, experimental therapeutics and animal models of cancer. At
the level of Phase II clinical studies, the Company believes the anticancer activity of Antineoplastons is supported by preliminary results
from FDA-authorized, Phase II clinical trials.
The cellular mechanism underlying the anticancer
effects of Antineoplastons continues to be investigated in both the Company’s own basic preclinical research program and in independent
laboratories around the world. A review of this work suggests several mechanisms that may underlie the antineoplastic activity of Antineoplastons.
For example, it has been found, in cell culture experiments, that Antineoplastons induce pathologically undifferentiated cancer cells
to assume a more normal state of differentiation. Cell culture experiments have also shown that Antineoplaston components can kill some
cancer cells by activating the cell’s intrinsic “suicide” program. It must be noted that data collected in cell culture
experiments may or may not indicate the mechanism of action of Antineoplastons in humans.
At a more molecular or sub-cellular level, cell
culture experiments have shown that Antineoplastons can block biochemical pathways involving oncogenes required to produce abnormal cell
growth. In addition, cell culture experiments have shown that Antineoplastons can increase the expression of anticancer tumor suppressor
genes. Although these experiments were conducted using human cancer cells, they may or may not indicate the mechanism of Antineoplaston
action in humans.
In addition to the original family of Antineoplaston
compounds (the “Parental Generation”), the Company continues its development of a second generation of Antineoplastons. In
cell culture experiments, the second generation Antineoplastons, which were developed by the Company, have been shown to be significantly
more potent than the Parental Generation.
The Company uses various scientific reagents from
several different suppliers to conduct its research activities.
Intellectual Property
Since 1984, eight patents involving the formulation,
preparation, manufacture, production, use, dosage and treatment of cancer with Antineoplastons (the “Patents”) have been issued
to Dr. Burzynski by the United States Patent Office and the Patent Offices of 34 other countries. The Patents for cancer treatment
and diagnosis in the United States and Canada were licensed to the Company pursuant to a License Agreement dated June 29, 1983, as
superseded by an Amended License Agreement dated April 24, 1989 and a Second Amended License Agreement dated March 1, 1990 (collectively,
the “License Agreement”). Pursuant to the License Agreement, the Company held an exclusive right in the United States, Canada,
and Mexico (the “Territory”) to use, manufacture, develop, sell, distribute, sub-license and otherwise exploit all of Dr. Burzynski’s
rights, title, and interests, including patent rights, in Antineoplastons in the treatment and diagnosis of cancer. See “Certain
Relationships and Related Transactions, and Director Independence.” The Company will not be able to exploit such rights until
such time as Antineoplastons are approved, of which there can be no assurance, by the FDA for sale in the United States. The License Agreement
was in effect until the expiration of the last Patent that was licensed under the agreement or termination pursuant to certain other provisions.
The Company and Dr. Burzynski also entered into a Royalty Agreement, dated March 25, 1997, and a First Amended Royalty Agreement,
dated September 29, 1997 (collectively, the “Royalty Agreement”), pursuant to which Dr. Burzynski will receive a
royalty interest from all future sales, distribution, and manufacture of Antineoplastons by the Company. The Company had, pursuant to
the License Agreement, exclusive rights to eight issued United States Patents, four issued Canadian Patents and one issued Mexican Patent,
which have all expired.
The five initial United States Patents (the “Initial
Patents”) relate to: (i) Determination of Antineoplastons in body tissue or fluids as a testing procedure to aid in the diagnosis
of cancer; (ii) Processes for the preparation of purified fractions of Antineoplastons from human urine; (iii) Processes for
the synthetic production of Antineoplastons and methods of treating neoplastic disease (cancer); (iv) Administration of Antineoplastons
to humans; and (v) Methods of synthesizing A-10. The last of the Initial Patents expired on January 11, 2009.
The sixth United States Patent (the “2000
U.S. Patent”) covers Liposomal Antineoplaston therapies with markedly improved anticancer activity. The 2000 U.S. Patent expired
on May 14, 2017.
The seventh United States Patent (the “2001
U.S. Patent”) is for a treatment regimen for the administration of phenylacetylglutamine, phenylacetylisoglutamine, and/or phenylacetate.
The 2001 U.S. Patent expired on July 23, 2018.
The eighth United States Patent (the “2005
U.S. Patent”) relates to a divisional application to the 2001 U.S. Patent. The 2005 U.S. Patent expired on July 31, 2018.
The four Canadian Patents (the “Canadian
Patents”) relate to: (i) Processes for the preparation of purified fractions of Antineoplastons from human urine, (ii) Processes
for the synthetic production of Antineoplastons and methods of treating neoplastic disease (cancer), (iii) Liposomal formulation
of Antineoplastons and (iv) Treatment regimen for the administration of phenylacetylglutamine. The last of the Canadian Patents expired
on July 2, 2019.
The Mexican Patent relates to a treatment regimen
for the administration of phenylacetylglutamine. This patent expired on January 14, 2019.
Pursuant to the terms of the License Agreement,
the License Agreement terminated on July 2, 2019 upon the expiration of the last patent licensed to the Company from Dr. Burzynski.
As of July 2, 2019, all patents previously licensed by the Company under the License Agreement have expired.
The Company depends upon unpatented proprietary
technology, and may determine in appropriate circumstances that its interest would be better served by reliance upon trade secrets or
confidentiality agreements rather than patents.
The Company’s success will depend in part
on its ability to obtain future patents for its products, preserve its trade secrets, and operate without infringing on the proprietary
rights of third parties in the United States, Canada, and Mexico. Because of the substantial length of time and expense associated with
bringing new products through development and regulatory approval to the marketplace, the pharmaceutical and biotechnology industries
place considerable importance on obtaining and maintaining patent and trade secret protection for new technologies, products and processes.
There can be no assurance that the Company will develop additional products and methods that are patentable or that present or future
patents will provide sufficient protection to the Company’s present or future technologies, products and processes. In addition,
there can be no assurance that others will not independently develop substantially equivalent proprietary information, design around the
Company’s products or obtain access to the Company’s know-how or that others will not successfully challenge the validity
of the Company’s future patents, if any, or be issued patents which may prevent the sale of one or more of the Company’s product
candidates, or require licensing and the payment of significant fees or royalties by the Company to third parties in order to enable the
Company to conduct its business. Legal standards relating to the scope of claims and the validity of patents in the fields in which the
Company is pursuing research and development are still evolving, are highly uncertain and involve complex legal and factual issues. No
assurance can be given as to the degree of protection or competitive advantage any patents issued to the Company will afford, the validity
of any such patents or the Company’s ability to avoid violating or infringing any patents issued to others. Further, there can be
no guarantee that any patents issued to or licensed by the Company will not be infringed upon by the products of others. Litigation and
other proceedings involving the defense and prosecution of patent claims can be expensive and time consuming, even in those instances
in which the outcome is favorable to the Company, and can result in the diversion of resources from the Company’s other activities.
An adverse outcome could subject the Company to significant liabilities to third parties, require the Company to obtain licenses from
third parties or require the Company to cease any related research and development activities or sales.
The Company depends upon the knowledge, experience
and skills (which are not patentable) of its key scientific and technical personnel. To protect its rights to its proprietary information,
the Company requires all employees, consultants, advisors and collaborators to enter into confidentiality agreements which prohibit the
disclosure of confidential information to anyone outside the Company and require disclosure and assignment to the Company of their ideas,
developments, discoveries and inventions. There can be no assurance that these agreements will effectively prevent the unauthorized use
or disclosure of the Company’s confidential information.
ANTINEOPLASTON® is a trademark registered
with the U.S. Patent and Trademark Office.
Competition
There are many companies, universities, research
teams and scientists, both private and government-sponsored, that are engaged in research to produce cancer treatment agents and that
have greater financial resources and larger research staffs and facilities than the Company. In addition, there are other companies and
entities, both private and government-sponsored, that are engaged in research aimed at compounds similar or related to the Company’s
Antineoplastons. To the extent that the United States Government also conducts research or supports other companies or individuals in
their research, such companies or individuals may have a competitive advantage over the Company.
Employees
As of February 28, 2021, the Company had no
full-time employees.
An investment in our common stock involves significant risks. You
should carefully consider the risks described below and the other information in this Annual Report on Form 10-K, including our financial
statements and related notes, before you decide to invest in our common stock. If any of the following risks or uncertainties actually
occurs, our business, results of operations or financial condition could be materially harmed, the trading price of our common stock could
decline and you could lose all or part of your investment. The risks and uncertainties described below are those that we currently believe
may materially affect us; however, they may not be the only ones that we face. Additional risks and uncertainties of which we are unaware
or currently deem immaterial may also become important factors that may harm our business.
Risks Related to Pandemics
Epidemic diseases, or the perception of their effects, could
have a material adverse effect on our business, financial condition, results of operation, or cash flows.
Outbreaks of epidemic, pandemic, or contagious diseases, such as the
recent novel coronavirus or, historically, the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, or the
H1N1 virus, could divert medical resources and priorities towards the treatment of that disease. Business disruptions could include disruptions
or restrictions on our ability to travel or to conduct business, as well as temporary closures of our offices. In addition, a significant
outbreak of epidemic, pandemic, or contagious diseases in the human population could result in a widespread health crisis that could adversely
affect the economies and financial markets of many countries, resulting in an economic downturn that could affect the operation of our
business. Any of these events could have a material adverse effect on our business, financial condition, results of operations, or cash
flows. Although we are monitoring the situation, it is currently unknown whether the outbreak will continue to disrupt our business operations
over a prolonged period. If such disruption were to extend over a prolonged period, it could have a material impact on our business.
Risks Relating to Our Business and Industry
Products that appear promising in research and development may
be delayed or may fail to reach later stages of clinical development.
The successful development of pharmaceutical products is highly uncertain.
Products that appear promising in research and development may be delayed or fail to reach later stages of development. Additionally,
the ongoing or future trials for Antineoplaston may fail to demonstrate that our product candidate is sufficiently safe and effective
to warrant further development. The Company’s IND 43742 is currently under full clinical hold and the Company cannot enroll new
patients into any clinical trials until the full clinical hold is removed by the FDA. Furthermore, decisions regarding the further development
of product candidates must be made with limited and incomplete data, which makes it difficult to accurately predict whether the allocation
of limited resources and the expenditure of additional capital on specific product candidates will result in desired outcomes. Preclinical
and clinical data can be interpreted in different ways, and negative or inconclusive results or adverse medical events during a clinical
trial could delay, limit or prevent the development of a product candidate, which could harm our business, financial condition or the
trading price of our securities. There can be no assurance as to whether or when we will receive regulatory approvals for any of our product
candidates.
There is no assurance that Antineoplaston will be safe, effective
or receive regulatory approval.
The risks associated with the development of Antineoplaston are significant.
Clinical data may fail to establish that Antineoplaston is effective in treating brain cancer or may indicate safety profile concerns
not indicated by our current clinical data. If the results of our current trials or of future trials do not indicate a favorable safety
and efficacy profile for Antineoplaston, or otherwise fail to support the continued development of Antineoplaston, a substantial decline
in the price of our common stock could result. There can be no assurance as to whether we will be able to successfully develop and commercialize
Antineoplaston.
Our source of funding is limited. If we fail to obtain additional
financing when needed, we may be unable to complete the development, regulatory approval and commercialization of Antineoplaston.
The Company has incurred negative cash flows since inception, and expects
to continue to expend substantial funds to continue its research and development programs. The Company’s existing resources may
be insufficient to fund the Company’s operating expenses and capital requirements. The Company’s sole source of funding for
its operations has been and continues to be payments made by Dr. Burzynski from funds generated from Dr. Burzynski’s medical
practice pursuant to the Research Funding Agreement. While the Company anticipates that Dr. Burzynski will continue to fund the Company’s
research costs, there is no assurance that Dr. Burzynski will be able to continue to fund the Company’s operations pursuant
to the Research Funding Agreement or otherwise. Because the Company currently is entirely dependent upon the contributions for research
provided by Dr. Burzynski under the Research Funding Agreement, the Company would not be able to continue conducting its clinical
trials if Dr. Burzynski ceased funding the Company’s research. In such event, the Company would be required to find immediate
funding which may not be available on acceptable terms or at all. If this were to occur and the Company were not able to find adequate
sources of funding, the Company would be required to cease operations. Even with Dr. Burzynski’s continued contributions under
the Research Funding Agreement, the Company may be required to seek additional capital through equity or debt financing or the sale of
assets until the Company’s operating revenues are sufficient to cover operating costs and provide positive cash flow; however, there
can be no assurance that the Company will be able to raise such additional capital on acceptable terms to the Company. In addition, there
can be no assurance that the Company will achieve positive operating cash flow.
If financing is available, it may be on terms that adversely affect
the interests of our existing stockholders or restrict our ability to conduct our operations. To the extent that we raise additional funds
through collaboration and licensing arrangements, we may be required to relinquish some rights to our technologies or product candidates,
or grant licenses on terms that are not favorable to us. Our actual capital requirements will depend on numerous factors, including:
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activities and arrangements related to the commercialization of our product candidates;
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the progress of our research and development programs;
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the progress of pre-clinical and clinical testing of our product candidates;
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the time and cost involved in obtaining regulatory approvals for our product candidates;
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the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights with respect to our intellectual property;
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our capacity to enter into collaborative or licensing agreements;
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the effect of competing technological and market developments; and
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the terms of any collaborative, licensing and other arrangements that we may establish.
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If we require additional financing and cannot secure sufficient financing
on acceptable terms, we may need to delay, reduce or eliminate some or all of our research and development programs, any of which could
have a material adverse effect on our business and financial condition.
We have a history of net losses, we anticipate additional losses
and we may not become profitable.
We have incurred net losses in each fiscal year since we commenced
our research activities. Our losses have resulted primarily from expenses incurred in research and development of our product candidate.
We may make significant capital commitments to fund the development of our product candidates. If these development efforts are unsuccessful,
the development costs would be incurred without any future revenue, which could have a material adverse effect on our financial condition.
We do not know when or if we will complete our product development efforts, receive regulatory approval for any of our product candidates,
or successfully commercialize any approved products. As a result, it is difficult to predict the extent of any future losses or the time
required to achieve profitability, if at all. Any failure of our products to complete successful clinical trials and obtain regulatory
approval and any failure to become and remain profitable could adversely affect the price of our common stock and our ability to raise
capital and continue operations.
The failure to enroll patients for clinical trials may cause
delays in developing our product candidates.
We may encounter delays if we are unable to enroll enough patients
to timely initiate or complete clinical trials. Patient enrollment depends on many factors, including, the size of the patient population,
the nature of the protocol, the proximity of patients to clinical sites and the eligibility criteria for the trial and competition for
patients in completing trials. We are focused on the treatment of cancer patients, which can be a difficult patient population to recruit.
If we fail to enroll patients for clinical trials, our clinical trials may be delayed or suspended, which could delay our ability to generate
revenues or raise capital to fund our operations. The Company’s IND 43742 is currently under full clinical hold and the Company
cannot enroll new patients into any clinical trials until the full clinical hold is removed by the FDA.
There is no assurance that we will be granted regulatory approval
for Antineoplaston.
There can be no assurance that our clinical trials for Antineoplaston
will demonstrate sufficient safety and efficacy to obtain the requisite regulatory approvals. A number of companies in the biotechnology
and pharmaceutical industries, including our company, have suffered significant setbacks in advanced clinical trials, even after promising
results in earlier trials. Further, we may be unable to submit applications to regulatory agencies within the time frame we currently
expect. Once submitted, applications must be approved by various regulatory agencies before we can commercialize the product described
in the application. Additionally, even if applications are submitted, regulatory approval may not be obtained for any of our product candidates,
and regulatory agencies could require additional studies to verify safety or efficacy, which could make further development of our product
candidates impracticable. If our product candidates are not shown to be safe and effective in clinical trials, we may not receive regulatory
approval, which would have a material adverse effect on our business, financial condition and results of operations.
Clinical trials are expensive and time consuming, and any failure
or delay in commencing or completing clinical trials for our product candidates could severely harm our business.
Our product candidates must undergo extensive pre-clinical studies
and clinical trials as a condition to regulatory approval. Pre-clinical studies and clinical trials are expensive and take many years
to complete. The commencement and completion of clinical trials for our product candidates may be delayed by many factors, including:
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safety issues or side effects;
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delays in patient enrollment and variability in the number and types of patients available for clinical trials, including the placement by the FDA of any clinical hold for the enrollment of new patients;
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poor effectiveness of product candidates during clinical trials;
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governmental or regulatory delays and changes in regulatory requirements, policy and guidelines;
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our ability to obtain regulatory approval to commence a clinical trial and conduct a trial in accordance with good clinical practices;
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our ability to manufacture or obtain from third parties materials sufficient for use in pre-clinical studies and clinical trials; and
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varying interpretation of data by the FDA and similar foreign regulatory agencies.
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It is possible that Antineoplaston will never complete clinical trials
in any of the markets in which we intend to sell those product candidates. Accordingly, we may not receive the regulatory approvals necessary
to market Antineoplaston. Any failure or delay in commencing or completing clinical trials or obtaining regulatory approvals for product
candidates would prevent or delay their commercialization and severely harm our business and financial condition.
We depend on the Burzynski Clinic (and, possibly, in the future,
other third-parties) to conduct and manage our clinical trials. If the Burzynski Clinic and these other third-parties do not successfully
carry out their contractual duties or meet expected timelines, we may face costs and delays that may prevent or delay us from obtaining
regulatory approval for or commercializing our product candidates, which could substantially harm our business.
We rely on clinical investigators and the Burzynski Clinic to enroll
patients and to manage our clinical trials. We control only certain aspects of these third-parties’ activities. Nevertheless, we
are responsible for ensuring that each of our studies is conducted in accordance with the prescribed protocol, and the applicable legal,
regulatory and scientific standards. Moreover, the FDA and foreign regulatory agencies require us to comply with regulations and standards,
commonly referred to as good clinical practices, for conducting, recording and reporting the results of clinical trials to assure that
data and reported results are credible and accurate and that the trial participants are adequately protected. Our reliance on third parties
does not relieve us of these responsibilities and requirements. If these third parties do not successfully carry out their contractual
duties or regulatory obligations or meet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of
the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons,
our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to
obtain regulatory approval for our product candidates.
Antineoplaston may never achieve market acceptance even if we
obtain regulatory approval.
Even if we receive regulatory approvals for the commercial sale of
Antineoplaston, the commercial success of Antineoplaston will depend on, among other things, its acceptance by physicians, patients, third-party
payers such as health insurance companies and other members of the medical community as a therapeutic and cost-effective alternative to
competing products and treatments. New patterns of care, alternative new treatments or different reimbursement and payor paradigms, possibly
due to economic conditions or governmental policies, could negatively impact the commercial viability of Antineoplaston. If our product
candidates fail to gain market acceptance, we may be unable to earn sufficient revenue to continue our business. Market acceptance of,
and demand for, any product that we may develop and commercialize will depend on many factors, including:
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our ability to provide acceptable evidence of safety and efficacy;
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the prevalence and severity of adverse side effects;
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availability, relative cost and relative efficacy of alternative and competing treatments;
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the effectiveness of our marketing and distribution strategy;
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publicity concerning our products or competing products and treatments; and
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our ability to obtain sufficient third-party insurance coverage or reimbursement.
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If our product candidates do not become widely accepted by physicians,
patients, third-party payers and other members of the medical community, our business, financial condition and results of operations would
be materially and adversely affected.
We face substantial competition, which may result in others discovering,
developing or commercializing products before, or more successfully, than we do.
The life sciences industry is highly competitive, and we face significant
competition from many pharmaceutical, biopharmaceutical and biotechnology companies that are researching and marketing products designed
to address cancer indications for which we are currently developing products or for which we may develop products in the future. Our future
success depends on our ability to demonstrate and maintain a competitive advantage with respect to the design, development and commercialization
of our product candidates. We expect any product candidate that we commercialize on our own will compete with existing, market-leading
products and products in development.
Many of our potential competitors have substantially greater financial,
technical and personnel resources than we have. In addition, many of these competitors have significantly greater commercial infrastructures
than we have. Our ability to compete successfully will depend largely on our ability to:
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design and develop products that are superior to other products in the market;
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attract qualified scientific, medical, sales and marketing and commercial personnel;
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obtain patent and/or other proprietary protection for our processes and product candidates;
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obtain required regulatory approvals; and
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successfully collaborate with others in the design, development and commercialization of new products.
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Established competitors may invest heavily to quickly discover and
develop novel compounds that could make our product candidates obsolete. In addition, any new product that competes with a generic market-leading
product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome severe price competition
and to be commercially successful. If we are not able to compete effectively against our current and future competitors, our business
will not grow and our financial condition and operations will suffer.
If we are unable to enter into agreements with partners to perform
sales and marketing functions, or build these functions ourselves, we will not be able to commercialize our product candidates.
We currently do not have any internal sales, marketing or distribution
capabilities. In order to commercialize any of our product candidates, we must either acquire or internally develop a sales, marketing
and distribution infrastructure or enter into agreements with partners to perform these services for us. We may not be able to enter into
such arrangements on commercially acceptable terms, if at all. Factors that may inhibit our efforts to commercialize our product candidates
without entering into arrangements with third parties include:
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our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
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the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our products;
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the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and
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unforeseen costs and expenses associated with creating a sales and marketing organization.
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If we are not able to partner with a third party and are not successful
in recruiting sales and marketing personnel or in building a sales and marketing and distribution infrastructure, we will have difficulty
commercializing our product candidates, which would adversely affect our business and financial condition.
We depend on key individuals to maintain and manage our business
in a rapidly changing market.
The continued services of our executive officers are essential to our
success. Any of our executive officers, including our Chief Executive Officer, Dr. Stanislaw Burzynski, M.D., and Chief Financial
Officer, Patryk Goscianski, may resign at any time. These individuals are in charge of the strategic planning and operations of our business
and the loss of the services of one or more of these individuals could disrupt our operations and damage our ability to grow our business.
We do not currently have key person life insurance policies covering any of our officers.
We may face risks related to securities litigation that could
result in significant legal expenses and settlement or damage awards.
We may in the future become subject to claims and litigation alleging
violations of the securities laws or other related claims, which could harm our business and require us to incur significant costs. We
are generally obliged, to the extent permitted by law, to indemnify our current and former directors and officers who are named as defendants
in these types of lawsuits. Any future litigation may require significant attention from management and could result in significant legal
expenses, settlement costs or damage awards that could have a material impact on our financial position, results of operations, and cash
flows.
Risks Related to Regulatory Matters
Our product candidates may cause undesirable side effects that
could delay or prevent their regulatory approval or commercialization.
Common side effects that occur in cancer patients undergoing treatment
with our product candidates include hypokalemia, fatigue, hypernatremia, nausea, somnolence, vomiting, headaches, edema, and hyponatremia.
Because our product candidates have been tested in relatively small patient populations and for limited durations to date, additional
side effects may be observed as their development progresses. Undesirable side effects caused by any of our product candidates could cause
us or regulatory authorities to interrupt, delay or discontinue clinical trials and could result in the denial, cancellation or withdrawal
of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications. This, in turn, could prevent us
from commercializing our product candidates and generating revenues from their sale.
Even if regulatory approval is received for our product candidates,
the later discovery of previously unknown problems with a product, manufacturer or facility may result in restrictions, including withdrawal
of the product from the market.
Approval of a product candidate may be conditioned upon certain limitations
and restrictions as to the drug’s use, or upon the conduct of further studies, and may be subject to continuous review. After approval
of a product, if any, there will be significant ongoing regulatory compliance obligations, and if we fail to comply with these requirements,
we could be subject to penalties, including:
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withdrawal of regulatory approval;
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operating restrictions;
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disgorgement of profits;
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Regulatory agencies may require us to delay, restrict or discontinue
clinical trials on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.
In addition, all statutes and regulations governing the conduct of clinical trials are subject to change in the future, which could affect
the cost of such clinical trials. Any unanticipated delays in clinical studies could delay our ability to generate revenues and harm our
financial condition and results of operations.
Our business is subject to complex environmental legislation
that increases both our costs and the risk of noncompliance.
Our business involves the use of hazardous material, which requires
us to comply with environmental regulations. We face increasing complexity in our product development as we adjust to new and upcoming
requirements relating to the materials composition of many of our product candidates. If we use hazardous materials in a manner that causes
contamination or injury or violates laws, we may be liable for damages. Environmental regulations could have a material adverse effect
on the results of our operations and our financial position. We maintain insurance for any liability associated with our hazardous materials
activities, and it is possible in the future that our coverage would be insufficient if we incurred a material environmental liability.
If we fail to establish and maintain proper and effective internal
controls, our ability to produce accurate financial statements on a timely basis could be impaired, which would adversely affect our consolidated
operating results, our ability to operate our business, and our stock price, and could result in litigation or similar actions.
Ensuring that we have adequate internal financial and accounting controls
and procedures in place to produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to
be re-evaluated frequently. Failure on our part to have effective internal financial and accounting controls would cause our financial
reporting to be unreliable, could have a material adverse effect on our business, operating results, and financial condition, and could
cause the trading price of our common stock to fall dramatically. Our management is responsible for establishing and maintaining adequate
internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the
preparation of financial statements for external purposes in accordance with U.S. GAAP. Our management does not expect that our internal
control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated,
can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur
or that all control issues and instances of fraud, if any, within the company will have been detected.
We cannot be certain that the actions we have taken to ensure we have
adequate internal controls over financial reporting will be sufficient. In future periods, if the process required by Section 404
of the Sarbanes-Oxley Act reveals any material weaknesses or significant deficiencies, the correction of any such material weaknesses
or significant deficiencies could require remedial measures which could be costly and time-consuming. In addition, in such a case, we
may be unable to produce accurate financial statements on a timely basis. Any associated accounting restatement could create a significant
strain on our internal resources and cause delays in our release of quarterly or annual financial results and the filing of related reports,
increase our cost and cause management distraction. Any of the foregoing could cause investors to lose confidence in the reliability of
our consolidated financial statements, which could cause the market price of our common stock to decline and make it more difficult for
us to finance our operations and growth.
Risks Related to Intellectual Property Matters
If we are unable to maintain and enforce our proprietary rights,
we may not be able to compete effectively or operate profitably.
Our success is dependent in part on maintaining and enforcing our intellectual
property and will depend in large part on our ability and Dr. Burzynski to:
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defend patents once issued;
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preserve trade secrets; and
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operate without infringing the patents and proprietary rights of third parties.
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The degree of future protection for our proprietary rights is uncertain.
For example:
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Dr. Burzynski might not have been the first to make the inventions covered by any of his patents, if issued, or his pending patent applications;
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Dr. Burzynski might not have been the first to file patent applications for these inventions;
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others may independently develop similar or alternative technologies or products and/or duplicate any of our technologies and/or products;
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it is possible that none of Dr. Burzynski’s pending patent applications will result in issued patents or, if issued, these patents may not be sufficient to protect our technology or provide us with a basis for commercially-viable products and may not provide us with any competitive advantages;
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if Dr. Burzynski’s pending applications issue as patents, they may be challenged by third parties as infringed, invalid or unenforceable under U.S. or foreign laws;
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if issued, the patents under which we hold rights may not be valid or enforceable, or have expired; or
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we and/or Dr. Burzynski may develop additional proprietary technologies that are not patentable and which may not be adequately protected through trade secrets, if for example a competitor were to independently develop duplicative, similar or alternative technologies.
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If we are unable to obtain intellectual property rights to develop
or market our products or we infringe on a third-party patent or other intellectual property rights, we may need to alter or terminate
a product development program.
If our product candidates infringe or conflict with the rights of others,
we may not be able to manufacture or market our product candidates, which could have a material and adverse effect on us. Issued patents
held by others may limit our ability to develop commercial products. All issued patents are entitled to a presumption of validity under
the laws of the United States. If we need licenses to such patents to permit us to develop or market our product candidates, we may be
required to pay significant fees or royalties, and we cannot be certain that we would be able to obtain such licenses on commercially
reasonable terms, if at all. Competitors or third parties may obtain patents that may cover subject matter we use in developing the technology
required to bring our products to market, that we use in producing our products, or that we use in treating patients with our products.
Our License Agreement with Dr. Stanislaw Burzynski terminated upon the expiration of the last patent licensed to the Company under
such agreement. As such, we currently do not own any patents or have licenses to any patents with respect to Antineoplastons.
Additionally, it is not possible to predict with certainty what patent
claims may issue from pending patent applications. In the United States, for example, patent prosecution can proceed in secret prior to
issuance of a patent. As a result, third parties may be able to obtain patents with claims relating to our product candidates or technology,
which they could attempt to assert against us. Further, as we develop our products, third parties may assert that we infringe the patents
currently held or licensed by them and it is difficult to provide the outcome of any such action. Ultimately, we could be prevented from
commercializing a product, or forced to cease some aspect of our business operations, as a result of claims of patent infringement or
violation of other intellectual property rights, which could have a material and adverse effect on our business, financial condition and
results of operations.
We may incur substantial costs as a result of litigation or other
proceedings relating to patent and other intellectual property rights, and we may be unable to protect our rights in, or to use, our technology.
There has been significant litigation in the biotechnology industry
over patents and other proprietary rights and if we become involved in any litigation, it could consume a substantial portion of our resources,
regardless of the outcome of the litigation. Others may challenge the validity, inventorship, ownership, enforceability or scope of any
of our future licensed patents or other technology used in or otherwise necessary for the development and commercialization of our product
candidates. We may not be successful in defending against any such challenges. If these legal actions are successful, in addition to any
potential liability for damages, we could be required to obtain a license, grant cross-licenses and pay substantial royalties in order
to continue to manufacture or market the affected products.
Moreover, the cost of litigation to uphold the validity of patents
to prevent infringement or to otherwise protect our proprietary rights can be substantial. If the outcome of litigation is adverse to
us, third parties may be able to use the challenged technologies without payment to us. There is also the risk that, even if the validity
of a patent were upheld, a court would refuse to stop the other party from using the inventions, including on the ground that its activities
do not infringe that patent. There is no assurance that we would prevail in any legal action or that any license required under a third-party
patent would be made available on acceptable terms or at all. If any of these events were to occur, our business, financial condition
and results of operations would be materially and adversely effected.
Risks Related to the Ownership of Our Common Stock
An active, liquid trading market for our common stock may not
develop.
We cannot predict the extent to which investor interest in our company
will lead to the development of an active and liquid trading market. If an active and liquid trading market does not develop, you may
have difficulty selling any of our common stock that you purchase. The market price of our common stock may decline, and you may not be
able to sell your shares of our common stock at or above the price you paid, or at all.
Our principal shareholders, executive officers and directors
own a significant percentage of our common stock and will continue to have significant control of our management and affairs, and they
can take actions that may be against your best interests.
Our executive officers, current directors and holders of five percent
or more of our common stock beneficially own an aggregate of approximately 81.0% of our outstanding common stock as of May 1, 2021.
This significant concentration of share ownership may adversely affect the trading price for our common stock because investors often
perceive disadvantages in owning stock in companies with controlling shareholders. Also, as a result, these shareholders, acting together,
may be able to control our management and affairs and matters requiring shareholder approval, including the election of directors and
approval of significant corporate transactions, such as mergers, consolidations or the sale of substantially all of our assets. Consequently,
this concentration of ownership may have the effect of delaying or preventing a change in control, including a merger, consolidation or
other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain
control, even if such a change in control would benefit our other shareholders.
Investors may face significant restrictions on the resale of
our common stock due to federal regulations of penny stocks.
Our common stock will be subject to the requirements of Rule 15(g)-9,
promulgated under the Securities Exchange Act as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers
who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice
requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive
the purchaser’s consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as a penny stock.
Generally, the SEC defines a penny stock as any equity security not
traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. The required penny stock disclosures include
the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such
requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the
secondary market.
In addition, various state securities laws impose restrictions on transferring
“penny stocks” and as a result, investors in the common stock may have their ability to sell their shares of the common stock
impaired.
The trading price of our common stock may be volatile.
The market prices for and trading volumes of securities of biotechnology
companies, including our securities, have been historically volatile. The market has from time to time experienced significant price and
volume fluctuations unrelated to the operating performance of particular companies. The market price of our common shares may fluctuate
significantly due to a variety of factors, including:
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the results of pre-clinical testing and clinical trials by us, our competitors and/or companies that are developing products that are similar to ours (regardless of whether such products are potentially competitive with ours);
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public concern as to the safety of products developed by us or others;
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changes in the expected or actual timing of our development programs or our competitors’ potential development programs;
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governmental regulations;
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developments in patent or other proprietary rights;
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general market conditions in our industry or in the economy as a whole;
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Additions or departures of key personnel;
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comments made on social media platforms, including magazines, blogs, websites, message boards and other forms of Internet-based communications;
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difficulty with the market quickly interpreting and understanding complex data;
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the issuance of additional shares of common stock, or securities convertible into, or exercisable or exchangeable for, shares of our common stock in connection with financings, acquisitions or otherwise;
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the incurrence of debt; and
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development concerning collaborations.
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We may seek to raise additional capital in the future; however,
such capital may not be available to us on reasonable terms, if at all, when or as we require additional funding. If we issue additional
shares of our common stock or other securities that may be convertible into, or exercisable or exchangeable for, our common stock, our
existing stockholders would experience further dilution.
Future financings may involve the issuance of debt, equity and/or securities
convertible into or exercisable or exchangeable for our equity securities. These financings may not be available to us on reasonable terms
or at all when and as we require funding. If we are able to consummate financings, the trading price of our common stock could be adversely
affected and/or the terms of such financings may adversely affect the interests of our existing stockholders. Any failure to obtain additional
working capital when required would have a material adverse effect on our business and financial condition and would be expected to result
in a decline in our stock price. Any issuances of our common stock, preferred stock, or securities such as warrants or notes that are
convertible into, exercisable or exchangeable for, our capital stock, would have a dilutive effect on the voting and economic interest
of our existing stockholders.
Because we do not expect to pay dividends on our common stock,
stockholders will benefit from an investment in our common stock only if it appreciates in value.
We have never paid cash dividends on our common shares and have no
present intention to pay any dividends in the future. We are not profitable and do not expect to earn any material revenues for at least
several years, if at all. As a result, we intend to use all available cash and liquid assets in the development of our business. Any future
determination about the payment of dividends will be made at the discretion of our board of directors and will depend upon our earnings,
if any, capital requirements, operating and financial conditions and on such other factors as our board of directors deems relevant. As
a result, the success of an investment in our common stock will depend upon any future appreciation in its value. There is no guarantee
that our common stock will appreciate in value or even maintain the price at which stockholders have purchased their shares.