ITEM
1. BUSINESS
We
are a clinical stage biopharmaceutical company focused on the development and commercialization of novel immuno-oncology products based
on our proprietary Tri-specific Killer Engager (TriKE®) fusion protein immune cell engager technology platform. Our TriKE®
platform generates proprietary therapeutics designed to harness and enhance the cancer killing abilities of a patient’s own
natural killer cells, or NK cells. Once bound to an NK cell, our moieties are designed to enhance the NK cell, and precisely direct it
to one or more specifically targeted proteins expressed on a specific type of cancer cell or virus infected cell, resulting in the targeted
cell’s death. TriKE®s can be designed to target any number of tumor antigens on hematologic malignancies or solid
tumors and do not require patient-specific customization.
We
are using our TriKE® platform with the intent to bring to market immuno-oncology products that can treat a range of hematologic
malignancies, and solid tumors. The platform is scalable, and we are putting processes in place to be able to produce investigational
new drug (IND) ready moieties in a timely manner after a specific TriKE® conceptual design. Specific drug candidates can
then be advanced into the clinic on our own or through potential collaborations with partnering companies. We believe our TriKE®s
may have the ability, if approved for marketing, to be used as both monotherapy and in combination with other standard-of-care therapies.
We
are also using our TriKE® platform to develop therapeutics useful for the treatment of infectious disease such as for
the treatment of patients infected by the human immunodeficiency virus (HIV). While the use of anti-retroviral drugs has
substantially improved the health and increased the longevity of individuals infected with HIV, these drugs are designed to suppress
virus replication to help modulate progression to acquired immunodeficiency syndrome (AIDS) and to limit further transmission of the
virus. Despite the use of anti-retroviral drugs, infected individuals retain reservoirs of latent HIV-infected cells that, upon
cessation of anti-retroviral drug therapy, can reactivate and re-establish an active HIV infection. For a curative therapy,
destruction of these latent HIV infected cells must take place. The HIV-TriKE® contains the antigen binding fragment
(Fab) from a broadly neutralizing antibody targeting the HIV-Env protein or a protein that binds infected CD4+ T cells. The HIV-TriKE® is designed to target HIV
while redirecting NK cell killing specifically to actively replicating HIV infected cells. The HIV-TriKE® induced NK
cell proliferation and demonstrated the ability in vitro to reactivate and kill HIV-infected T-cells. These findings indicate a
potential role for the HIV-TriKE® in the reactivation and elimination of the latently infected HIV reservoir cells by
harnessing the NK cell’s ability to mediate the antibody-directed cellular cytotoxicity (ADCC).
Our
initial work has been conducted in collaboration with the Masonic Cancer Center at the University of Minnesota under a program led by
Dr. Jeffrey Miller, the Deputy Director. Dr. Miller is a recognized key opinion leader in the field of NK cell and IL-15 biology and
their therapeutic potential. We have exclusive rights to the TriKE® platform and are generating additional intellectual
property for specific moieties.
Immuno-Oncology
Platform
Tri-specific
Killer Engagers (TriKE®s)
The
generation of chimeric antigen receptor, or CAR, expressing T cells from monoclonal antibodies has represented an important step forward
in cancer therapy. These therapies involve the genetic engineering of T cells to express either CARs, or T cell receptors, or TCRs, and
are designed such that the modified T cells can recognize and destroy cancer cells. While a great deal of interest has recently been
placed upon chimeric antigen receptor T, or CAR-T, therapy, it has certain limitations for broad potential applicability because it can
require an individual approach that is expensive, time consuming, and may be difficult to apply on a large scale. NK cells represent
an important immunotherapeutic target as they are involved in tumor immune-surveillance, can mediate antibody-dependent cell-mediated
cytotoxicity (ADCC), contain pre-made granules with perforin and granzyme B and can quickly secrete inflammatory cytokines, and unlike
T cells they do not require antigen priming and can kill cells in the absence of major histocompatibility complex (MHC) presentation
of antigens. Unlike full-length antibodies, TriKE® constructs are composed of a single-chain fusion protein that binds
the CD16 receptor of NK cells directly producing a potent and lasting cytotoxic killing response, interleukin 15 (IL-15) to promote NK
cell activation, persistence and proliferation, and a cancer cell targeting moiety. An additional benefit of TriKE® may
have been its attractive biodistribution, as a consequence of their smaller size, which we expect to be important in the treatment of
solid tumors. In addition to these advantages, TriKE® is designed to be non-immunogenic, have appropriate clearance properties,
and can be engineered to target a variety of tumor antigens.
We
believe there is a continued unmet medical need for targeted immuno-oncology therapies that can have the potential to be dosed in a patient-friendly
outpatient setting, can be used on a stand-alone basis, augment the current monoclonal antibody therapeutics, or be used in conjunction
with more traditional cancer therapy. We believe our TriKE® constructs have this potential and therefore we have generated,
and intend to continue to generate, a pipeline of product candidates to be advanced into the clinic on our own or through potential collaborations
with larger companies.
GTB-3550
TriKE® and Phase 1 Acute Myeloid Leukemia/Myelodysplastic Syndrome (AML/MDS) Phase 1 Clinical Trial
GTB-3550
is the Company’s first-generation TriKE® product candidate which is a single-chain, tri-specific recombinant fusion
protein construct composed of the variable regions of the heavy and light chains of anti-CD16 and anti-CD33 antibodies and a modified
form of IL-15, all connected by small peptide linkers. The GTB-3550 Phase 1 clinical trial for treatment of patients with CD33-expressing, high risk myelodysplastic syndromes
and refractory/relapsed acute myeloid leukemia opened for patient enrollment in September 2019 and completed enrollment in September
2021. The clinical trial was conducted at the University of Minnesota’s Masonic Cancer Center in Minneapolis, Minnesota under the
direction of Dr. Erica Warlick and Dr. Mark Juckett.
Background
and Select Non-Clinical Data
In
conjunction with our research agreement with the Masonic Cancer Center at the University of Minnesota, the exploration of targeting NK
cells to a variety of tumors initially focused on novel bi-specific killer engagers, or BiKEs, composed of the variable portions of antibodies
targeting the CD16 activating receptor on NK cells and CD33 (AML and MDS; see figure below), B7H3 (solid tumors – breast, lung,
colon, prostate), Her2 (Breast, Gastric), or CD19/CD22 (B cell lymphomas) on the tumor cells.
![](https://content.edgar-online.com/edgar_conv_img/2023/03/30/0001493152-23-009812_form10-k_001.jpg)
Subsequently,
a tri-specific (TriKE®) construct that replaced the linker molecule between the CD16 scFv and the CD33 scFv with a modified
IL-15 molecule, containing flanking sequences, was generated, and tested. Data indicates that the CD16 x IL-15 x CD33 potently induce
proliferation of healthy donor NK cells, possibly greater than that induced by exogenous IL-15, which is absent in the BiKE platform.
Targeted delivery of the IL-15 through the TriKE® also resulted in specific expansion of the NK cells without inducing
T cell expansion on post-transplant patient samples.
When
compared to the CD16 x CD33 BiKE, the CD16 x IL-15 x CD33 TriKE® is also capable of potently restoring killing capacity
of post-transplant NK cells against CD33-expressing HL-60 targets and primary AML blasts. These results demonstrated the ability to functionally
incorporate an IL-15 cytokine into the BiKE platform and also demonstrated the possibility of targeting a variety of cytokines directly
to NK cells while reducing off-target effects and the amount of cytokines needed to obtain biologically relevant function.
The
figure below is a schematic of a BiKE construct (top) and a TriKE® construct (bottom), which has the modified IL-15 linker
between the CD16 scFv and the CD33 scFv components.
![](https://content.edgar-online.com/edgar_conv_img/2023/03/30/0001493152-23-009812_form10-k_002.jpg)
The CD33 -targeting TriKE® constructs was tested against
three separate human tumor cell lines to evaluate specificity: CD33+ HL-60 (promyelocitic leukemia) cells, CD33, Raji (Burkitt’s
lymphoma), and CD33- HT29 (colorectal adenocarcinoma). TriKE® (GTB-3550) activity was only seen against the CD33+ HL-60
cells containing a Luc reporter to allow for in vivo imaging of the tumors, were used to show in vivo efficacy of BiKE (1633) and TriKE®
(GTB-3550) against relevant human tumor targets (HL-60-luc) over an extended period of time. The system consisted of initial conditioning
of mice using radiation (250-275 cGy), followed by injection of the tumor cells (I.V. for HL-60-luc, a three-day growth phase, injection
of human NK cells, and repeated injection of the drugs of interest, BiKE and TriKE® (three to five times a week). Imaging
was carried out at Day 7, 14, and 21, and extended as needed. Subsequent studies were also carried out to evaluate other TriKEs expressing
targeting arms against other tumor antigens (B7H3 and HER2 for instance).
The
figure below shows the results (tumor burden and mortality) when dosing NK cells alone (top panel), the BiKE version (lacking IL-15)
of GTB-3550 (middle panel; called 1633), and the TriKE®, GTB-3550 (bottom panel; then called 161533) in the above human
tumor model, HL-60-luc. In the NK-cell-only arm, two out of the five mice were dead by Day 21 with two of the surviving mice having extensive
tumor burden as depicted by the colored images. In contrast, all five mice in each of the BiKE and TriKE® arms survived.
In addition, the tumor burden in the TriKE®-treated mice was significantly less than in the BiKE-treated mice, demonstrating
the improved efficacy from NK cells in the TriKE®-treated mice.
![](https://content.edgar-online.com/edgar_conv_img/2023/03/30/0001493152-23-009812_form10-k_003.jpg)
Based
on these results, and others, the IND for GTB-3550 was filed in June 2017 by the University of Minnesota. The FDA requested that additional
preclinical toxicology, additional information and clarifications on manufacturing, and clinical development plans. The requested additional
information and clarifications were completed and incorporated into the IND in eCTD format. We filed the IND amendment in June 2018 and
announced on November 1, 2018, that the FDA granted approval of the IND and the Company was authorized to initiate a first-in-human Phase
1 study with GTB-3550 in AML, MDS, and severe mastocytosis. The Phase 1 clinical trial was initiated in September 2019 and closed in
September 2021.
Targeting
Solid Tumors and Other Potentially Attractive Characteristics
Unlike
full-length antibodies, TriKE® is composed of a single-chain fusion protein that binds the CD16 receptor of NK cells directly
producing a potentially more potent and lasting response as demonstrated by preclinical studies. An additional benefit due to the smaller
size of TriKE® is enhanced biodistribution which we expect to be important in the treatment of solid tumors. In addition
to these potential advantages, TriKE® is designed to be non-immunogenic, have appropriate clearance properties and can
be engineered quickly to target a variety of tumor antigens. We believe these attributes make them an ideal pharmaceutical platform for
potentiated NK cell-based immunotherapies and have the potential to overcome some of the limitations of CAR-T therapy and other antibody
therapies.
Examples
of our earlier stage solid tumor targeting product candidates are focused on CD33, B7-H3, Her2, CD19, CLEC12A, CD22, and CD133
alone and in combination. We believe these constructs have the potential to target prostate, breast, colon, ovarian, liver, and head
and neck cancers. Depending on the availability of drug supply, we hope to initiate human clinical testing for certain of our solid tumor
product candidates in 2023.
Efficient
Advancement of Potential Future Product Candidates – Production and Scale Up
We
are using our TriKE® platform with the intent to bring to market multiple immuno-oncology products that can treat a range
of hematologic malignancies and solid tumors. The platforms are scalable, and we are currently working with a third-party product manufacturer
investigating the optimal GMP production expression system for TriKE® constructs.
We
believe TriKE®s will have the ability, if approved for marketing, to be used as both monotherapy and in combination with
standard-of-care therapies.
Immuno-Oncology
Product Candidates
GTB-3550
GTB-3550
was our first TriKE® product candidate. It reflected our first-generation TriKE® platform. It is a single-chain,
tri-specific scFv recombinant fusion protein conjugate composed of the variable regions of the heavy and light chains of anti-CD16 and
anti-CD33 antibodies and a modified form of IL-15. We studied this anti-CD16-IL-15-anti-CD33 TriKE® in CD33 positive leukemias,
a marker expressed on tumor cells in acute myelogenous leukemia, or AML, myelodysplastic syndrome, or MDS. CD33 is primarily a myeloid
differentiation antigen with endocytic properties broadly expressed on AML blasts and, possibly, some leukemic stem cells. CD33 or Siglec-3
(sialic acid binding Ig-like lectin 3, SIGLEC3, SIGLEC3, gp67, p67) is a transmembrane receptor expressed on cells of myeloid lineage.
It is usually considered myeloid-specific, but it can also be found on some lymphoid cells. The anti-CD33 antibody fragment used for
these studies was derived from the M195 humanized anti-CD33 scFV and has been used in multiple human clinical studies. It has been exploited
as target for therapeutic antibodies for many years. We believe the recent approval of the antibody-drug conjugate gemtuzumab validates
this targeted approach.
GTB-3550
is being replaced by a more potent next-generation camelid nanobody TriKE®, GTB-3650, targeting relapsed/refractory
Acute Myeloid Leukemia (AML) and high-risk Myelodysplastic Syndromes (MDS).
About
High-Risk Myelodysplastic Syndromes
Myelodysplastic
Syndromes is a rare form of bone marrow-related cancer caused by irregular blood cell production within the bone marrow. As a result
of this irregular production, MDS patients do not have sufficient normal red blood cells, white blood cells and/or platelets in circulation.
High-risk MDS is associated with poor prognosis, diminished quality of life, and a higher chance of transformation to acute myeloid leukemia.
The goals of therapy are to reduce disease associated symptoms and the risk of disease progression and death, thereby improving both
quality and quantity of life. United States incidence of MDS is estimated to be 10,000 cases per year, although the condition is thought
to be under diagnosed. The prevalence has been estimated to be from 60,000 to 170,000 in the United States. Approximately 40% of patients
with High-Risk MDS transform to AML, another aggressive cancer with poor outcomes.
About
Acute Myeloid Leukemia
Acute
myeloid leukemia is a type of cancer in which the bone marrow makes abnormal myeloblasts (a type of white blood cell), red blood cells,
or platelets. The median age at the time of diagnosis is 65–69 years. AML is an aggressive disease and is fatal without anti-leukemic
treatment. Among patients treated with chemotherapy, 65% to 80% achieve complete remission. Despite a plethora of novel agents that have
been approved by the U.S. Food and Drug Administration since 2017 for treatment of AML, once complete remission (CR) is achieved, approximately
50% of patients age < 60 years of age and up to 90% of patients ≥ 60 years of age will relapse, despite consolidation strategies.
Furthermore, while 10–40% of younger AML patients are primarily refractory to AML induction therapy, the number is considerably
higher for patients above 60 years (40–60%). The vast majority of fit AML patients will undergo hematopoietic stem cell transplantation
(HSCT) after achieving a CR. However, 40% of these patients relapse after HSCT. Thus, refractory or relapsed (r/r) AML is a very common
scenario in AML and despite recent advances and new targeted therapies, the management of AML remains a challenge, particularly in older
adults ineligible for intensive therapies. According to the National Cancer Institute (NCI), the five-year survival rate is about 35%
in people under 60 years old, and 10% in people over 60 years old. Older people whose health is too poor for intensive chemotherapy have
a typical survival of five to ten months. AML accounts for approximately 1.8% of cancer deaths in the United States.
About
GTB-3550 TriKE® Clinical Trial
We
opened our GTB-3550 Phase 1 clinical trial in September 2019 and enrolled our first patient in January 2020. Patients with CD33+ malignancies
(primary induction failure or relapsed AML with failure of one reinduction attempt or high-risk MDS progressed on two lines of therapy)
age 18 and older were eligible (ClinicalTrials.gov Identifier NCT03214666). The primary endpoint is to identify the maximum tolerated
dose (MTD) of GTB-3550 TriKE®. Correlative objectives include the number, phenotype, activation status and function of
NK cells and T cells. From January, 2020 until September, 2021 twelve patients received escalating doses of GTB-3550 in the Phase 1 trial.
The results of this trial were presented at several conferences in 2021. To summarize, the therapy was overall well tolerated and safe.
There were no serious cases of cytokine release syndrome observed. Four of twelve patients had transient reductions in bone marrow leukemic
blast cells. Correlative studies showed activation, proliferation, and persistence of functionally active endogenous NK cells. The results
of our first generation GTB-3550 Phase 1 clinical trial support our plans to advance the next generation camelid nanobody into the clinic.
The
Next Generation of Camelid Nanobody TriKE®s
Our
goal is to be a leader in immuno-oncology therapies targeting a broad range of indications including hematological malignancies and solid
tumors. A key element of our strategy includes introducing a next-generation camelid nanobody platform. Camelid antibodies (often referred
as nanobodies) are smaller than human immunoglobulin and consist of two heavy chains. These nanobodies have the potential to have greater
affinity to target antigens, potentially resulting in greater potency. GT Biopharma is utilizing this camelid antibody structure for
all its new TriKE® product candidates.
Generation
of humanized single-domain antibody targeting CD16 for incorporation into the TriKE® platform
To
develop second generation TriKE®s, we designed a new humanized CD16 engager derived from a single-domain antibody. While
scFvs consist of a heavy and a light variable chain joined by a linker, single-domain antibodies consist of a single variable heavy chain
capable of engaging without the need of a light chain counterpart (see figure below).
![](https://content.edgar-online.com/edgar_conv_img/2023/03/30/0001493152-23-009812_form10-k_004.jpg)
These
single-domain antibodies are thought to have certain attractive features for antibody engineering, including physical stability, ability
to bind deep grooves, and increased production yields, amongst others. Pre-clinical studies demonstrated increased NK cell activation
against CD33+ targets including NK cell degranulation (% CD107a+) and IFNg with the single-domain CD16 TriKE® (cam 16-wt15-33;
GTB-3650) compared to the original TriKE® (scFv16-m 15-33; GTB-3550) (see figure below). These data were published by
Felices M et al (2020) in Cancer Immunol Res.
CD33+
HL60 Targets
![](https://content.edgar-online.com/edgar_conv_img/2023/03/30/0001493152-23-009812_form10-k_005.jpg)
GTB-3650
GTB-3650
is a CD33 targeted TriKE® which targets CD33 on the surface of myeloid leukemias. We are advancing GTB-3650 through
preclinical studies and anticipate filing an Investigational New Drug (IND) application in the first half of 2023. We further
anticipate starting a study targeting patients with relapsed/refractory AML and high grade MDS by the end of 2023.
GTB-5550
GTB-5550
is a B7-H3 targeted TriKE® which targets B7-H3 on the surface of advanced solid tumors. We are advancing GTB-5550
through preclinical studies and have initiated a GMP manufacturing campaign in anticipation of filing an IND in the late second half
of 2023 and starting a study targeting patients with B7-H3 positive solid tumors in the first half of 2024.
Oncology
Markets
Acute
Myeloid Leukemia and Myelodysplastic Syndromes
AML
is a heterogeneous hematologic stem cell malignancy in adults with incidence rate of 4.3% per 100,000 populations. The median age at
the time of diagnosis is 68 years. AML is an aggressive disease and is fatal without anti-leukemic treatment. AML is the most common
form of adult leukemia in the U.S. These patients will require frontline therapy, usually chemotherapy including cytarabine and an anthracycline,
a therapy that has not changed in over 40 years. Myelodysplastic syndromes are a heterogeneous group of myeloid neoplasms characterized
by dysplastic features of erythroid/myeloid/megakaryocytic lineages, progressive bone marrow failure, a varying percentage of blast cells,
and enhanced risk to evolve into acute myeloid leukemia. It is estimated that over 10,000 new cases of MDS are diagnosed each year and
there are minimal treatment options; other estimates have put this number higher. In addition, the incidence of MDS is rising for unknown
reasons.
B7-H3
Positive Solid Tumors
The
B7-H3 protein, which functions as a checkpoint inhibitor, has been identified in many of the most common solid tumor cancers, including
but not limited to bladder, breast, cervical, colorectal, endometrial, esophageal, gastric, glioma, kidney, liver, lung, pancreatic,
prostate, head and neck cancer, and melanoma. In recent studies, B7-H3 has been identified as a critical promoter of tumor cell proliferation,
migration, invasion, epithelial-to-mesenchymal transition, cancer stemness and drug resistance. Because this protein does not seem to
be expressed in normal cells, this makes it an attractive target for therapeutic intervention.
Manufacturing
We
do not currently own or operate manufacturing facilities for the production of clinical or commercial quantities of any of our product
candidates. We rely on a third-party contract manufacturing operation to produce and/or test our compounds and expect to continue to
do so to meet the preclinical and clinical requirements of our potential product candidates as well as for our future commercial needs.
We do not have long-term commitments with a third-party product manufacturer. We require in our manufacturing and processing agreements
that third-party product manufacturers produce intermediates, active pharmaceutical ingredients, or API, and finished products in accordance
with the FDA’s current Good Manufacturing Practices (cGMP), and all other applicable laws and regulations. We maintain confidentiality
agreements with potential and existing manufacturers to protect our proprietary rights related to our drug candidates.
Patents
and Trademarks
Immuno-oncology
platform
TriKE®
Patents
On
August 24, 2021, two patents were issued by the US Patent Office covering our pipeline of clinical and non-clinical product candidates
consisting of tri-specific killer engagers, or TriKE®s, designed to target natural killer, or NK, cells and tumor or virus
infected cells forming an immune synapse between the NK cell and the tumor cell thereby inducing NK cell activation at that site. The
patents broadly include TriKE®s that target the CD16 receptor, which includes the more potent camelid nanobody sequence,
an IL-15 activating domain, and any targeting domain.
University
of Minnesota License Agreements
2016
Exclusive Patent License Agreement
We
are party to an exclusive worldwide license agreement with the Regents of the University of Minnesota, (“UofMN”) to further
develop and commercialize cancer therapies using TriKE® technology developed by researchers at the UofMN to target NK
cells to cancer. Under the terms of the 2016 agreement, we received exclusive rights to conduct research and to develop, make, use, sell,
and import TriKE® technology worldwide for the treatment of any disease, state or condition in humans. We are responsible
for obtaining all permits, licenses, authorizations, registrations and regulatory approvals required or granted by any governmental authority
anywhere in the world that is responsible for the regulation of products such as the TriKE® technology, including without
limitation the FDA and the European Agency for the Evaluation of Medicinal Products in the European Union. Under the agreement, the University
of Minnesota received an upfront payment of $200,000, annual license maintenance fees of $100,000 beginning in 2021, 4% royalty fees
(not to exceed 6% under subsequent license agreements or amendments to this agreement), upon sale of a licensed product or a minimum
annual royalty payment ranging from $250,000 to $5.0 million. The agreement also includes certain milestone payments totaling $3.1 million,
and one-time sales milestone payments of $1.0 million upon reaching $250 million in gross sales and $5.0 million upon reaching $500 million
in cumulative gross sales of licensed products.
2021
Exclusive License Agreement
On
March 26, 2021, we entered into an agreement with the UofMN specific to the B7H3 targeted TriKE®. Under the agreement,
the UofMN received an upfront license fee of $20,000, and will receive annual license maintenance fees of $5,000 beginning in 2022, 2.5%
to 5% royalty fees or minimum annual royalty payments of $250,000 beginning in the first year after the first commercial sale of licensed
product, and $2.0 million beginning in the fifth year after the first commercial sale of licensed product. The agreement also includes
certain milestone payments totaling $3.1 million and one-time sales milestone payments of $1.0 million upon reaching $250 million in
gross sales, and $5.0 million upon reaching $500 million in cumulative gross sales of licensed products. There is no double payment intended;
if one of the milestone payments has been paid under the 2016 agreement, no further payment is due for the corresponding milestone above.
Employees and Human Capital Resources
At
the date of this Annual Report, we have 2 full-time employees and eight consultants to carry on our operations. Many of our activities are outsourced to consultants who provide
services to us on a project basis. As business activities require and capital resources permit, we will hire additional employees to
fulfill our Company’s needs.
Form
and Year of Organization
In
1965, the corporate predecessor of GT Biopharma, Diagnostic Data, Inc., was incorporated in the State of California. Diagnostic Data
changed its incorporation to the State of Delaware in 1972, and changed its name to DDI Pharmaceuticals, Inc. in 1985. In 1994, DDI Pharmaceuticals
merged with International BioClinical, Inc. and Bioxytech S.A. and changed its name to OXIS International, Inc. On July 17, 2017, we
amended our Certificate of Incorporation for the purpose of changing our name from Oxis International, Inc. to GT Biopharma, Inc.
Available Information
We post our annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act, free of charge, on the Investors section of our public website (www.gtbiopharma.com) as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the SEC . In addition, you can read our SEC filings over the Internet at the SEC’s
website at www.sec.gov. The contents of these websites are not incorporated into this annual report on Form 10-K. Further, our references
to the URLs for these websites are intended to be inactive textual references only.
ITEM
1A. RISK FACTORS
Investing
in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below in addition
to the other information contained in this Annual Report on Form 10-K before deciding whether to invest in shares of our common stock.
If any of the following risks actually occur, our business, financial condition or operating results could be harmed. In that case, the
trading price of our common stock could decline and you may lose part or all of your investment. In the opinion of management, the risks
discussed below represent the material risks known to the company. Additional risks and uncertainties not currently known to us or that
we currently deem immaterial may also impair our business, financial condition and operating results and adversely affect the market
price of our common stock.
Risks
Related to Our Business
Our
business is at an early stage of development and we may not develop therapeutic products that can be commercialized.
Our
business is at an early stage of development. We do not have immune-oncology products in late stage clinical trials. We are still in
the early stages of identifying and conducting research on potential therapeutic products. Our potential therapeutic products will require
significant research and development and pre-clinical and clinical testing prior to regulatory approval in the United States and other
countries. We may not be able to obtain regulatory approvals, enter clinical trials for any of our product candidates, or commercialize
any products. Our product candidates may prove to have undesirable and unintended side effects or other characteristics adversely affecting
their safety, efficacy or cost effectiveness that could prevent or limit their use. Any product using any of our technology may fail
to provide the intended therapeutic benefits or achieve therapeutic benefits equal to or better than the standard of treatment at the
time of testing or production.
We
have a history of operating losses and we expect to continue to incur losses for the foreseeable future and we may never generate revenue
or achieve profitability.
During
the year ended December 31, 2022, the Company reported a net loss of $20.9 million and as of December 31, 2022 and had an
accumulated deficit of $674.5 million. We have not generated any revenue to date and are not profitable, and have incurred losses in
each year since our inception. We do not expect to generate any product sales or royalty revenues for the foreseeable future. We
expect to incur significant additional operating losses for the foreseeable future as we expand research and development and
clinical trial efforts.
Our
ability to achieve long-term profitability is dependent upon obtaining regulatory approvals for our products and successfully commercializing
our products alone or with third parties. However, our operations may not be profitable even if any of our products under development
are successfully developed and produced and thereafter commercialized. Even if we achieve profitability in the future, we may not be
able to sustain profitability in subsequent periods.
Even
if we succeed in commercializing one or more of our product candidates, we expect to continue to incur substantial research and development
and other expenditures to develop and market additional product candidates. The size of our future net losses will depend, in part, on
the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and
will continue to have an adverse effect on our stockholders’ equity and working capital.
We
will need additional capital to conduct our operations and develop our products, and our ability to obtain the necessary funding is uncertain.
We
have used a significant amount of cash since inception to finance the continued development and testing of our product candidates, and
we expect to need substantial additional capital resources to develop our product candidates going forward and launch and commercialize
any product candidates for which we receive regulatory approval.
We
may not be successful in generating and/or maintaining operating cash flow, and the timing of our capital expenditures and other expenditures
may not result in cash sufficient to sustain our operations through the commercialization of our product candidates. If financing is
not sufficient and additional financing is not available or available only on terms that are detrimental to our long-term survival, it
could have a material adverse effect on our ability to continue to function. The timing and degree of any future capital requirements
will depend on many factors, including:
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magnitude and scope of our research and development programs and our ability to establish, enforce and maintain strategic arrangements
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Additional
financing through strategic collaborations, public or private equity or debt financings or other financing sources may not be available
on acceptable terms, or at all. Additional equity financing could result in significant dilution to our stockholders, and any debt financings
will likely involve covenants restricting our business activities. Further, if we obtain additional funds through arrangements with collaborative
partners, these arrangements may require us to relinquish rights to some of our technologies, product candidates or products that we
would otherwise seek to develop and commercialize on our own.
If
sufficient capital is not available, we may be required to delay, reduce the scope of or eliminate one or more of our research or product
development initiatives, any of which could have a material adverse effect on our financial condition or business prospects.
Our
research and development costs could exceed our projections requiring us to significantly modify our planned operations.
Our
currently projected expenditures for 2023 include approximately $10.2 million for research and development. The actual cost
of our programs could differ significantly from our current projections if we change our planned development process. In the event that
actual costs of our clinical program, or any of our other ongoing research activities, are significantly higher than our current estimates,
we may be required to significantly modify our planned level of operations.
The
successful development of any product candidate is highly uncertain. It is difficult to reasonably estimate or know the nature, timing
and costs of the efforts necessary to complete the development of, or the period in which material net cash inflows are expected to commence
from any product candidate, due to the numerous risks and uncertainties associated with developing drugs. Any failure to complete any
stage of the development of products in a timely manner could have a material adverse effect on our operations, financial position and
liquidity.
We
previously identified material weaknesses in our internal controls over financial reporting. While we have worked to remedy these weaknesses,
if we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our
financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which
would harm our business and the trading price of our common stock.
Effective
internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure
controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered
in their implementation, could cause us to fail to meet our reporting obligations. Ineffective internal control could also cause investors
to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
We
previously identified material weaknesses in our internal control over financial reporting as a company, which resulted in unauthorized
transactions involving our assets and common stock. As defined in Regulation 12b-2 under the Securities Exchange Act of 1934, or the
Exchange Act, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will
not be prevented, or detected on a timely basis.
We
have taken measures to mitigate the issues identified and implement a functional system of internal controls over financial reporting.
However, such controls may become inadequate due to changes in conditions, or the degree of compliance with such policies or procedures
may deteriorate, which could result in the discovery of additional material weaknesses and deficiencies. In any event, the process of
determining whether our existing internal control over financial reporting is compliant with Section 404 of the Sarbanes-Oxley Act, or
Section 404, and sufficiently effective requires the investment of substantial time and resources, including by certain members of our
senior management.
We
are required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control
over financial reporting. However, for as long as we are a “smaller reporting company,” our independent registered public
accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section
404. While we could be a smaller reporting company for an indefinite amount of time, and thus relieved of the above-mentioned attestation
requirement, an independent assessment of the effectiveness of our internal control over financial reporting could detect problems that
our management’s assessment might not. Such undetected material weaknesses in our internal control over financial reporting could
lead to financial statement restatements and require us to incur the expense of remediation.
Our
intellectual property may be compromised.
Part
of our value going forward depends on the intellectual property rights that we have been and are acquiring. There may have been many
persons involved in the development of our intellectual property, and we may not be successful in obtaining the necessary rights from
all of them. It is possible that in the future, third parties may challenge our intellectual property rights. We may not be successful
in protecting our intellectual property rights. In either event, we may lose the value of our intellectual property, and if so, our business
prospects may suffer.
If
our efforts to protect the proprietary nature of the intellectual property related to our technologies are not adequate, we may not be
able to compete effectively in our market and our business would be harmed.
We
rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related
to our technologies. Any disclosure to or misappropriation by third parties of our trade secret or other confidential information could
enable competitors to quickly duplicate or surpass our technological achievements, thus eroding any competitive advantage we may derive
from this information.
The
strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain.
The patent applications we own or license may fail to result in issued patents in the United States or in foreign countries. Third parties
may challenge the validity, enforceability or scope of any issued patents we own or license or any applications that may be issued as
patents in the future, which may result in those patents being narrowed, invalidated or held unenforceable. Even if they are unchallenged,
our patents and patent applications may not adequately protect our intellectual property or prevent others from developing similar products
that do not fall within the scope of our patents. If the breadth or strength of protection provided by the patents we hold or pursue
is threatened, our ability to commercialize any product candidates with technology protected by those patents could be threatened. Further,
if we encounter delays in our clinical trials, the time during which we would have patent protection for any covered product candidates
that obtain regulatory approval would be reduced. Since patent applications in the United States and most other countries are confidential
for a period of time after filing, we cannot be certain at the time of filing that we are the first to file any patent application related
to our product candidates.
In
addition to the protection afforded by patents, we seek to rely on trade secret protection and confidentiality agreements to protect
proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our discovery
platform and drug development processes that involve proprietary know-how, information or technology that is not covered by patents or
not amenable to patent protection. Although we require all of our employees and certain consultants and advisors to assign inventions
to us, and all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information
or technology to enter into confidentiality agreements, our trade secrets and other proprietary information may be disclosed or competitors
may otherwise gain access to such information or independently develop substantially equivalent information. Further, the laws of some
foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result,
we may encounter significant difficulty in protecting and defending our intellectual property both in the United States and abroad. If
we are unable to prevent material disclosure of the trade secret intellectual property related to our technologies to third parties,
we may not be able to establish or maintain the competitive advantage that we believe is provided by such intellectual property, which
could materially adversely affect our market position and business and operational results.
Claims
that we infringe the intellectual property rights of others may prevent or delay our drug discovery and development efforts.
Our
research, development and commercialization activities, as well as any product candidates or products resulting from those activities,
may infringe or be accused of infringing a patent or other form of intellectual property under which we do not hold a license or other
rights. Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents
of which we are currently unaware, with claims that cover the use or manufacture of our product candidates or the practice of our related
methods. Because patent applications can take many years to issue, there may be currently pending patent applications that may later
result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim
that use of our technologies infringes one or more claims of these patents. If our activities or product candidates infringe the patents
or other intellectual property rights of third parties, the holders of such intellectual property rights may be able to block our ability
to commercialize such product candidates or practice our methods unless we obtain a license under the intellectual property rights or
until any applicable patents expire or are determined to be invalid or unenforceable.
Defense
of any intellectual property infringement claims against us, regardless of their merit, would involve substantial litigation expense
and would be a significant diversion of employee resources from our business. In the event of a successful claim of infringement against
us, we may have to pay substantial damages, obtain one or more licenses from third parties, limit our business to avoid the infringing
activities, pay royalties and/or redesign our infringing product candidates or methods, any or all of which may be impossible or require
substantial time and monetary expenditure. Further, if we were to seek a license from the third-party holder of any applicable intellectual
property rights, we may not be able to obtain the applicable license rights when needed or on commercially reasonable terms, or at all.
The occurrence of any of the above events could prevent us from continuing to develop and commercialize one or more of our product candidates
and our business could materially suffer.
We
may desire, or be forced, to seek additional licenses to use intellectual property owned by third parties, and such licenses may not
be available on commercially reasonable terms or at all.
A
third party may hold intellectual property, including patent rights, that are important or necessary to the development of our product
candidates, in which case we would need to obtain a license from that third party or develop a different formulation of the product that
does not infringe upon the applicable intellectual property, which may not be possible. Additionally, we may identify product candidates
that we believe are promising and whose development and other intellectual property rights are held by third parties. In such a case,
we may desire to seek a license to pursue the development of those product candidates. Any license that we may desire to obtain or that
we may be forced to pursue may not be available when needed on commercially reasonable terms or at all. Any inability to secure a license
that we need or desire could have a material adverse effect on our business, financial condition and prospects.
The
patent protection covering some of our product candidates may be dependent on third parties, who may not effectively maintain that protection.
While
we expect that we will generally seek to gain the right to fully prosecute any patents covering product candidates we may in-license
from third-party owners, there may be instances when platform technology patents that cover our product candidates remain controlled
by our licensors. If any of our current or future licensing partners that retain the right to prosecute patents covering the product
candidates we license from them fail to appropriately maintain that patent protection, we may not be able to prevent competitors from
developing and selling competing products or practicing competing methods and our ability to generate revenue from any commercialization
of the affected product candidates may suffer.
We
may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming
and unsuccessful.
Competitors
may infringe our patents or the patents of our current or potential licensors. To attempt to stop infringement or unauthorized use, we
may need to enforce one or more of our patents, which can be expensive and time-consuming and distract management. If we pursue any litigation,
a court may decide that a patent of ours or our licensor’s is not valid or is unenforceable, or may refuse to stop the other party
from using the relevant technology on the grounds that our patents do not cover the technology in question. Further, the legal systems
of certain countries, particularly certain developing countries, do not favor the enforcement of patents, which could reduce the likelihood
of success of any infringement proceeding we pursue in any such jurisdiction. An adverse result in any infringement litigation or defense
proceedings could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly and could
put our patent applications at risk of not issuing, which could limit our ability to exclude competitors from directly competing with
us in the applicable jurisdictions.
Interference
proceedings provoked by third parties or brought by the U.S. PTO may be necessary to determine the priority of inventions with respect
to our patents or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology
or to attempt to license rights to use it from the prevailing party. Our business could be harmed if the prevailing party does not offer
us a license on commercially reasonable terms, or at all. Litigation or interference proceedings may fail and, even if successful, may
result in substantial costs and distract our management and other employees.
If
we are unsuccessful in obtaining or maintaining patent protection for intellectual property in development, our business and competitive
position would be harmed.
We
are seeking patent protection for some of our technology and product candidates. Patent prosecution is a challenging process and is not
assured of success. If we are unable to secure patent protection for our technology and product candidates, our business may be adversely
impacted.
In
addition, issued patents and pending international applications require regular maintenance. Failure to maintain our portfolio may result
in loss of rights that may adversely impact our intellectual property rights, for example by rendering issued patents unenforceable or
by prematurely terminating pending international applications.
If
we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In
addition to seeking patents for some of our technology and product candidates, we also rely on trade secrets, including unpatented know-how,
technology and other proprietary information, to maintain our competitive position. We currently, and expect in the future to continue
to, seek to protect these trade secrets, in part, by entering into confidentiality agreements with parties who have access to them, such
as our employees, collaborators, contract manufacturers, consultants, advisors and other third parties. Despite these efforts, any of
these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able
to obtain adequate remedies for any such disclosure. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret
is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United
States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently
developed by a competitor, we would have no right to prevent them, or those to whom they disclose the trade secrets, from using that
technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor,
our competitive position would be harmed.
If
we fail to meet our obligations under our license agreements, we may lose our rights to key technologies on which our business depends.
Our
business depends in part on licenses from third parties. These third-party license agreements impose obligations on us, such as payment
obligations and obligations to diligently pursue development of commercial products under the licensed patents. If a licensor believes
that we have failed to meet our obligations under a license agreement, the licensor could seek to limit or terminate our license rights,
which could lead to costly and time-consuming litigation and, potentially, a loss of the licensed rights. During the period of any such
litigation, our ability to carry out the development and commercialization of potential products could be significantly and negatively
affected. If our license rights were restricted or ultimately lost, our ability to continue our business based on the affected technology
platform could be severely adversely affected.
We
will have to hire additional employees to carry on our business operations. If we are unable to hire qualified personnel, we may not
be able to implement our business strategy.
We currently have two
full-time employees and eight consultants to carry on our operations. Our interim Chief Executive Officer and Executive Chairman of
the Board provides his services through a consulting arrangement. The
loss of the services of any of our employees or consultants could delay our product development programs and our research and
development efforts. In order to develop our business in accordance with our business strategy, we will have to hire additional
qualified personnel, including in the areas of manufacturing, clinical trials management, regulatory affairs, finance, discovery
biology, and business development. We will need to raise sufficient funds to hire and retain the necessary employees and
consultants.
Moreover,
there is intense competition for a limited number of qualified personnel among biopharmaceutical, biotechnology, pharmaceutical and other
businesses. Many of the other pharmaceutical companies against which we compete for qualified personnel have greater financial and other
resources, different risk profiles, longer histories in the industry and greater ability to provide valuable cash or stock incentives
to potential recruits than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of
these characteristics may be more appealing to high quality candidates than what we are able to offer as an early-stage company. If we
are unable to continue to attract and retain high quality personnel, the rate and success at which we can develop and commercialize product
candidates will be limited.
We
depend on key personnel for our continued operations and future success, and a loss of certain key personnel could significantly hinder
our ability to move forward with our business plan.
Because
of the specialized nature of our business, we are highly dependent on our ability to identify, hire, train and retain highly qualified
scientific and technical personnel for the research and development activities we conduct or sponsor. The loss of one or more key executive
officers, scientific or operational team members would be significantly detrimental to us. In addition, recruiting and retaining qualified
scientific personnel to perform research and development work is critical to our success. Our anticipated growth and expansion into areas
and activities requiring additional expertise, such as discovery biology, clinical testing, regulatory compliance, manufacturing and
compliance, will require the addition of new management personnel and the development of additional expertise by existing management
personnel. There is intense competition for qualified personnel in the areas of our present and planned activities. Accordingly, we may
not be able to continue to attract and retain the qualified personnel, which would adversely affect the development of our business.
We
may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming
ownership of what we regard as our own intellectual property.
Many
of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors
or potential competitors. Although we try to ensure that our employees do not use the proprietary information or know-how of others in
their work for us, with contractual provisions and other procedures, we may be subject to claims that these employees or we have used
or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employers.
Litigation may be necessary to defend against any such claims.
In
addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property
to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party
who in fact contributes to the development of intellectual property that we regard as our own. Further, the terms of such assignment
agreements may be breached and we may not be able to successfully enforce their terms, which may force us to bring claims against third
parties, or defend claims they may bring against us, to determine the ownership of intellectual property rights we may regard and treat
as our own.
Our
employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements,
which could cause our business to suffer.
We
are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with
regulations of governmental authorities, such as the U.S. Food and Drug Administration (FDA) or the European Medicines Agency, or EMA,
to provide accurate information to the FDA or EMA, to comply with manufacturing standards we have established, to comply with federal,
state and international healthcare fraud and abuse laws and regulations as they may become applicable to our operations, to report financial
information or data accurately or to disclose unauthorized activities to us. Employee misconduct could also involve the improper use
of information obtained during clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is
not always possible to identify and deter employee misconduct, and the precautions we currently take and the procedures we may establish
in the future as our operations and employee base expand to detect and prevent this type of activity may not be effective in controlling
unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from
a failure by our employees to comply with such laws or regulations. If any such actions are instituted against us, and we are not successful
in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations,
including the imposition of significant fines or other sanctions.
Our
reliance on the activities of our non-employee consultants, research institutions and scientific contractors, whose activities are not
wholly within our control, may lead to delays in development of our proposed products.
We
rely extensively upon and have relationships with scientific consultants at academic and other institutions, some of whom conduct research
at our request, and other consultants with expertise in clinical development strategy or other matters. These consultants are not our
employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to
us. We have limited control over the activities of these consultants and, except as otherwise required by our collaboration and consulting
agreements to the extent they exist, can expect only limited amounts of their time to be dedicated to our activities. These research
facilities may have commitments to other commercial and non-commercial entities. We have limited control over the operations of these
laboratories and can expect only limited amounts of time to be dedicated to our research goals.
It
may take longer to complete our clinical trials than we project, or we may not be able to complete them at all.
For
budgeting and planning purposes, we have projected the date for the commencement, continuation and completion of our various clinical
trials. However, a number of factors, including scheduling conflicts with participating clinicians and clinical institutions, and difficulties
in identifying and enrolling patients who meet trial eligibility criteria, may cause significant delays. We may not commence or complete
clinical trials involving any of our products as projected or may not conduct them successfully.
We
expect to rely on medical institutions, academic institutions or clinical research organizations to conduct, supervise or monitor some
or all aspects of clinical trials involving our products. We will have less control over the timing and other aspects of these clinical
trials than if we conducted them entirely on our own. If we fail to commence or complete, or experience delays in, any of our planned
clinical trials, our stock price and our ability to conduct our business as currently planned could be harmed.
Clinical
drug development is costly, time-consuming and uncertain, and we may suffer setbacks in our clinical development program that could harm
our business.
Clinical
drug development for our product candidates is costly, time-consuming and uncertain. Our product candidates are in various stages of
development and while we expect that clinical trials for these product candidates will continue for several years, such trials may take
significantly longer than expected to complete. In addition, we, the FDA, an institutional review board, or IRB, or other regulatory
authorities, including state and local agencies and counterpart agencies in foreign countries, may suspend, delay, require modifications
to or terminate our clinical trials at any time, for various reasons, including:
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discovery
of safety or tolerability concerns, such as serious or unexpected toxicities or side effects or exposure to otherwise unacceptable
health risks, with respect to study participants; |
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lack
of effectiveness of any product candidate during clinical trials or the failure of our product candidates to meet specified endpoints; |
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delays
in subject recruitment and enrollment in clinical trials or inability to enroll a sufficient number of patients in clinical trials
to ensure adequate statistical ability to detect statistically significant treatment effects; |
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difficulty
in retaining subjects and volunteers in clinical trials; |
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difficulty
in obtaining the Institutional Review Board’s (“IRB”) approval for studies to be conducted at each clinical trial
site; |
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inadequacy
of or changes in our manufacturing process or the product formulation or method of delivery; |
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delays
or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with prospective contract research
organizations, (“CROs”), clinical trial sites and other third-party contractors; |
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inability
to add a sufficient number of clinical trial sites; |
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uncertainty
regarding proper formulation and dosing; |
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failure
by us, our employees, our CROs or their employees or other third-party contractors to comply with contractual and applicable regulatory
requirements or to perform their services in a timely or acceptable manner; |
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scheduling
conflicts with participating clinicians and clinical institutions; |
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failure
to design appropriate clinical trial protocols; |
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inability
or unwillingness of medical investigators to follow our clinical protocols; |
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difficulty
in maintaining contact with subjects during or after treatment, which may result in incomplete data; or |
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changes
in applicable laws, regulations and regulatory policies. |
If
we experience delays or difficulties in the enrollment of patients in clinical trials, those clinical trials could take longer than expected
to complete and our receipt of necessary regulatory approvals could be delayed or prevented.
We
may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient
number of eligible patients to participate in these trials as required by U.S. Food and Drug Administration, or the FDA, or similar regulatory
authorities outside the United States. In particular, because we are focused on patients with molecularly defined cancers, our pool of
suitable patients may be smaller and more selective and our ability to enroll a sufficient number of suitable patients may be limited
or take longer than anticipated. In addition, some of our competitors have ongoing clinical trials for product candidates that treat
the same indications as our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll
in clinical trials of our competitors’ product candidates.
Patient
enrollment for any of our clinical trials may also be affected by other factors, including without limitation:
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the
severity of the disease under investigation; |
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the
frequency of the molecular alteration we are seeking to target in the applicable trial; |
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the
eligibility criteria for the study in question; |
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the
perceived risks and benefits of the product candidate under study; |
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the
extent of the efforts to facilitate timely enrollment in clinical trials; |
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the
patient referral practices of physicians; |
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the
ability to monitor patients adequately during and after treatment; and |
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the
proximity and availability of clinical trial sites for prospective patients. |
Our
inability to enroll a sufficient number of patients for our clinical trials would result in significant delays and could require us to
abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for
our product candidates, and we may not have or be able to obtain sufficient cash to fund such increased costs when needed, which could
result in the further delay or termination of the trial.
Consistent
with our general product development strategy, we intend to design future trials for our product candidates to include some patients
with the applicable clinical characteristics, stage of therapy, molecular alterations, biomarkers, and/or cell surface antigens that
determine therapeutic options, or are indicators of the disease, with a view to assessing possible early evidence of potential therapeutic
effect. If we are unable to locate and include such patients in those trials, then our ability to make those early assessments and to
seek participation in FDA expedited review and approval programs, including breakthrough therapy and fast track designation, or otherwise
to seek to accelerate clinical development and regulatory timelines, could be compromised.
We
have limited clinical testing and regulatory capabilities, and human clinical trials are subject to extensive regulatory
requirements, which are very expensive, time-consuming and difficult to design and implement. Our products may fail to achieve
necessary safety and efficacy endpoints during clinical trials, which may limit our ability to generate revenues from therapeutic
products.
We
cannot assure you that we will be able to invest or develop resources for clinical trials successfully or as expediently as necessary.
In particular, human clinical trials can be very expensive and difficult to design and implement, in part because they are subject to
rigorous regulatory requirements. The clinical trial process is time consuming. We estimate that clinical trials of our product candidates
will take at least several years to complete. Furthermore, failure can occur at any stage of the trials, and we could encounter problems
that cause us to abandon or repeat clinical trials. The commencement and completion of clinical trials may be affected by several factors,
including:
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unforeseen
safety issues; |
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determination
of dosing issues; |
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inability
to demonstrate effectiveness during clinical trials; |
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slower
than expected rates of patient recruitment; |
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inability
to monitor patients adequately during or after treatment; and |
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inability
or unwillingness of medical investigators to follow our clinical protocols. |
In
addition, we or the FDA, may suspend our clinical trials at any time if it appears that we are exposing participants to unacceptable
health risks or if the FDA finds deficiencies in our investigational new drug application, or IND, submissions or the conduct of these
trials.
We
are subject to extensive regulation, which can be costly and time consuming and can subject us to unanticipated delays. even if we obtain
regulatory approval for some of our products, those products may still face regulatory difficulties.
All
of our potential products, processing and manufacturing activities, are subject to comprehensive regulation by the FDA in the United
States and by comparable authorities in other countries. The process of obtaining FDA and other required regulatory approvals, including
foreign approvals, is expensive and often takes many years and can vary substantially based upon the type, complexity and novelty of
the products involved. In addition, regulatory agencies may lack experience with our technologies and products, which may lengthen the
regulatory review process, increase our development costs and delay or prevent their commercialization.
If
we violate regulatory requirements at any stage, whether before or after we obtain marketing approval, the FDA may take enforcement action(s)
against us, which could include issuing a warning or untitled letter, placing a clinical hold on an ongoing clinical trial, product seizure,
enjoining our operations, refusal to consider our applications for pre-market approval, refusal of an investigational new drug application,
fines, or even civil or criminal liability, any of which could materially harm our reputation and financial results. Additionally, we
may not be able to obtain the labeling claims necessary or desirable for the promotion of our products. We may also be required to undertake
post marketing trials to provide additional evidence of safety and effectiveness. In addition, if we or others identify side effects
after any of our adoptive therapies are on the market, or if manufacturing problems occur, regulators may withdraw their approval and
reformulations, additional clinical trials, changes in labeling of our products, and additional marketing applications may be required.
Any
of the following factors, among others, could cause regulatory approval for our product candidates to be delayed, limited or denied:
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the
product candidates require significant clinical testing to demonstrate safety and effectiveness before applications for marketing
approval can be filed with the FDA and other regulatory authorities; |
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data
obtained from pre-clinical and nonclinical animal testing and clinical trials can be interpreted in different ways, and regulatory
authorities may not agree with our respective interpretations or may require us to conduct additional testing; |
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negative
or inconclusive results or the occurrence of serious or unexpected adverse events during a clinical trial could cause us to delay
or terminate development efforts for a product candidate; and/or |
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FDA
and other regulatory authorities may require expansion of the size and scope of the clinical trials. |
Any
difficulties or failures that we encounter in securing regulatory approval for our product candidates would likely have a substantial
adverse impact on our ability to generate product sales, and could make a search for a collaborative partner more difficult.
Obtaining
regulatory approval even after clinical trials that are believed to be successful is an uncertain process.
Even
if we complete our planned clinical trials and believe the results were successful, obtaining regulatory approval is a lengthy, expensive
and uncertain process, and the FDA or other regulatory agencies may delay, limit or deny approval of any of our applications for pre-market
approval for many reasons, including:
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we
may not be able to demonstrate to the FDA’s satisfaction that our product candidates are safe and effective for any indication; |
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the
results of clinical trials may not meet the level of statistical significance or clinical significance required by the FDA for approval; |
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the
FDA may disagree with the number, design, size, conduct or implementation of our clinical trials; |
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the
FDA may not find the data from pre-clinical studies and clinical trials sufficient to demonstrate that the clinical and other benefits
of our product candidates outweigh their safety risks; |
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the
FDA may disagree with our interpretation of data from pre-clinical studies or clinical trials, or may not accept data generated at
our clinical trial sites; |
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the
data collected from pre-clinical studies and clinical trials of our product candidates may not be sufficient to support the submission
of applications for regulatory approval; |
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the
FDA may have difficulties scheduling an advisory committee meeting in a timely manner, or the advisory committee may recommend against
approval of our application or may recommend that the FDA require, as a condition of approval, additional pre-clinical studies or
clinical trials, limitations on approved labeling, or distribution and use restrictions; |
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the
FDA may require development of a risk evaluation and mitigation strategy as a condition of approval; |
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the
FDA may identify deficiencies in the manufacturing processes or facilities of third-party manufacturers with which we enter into
agreements for clinical and commercial supplies; |
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the
FDA may change their approval policies or adopt new regulations that adversely affect our applications for pre-market approval; and |
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the
FDA may require simultaneous approval for both adults and for children and adolescents delaying needed approvals, or we may have
successful clinical trial results for adults but not children and adolescents, or vice versa. |
Before
we can submit an application for regulatory approval in the United States, we must conduct a pivotal, registrational trial. We will also
need to agree on a protocol with the FDA for a clinical trial before commencing the trial. Registrational clinical trials frequently
produce unsatisfactory results even though prior clinical trials were successful. Therefore, even if the results of our early phase trials
are successful, the results of the additional trials that we conduct may or may not be successful. Further, our product candidates may
not be approved even if they achieve their primary endpoints in registrational clinical trials. The FDA or other foreign regulatory authorities
may disagree with our trial design and our interpretation of data from preclinical studies and clinical trials. Any of these regulatory
authorities may change requirements for the approval of a product candidate even after reviewing and providing comments or advice on
a protocol for a clinical trial. The FDA or other regulatory agencies may require that we conduct additional clinical, nonclinical, manufacturing
validation or drug product quality studies and submit those data before considering or reconsidering the application. Depending on the
extent of these or any other studies, approval of any applications that we submit may be delayed by several years, or may require us
to expend more resources than we have available. It is also possible that additional studies, if performed and completed, may not be
considered sufficient by the FDA or other regulatory agencies.
In
addition, the FDA or other regulatory agencies may also approve a product candidate for fewer or more limited indications than we request,
may impose significant limitations related to use restrictions for certain age groups, warnings, precautions or contraindications or
may grant approval contingent on the performance of costly post-marketing clinical trials or risk mitigation requirements.
We
will continue to be subject to extensive FDA regulation following any product approvals, and if we fail to comply with these regulations,
we may suffer a significant setback in our business.
Even
if we are successful in obtaining regulatory approval of our product candidates, we will continue to be subject to the requirements of
and review by, the FDA and comparable regulatory authorities in the areas of manufacturing processes, post-approval clinical data, adverse
event reporting, labeling, advertising and promotional activities, among other things. In addition, any marketing approval we receive
may be limited in terms of the approved product indication or require costly post-marketing testing and surveillance. Discovery after
approval of previously unknown problems with a product, manufacturer or manufacturing process, or a failure to comply with regulatory
requirements, may result in enforcement actions such as:
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warning
letters or other actions requiring changes in product manufacturing processes or restrictions on product marketing or distribution; |
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product
recalls or seizures or the temporary or permanent withdrawal of a product from the market; |
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suspending
any ongoing clinical trials; |
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temporary
or permanent injunctions against our production operations; |
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refusal
of our applications for pre-market approval or an investigational new drug application; and |
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fines,
restitution or disgorgement of profits or revenue, the imposition of civil penalties or criminal prosecution. |
The
occurrence of any of these actions would likely cause a material adverse effect on our business, financial condition and results of operations.
Many
of our business practices are subject to scrutiny and potential investigation by regulatory and government enforcement authorities, as
well as to lawsuits brought by private citizens under federal and state laws. We could become subject to investigations, and our failure
to comply with applicable law or an adverse decision in lawsuits may result in adverse consequences to us. If we fail to comply with
U.S. healthcare laws, we could face substantial penalties and financial exposure, and our business, operations and financial condition
could be adversely affected.
While
payment is not yet available from third-party payors (government or commercial) for our product, our goal is to obtain such coverage
as soon as possible after product approval and commercial launch in the U.S. If this occurs, the availability of such payment would mean
that many healthcare laws would place limitations and requirements on the manner in which we conduct our business (including our sales
and promotional activities and interactions with healthcare professionals and facilities) and could result in liability and exposure
to us. In some instances, our interactions with healthcare professionals and facilities that occurred prior to commercialization could
have implications at a later date. The laws that may affect our ability to operate include, among others: (i) the federal healthcare
programs Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering
or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase,
order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as Medicare or Medicaid;
(ii) federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be
presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, and which may apply
to entities like us under theories of “implied certification” where the government and qui tam relators may allege that device
companies are liable where a product that was paid for by the government in whole or in part was promoted “off-label,” lacked
necessary approval, or failed to comply with good manufacturing practices or other laws; (iii) transparency laws and related reporting
and/or disclosures such as the Sunshine Act; and/or (iv) state law equivalents of each of the above federal laws, such as anti-kickback
and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, many of
which differ from their federal counterparts in significant ways, thus complicating compliance efforts.
If
our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us,
we may be subject to penalties, including civil and criminal penalties, exclusion from participation in government healthcare programs,
damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment or restructuring of
our operations could adversely affect our ability to operate our business and our financial results. The risk of our being found in violation
of these laws is increased by the fact that their provisions are open to a variety of evolving interpretations and enforcement discretion.
Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal
expenses and divert our management’s attention from the operation of our business.
Both
federal and state government agencies have heightened civil and criminal enforcement efforts. There are numerous ongoing investigations
of healthcare pharmaceutical companies and others in the healthcare space, as well as their executives and managers. In addition, amendments
to the Federal False Claims Act, have made it easier for private parties to bring qui tam (whistleblower) lawsuits against companies
under which the whistleblower may be entitled to receive a percentage of any money paid to the government. In addition, the Affordable
Care Act amended the federal civil False Claims Act to provide that a claim that includes items or services resulting from a violation
of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. Penalties
include substantial fines for each false claim, plus three times the amount of damages that the federal government sustained because
of the act of that person or entity and/or exclusion from the Medicare program. In addition, a majority of states have adopted similar
state whistleblower and false-claims provision. There can be no assurance that our activities will not come under the scrutiny of regulators
and other government authorities or that our practices will not be found to violate applicable laws, rules and regulations or prompt
lawsuits by private citizen “relators” under federal or state false claims laws. Any future investigations of our business
or executives, or enforcement action or prosecution, could cause us to incur substantial costs, and result in significant liabilities
or penalties, as well as damage to our reputation.
Laws
impacting the U.S. healthcare system are subject to a great deal of uncertainty, which may result in adverse consequences to our business.
There
have been a number of legislative and regulatory proposals to change the healthcare system, reduce the costs of healthcare and change
medical reimbursement policies. Doctors, clinics, hospitals and other users of our products may decline to purchase our products to the
extent there is uncertainty regarding coverage from government or commercial payors. Further proposed legislation, regulation and policy
changes affecting third-party reimbursement are likely. Among other things, Congress has in the past proposed changes to and the repeal
of the Patient Protection and Affordable Care and Health Care and Education Affordability Reconciliation Act of 2010 (collectively, the
“Affordable Care Act”), and lawsuits have been brought challenging aspects of the law at various points. There have been
repeated recent attempts by Congress to repeal or replace the Affordable Care Act. At this time, it remains unclear whether there will
be any changes made to or any repeal or replacement of the Affordable Care Act, with respect to certain of its provisions or in its entirety.
We are unable to predict what legislation or regulation, if any, relating to the health care industry or third-party coverage and reimbursement
may be enacted in the future at the state or federal level, or what effect such legislation or regulation may have on us. Denial of coverage
and reimbursement of our products, or the revocation or changes to coverage and reimbursement policies, could have a material adverse
effect on our business, results of operations and financial condition.
We
may not be successful in our efforts to build a pipeline of product candidates.
A
key element of our strategy is to use and expand our product platform to build a pipeline of product candidates and progress those product
candidates through clinical development for the treatment of a variety of different types of cancer. Even if we are successful in building
a product pipeline, the potential product candidates that we identify may not be suitable for clinical development for a number of reasons,
including causing harmful side effects or demonstrating other characteristics that indicate a low likelihood of receiving marketing approval
or achieving market acceptance. If our methods of identifying potential product candidates fail to produce a pipeline of potentially
viable product candidates, then our success as a business will be dependent on the success of fewer potential product candidates, which
introduces risks to our business model and potential limitations to any success we may achieve.
Our
product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval,
limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.
Additionally,
if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused
by such products, a number of potentially significant negative consequences could result, including:
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regulatory
authorities may withdraw approvals of such product; |
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regulatory
authorities may require additional warnings on the product’s label; |
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we
may be required to create a medication guide for distribution to patients that outlines the risks of such side effects; |
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we
could be sued and held liable for harm caused to patients; and |
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our
reputation may suffer. |
Any
of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and
could significantly harm our business, results of operations and prospects.
We
may expend our limited resources to pursue a particular product candidate or indication that does not produce any commercially viable
products and may fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater
likelihood of success.
Because
we have limited financial and managerial resources, we must focus our efforts on particular research programs and product candidates
for specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications
that later prove to have greater commercial potential. Further, our resource allocation decisions may result in our use of funds for
research and development programs and product candidates for specific indications that may not yield any commercially viable products.
If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable
rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been
more advantageous for us to retain sole development and commercialization rights to such product candidate. Any such failure to improperly
assess potential product candidates could result in missed opportunities and/or our focus on product candidates with low market potential,
which would harm our business and financial condition.
Our
products may be expensive to manufacture, and they may not be profitable if we are unable to control the costs to manufacture them.
Our
products may be significantly more expensive to manufacture than we expect or than other therapeutic products currently on the market
today. We hope to substantially reduce manufacturing costs through process improvements, development of new methods, increases in manufacturing
scale and outsourcing to experienced manufacturers. If we are not able to make these, or other improvements, and depending on the pricing
of the product, our profit margins may be significantly less than that of other therapeutic products on the market today. In addition,
we may not be able to charge a high enough price for any product we develop, even if they are safe and effective, to make a profit. If
we are unable to realize significant profits from our potential product candidates, our business would be materially harmed.
We
currently lack manufacturing capabilities to produce our therapeutic product candidates at commercial-scale quantities and do not have
an alternate manufacturing supply, which could negatively impact our ability to meet any future demand for the product.
We
expect that we would need to significantly expand our manufacturing capabilities to meet potential demand for our therapeutic product
candidates, if approved. Such expansion would require additional regulatory approvals. Even if we increase our manufacturing capabilities,
it is possible that we may still lack sufficient capacity to meet demand.
We
do not currently have any alternate supply for our products. If the facilities where our products are currently being manufactured or
equipment were significantly damaged or destroyed, or if there were other disruptions, delays or difficulties affecting manufacturing
capacity or availability of drug supply, including, but not limited to, if such facilities are deemed not in compliance with current
Good Manufacturing Practice, or GMP, requirements, future clinical studies and commercial production for our products would likely be
significantly disrupted and delayed. It would be both time-consuming and expensive to replace this capacity with third parties, particularly
since any new facility would need to comply with the regulatory requirements.
Ultimately,
if we are unable to supply our products to meet commercial demand, whether because of processing constraints or other disruptions, delays
or difficulties that we experience, our production costs could dramatically increase and sales of our products and their long-term commercial
prospects could be significantly damaged.
To
be successful, our proposed products must be accepted by the healthcare community, which can be very slow to adopt or unreceptive to
new technologies and products.
Our
proposed products and those developed by our collaborative partners, if approved for marketing, may not achieve market acceptance since
hospitals, physicians, patients or the medical community in general may decide not to accept and use these products. The products that
we are attempting to develop represent substantial departures from established treatment methods and will compete with a number of more
conventional therapies manufactured and marketed by major pharmaceutical companies. The degree of market acceptance of any of our developed
products will depend on a number of factors, including:
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our
establishment and demonstration to the medical community of the clinical efficacy and safety of our proposed products; |
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our
ability to create products that are superior to alternatives currently on the market; |
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our
ability to establish in the medical community the potential advantage of our treatments over alternative treatment methods; and |
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reimbursement
policies of government and third-party payers. |
If
the healthcare community does not accept our products for any of these reasons, or for any other reason, our business would be materially
harmed.
Our
business is based on novel technologies that are inherently expensive and risky and may not be understood by or accepted in the marketplace,
which could adversely affect our future value.
The
clinical development, commercialization and marketing of immuno-oncology therapies are at an early-stage, substantially research-oriented,
and financially speculative. To date, very few companies have been successful in their efforts to develop and commercialize an immuno-oncology
therapeutic product. In general, such products may be susceptible to various risks, including undesirable and unintended side effects,
unintended immune system responses, inadequate therapeutic efficacy, or other characteristics that may prevent or limit their approval
or commercial use. Furthermore, the number of people who may use such therapies is difficult to forecast with accuracy. Our future success
is dependent on the establishment of a significant market for such therapies and our ability to capture a share of this market with our
product candidates.
Our
development efforts with our therapeutic product candidates are susceptible to the same risks of failure inherent in the development
and commercialization of therapeutic products based on new technologies. The novel nature of immuno-oncology therapeutics creates significant
challenges in the areas of product development and optimization, manufacturing, government regulation, third-party reimbursement and
market acceptance. For example, the FDA has relatively limited experience regulating such therapies, and there are few approved treatments
using such therapy.
Our
competition includes fully integrated biotechnology and pharmaceutical companies that have significant advantages over us.
The
market for therapeutic immuno-oncology products is highly competitive. We expect that our most significant competitors will be fully
integrated and more established pharmaceutical and biotechnology companies or institutions, including major multinational pharmaceutical
companies, biotechnology companies and universities and other research institutions. These companies are developing similar products,
and they have significantly greater capital resources and research and development, manufacturing, testing, regulatory compliance, and
marketing capabilities. Many of these potential competitors may be further along in the process of product development and also operate
large, company-funded research and development programs. As a result, our competitors may develop more competitive or affordable products,
or achieve earlier patent protection or product commercialization than we are able to achieve. Competitive products may render any products
or product candidates that we develop obsolete.
Many
of our competitors have substantially greater financial, technical and other resources than we do, such as larger research and development
staff and experienced marketing and manufacturing organizations. Additional mergers and acquisitions in the biotechnology and pharmaceutical
industries may result in even more resources being concentrated in certain of our competitors. As a result, these companies may be able
to obtain regulatory approval more rapidly than we can and may be more effective in selling and marketing their products. Smaller or
early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established
companies. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability
of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing drug products that are
more effective or less costly to produce or purchase on the market than any product candidate we are currently developing or that we
may seek to develop in the future. If approved, our product candidates will face competition from commercially available drugs as well
as drugs that are in the development pipelines of our competitors.
Established
pharmaceutical companies may invest heavily to accelerate discovery and development of or in-license novel compounds that could make
our product candidates less competitive. In addition, any new product that competes with an approved product must demonstrate compelling
advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commercially successful.
Accordingly, our competitors may succeed in obtaining patent protection, receiving FDA, EMA or other regulatory approval, or discovering,
developing and commercializing medicines before we do, which would have a material adverse impact on our business and ability to achieve
profitability from future sales of our approved product candidates, if any.
If
competitors develop and market products that are more effective, safer or less expensive than our product candidates or offer other advantages,
our commercial prospects will be limited.
Our
therapeutic immuno-oncology (IO) development programs face, and will continue to face, intense competition from pharmaceutical, biopharmaceutical
and biotechnology companies, as well as numerous academic and research institutions and governmental agencies engaged in drug discovery
activities or funding, both in the United States and abroad. Some of these competitors are pursuing the development of drugs and other
therapies that target the same diseases and conditions that we are targeting with our product candidates. According to Global Data, Thematic
Research: Immuno-Oncology (March 2021), as of December 2020, there are 4,822 industry-sponsored clinical trials for immuno-oncology with
422 drugs in development. Phase 2 trials constitute the majority of the IO pipeline, followed by early-stage molecules in Phase 1/2 and
Phase 1. For late-stage pipeline products, 484 clinical trials are ongoing in Phase 3, and 51 are in Phase 2/3 development. There are
currently 22 marketed immuno-oncology agents. Cancer vaccine products lead the category with 9 products followed by checkpoint modulators
with 8 approved drugs. The indications with the most marketed IO agents in the United States are metastatic melanoma and non-small cell
lung cancer, with 6 approved products each. The market value of bispecific antibodies, cancer vaccines, checkpoint modulators, cell therapies,
and oncolytic viruses globally has increased sharply in the past 10 years with nearly $29 billion in 2019 compared to $370 million in
2010 .
As
a general matter, we also face competition from many companies that are researching and developing cell therapies. Many of these companies
have financial and other resources substantially greater than ours. In addition, many of these competitors have significantly greater
experience in testing pharmaceutical and other therapeutic products, obtaining FDA and other regulatory approvals, and marketing and
selling. If we obtain regulatory approval for any of our product candidates, we also will be competing with respect to manufacturing
efficiency and marketing capabilities, areas in which we have limited or no commercial-scale experience. Mergers and acquisitions in
the pharmaceutical and biotechnology industries may result in even more resources’ being concentrated by our competitors. Competition
may increase further as a result of advances made in the commercial applicability of our technologies and greater availability of capital
for investment in these fields.
If
we are unable to keep up with rapid technological changes in our field or compete effectively, we will be unable to operate profitably.
We
are engaged in activities in the biotechnology field, which is characterized by extensive research efforts and rapid technological progress.
If we fail to anticipate or respond adequately to technological developments, our ability to operate profitably could suffer. Research
and discoveries by other biotechnology, pharmaceutical or other companies may render our technologies or potential products or services
uneconomical or result in products superior to those we develop. Similarly, any technologies, products or services we develop may not
be preferred to any existing or newly developed technologies, products or services.
We
may not be able to obtain third-party patient reimbursement or favorable product pricing, which would reduce our ability to operate profitably.
Our
ability to successfully commercialize certain of our proposed products in the human therapeutic field may depend to a significant degree
on patient reimbursement of the costs of such products and related treatments at acceptable levels from government authorities, private
health insurers and other organizations, such as health maintenance organizations. Reimbursement in the United States or foreign countries
may not be available for any products we may develop, and, if available, may be decreased in the future. Also, reimbursement amounts
may reduce the demand for, or the price of, our products with a consequent harm to our business. We cannot predict what additional regulation
or legislation relating to the healthcare industry or third-party coverage and reimbursement may be enacted in the future or what effect
such regulation or legislation may have on our business. If additional regulations are overly onerous or expensive, or if healthcare-related
legislation makes our business more expensive or burdensome than originally anticipated, we may be forced to significantly downsize our
business plans or completely abandon our business model.
We
may be subject to litigation that will be costly to defend or pursue and uncertain in its outcome.
Our
business may bring us into conflict with our licensees, licensors or others with whom we have contractual or other business relationships,
or with our competitors or others whose interests differ from ours. If we are unable to resolve those conflicts on terms that are satisfactory
to all parties, we may become involved in litigation brought by or against us. That litigation is likely to be expensive and may require
a significant amount of management’s time and attention, at the expense of other aspects of our business. The outcome of litigation
is always uncertain, and in some cases could include judgments against us that require us to pay damages, enjoin us from certain activities,
or otherwise affect our legal or contractual rights, which could have a significant adverse effect on our business.
We
are exposed to the risk of liability claims, for which we may not have adequate insurance.
Since
we participate in the pharmaceutical industry, we may be subject to liability claims by employees, customers, end users and third parties.
We intend to obtain proper insurance, however, there can be no assurance that any liability insurance we purchase will be adequate to
cover claims asserted against us or that we will be able to maintain such insurance in the future. We intend to adopt prudent risk-management
programs to reduce these risks and potential liabilities, however, we have not taken any steps to create these programs and have no estimate
as to the cost or time required to do so and there can be no assurance that such programs, if and when adopted, will fully protect us.
We may not be able to put risk management programs in place, or obtain insurance, if we are unable to retain the necessary expertise
and/or are unsuccessful in raising necessary capital in the future. Our failure to obtain appropriate insurance, or to adopt and implement
effective risk-management programs, as well as any adverse rulings in any legal matters, proceedings and other matters could have a material
adverse effect on our business.
Preclinical
and clinical trials are conducted during the development of potential products and other treatments to determine their safety and efficacy
for use by humans. Notwithstanding these efforts, when our treatments are introduced into the marketplace, unanticipated side effects
may become evident. Manufacturing, marketing, selling and testing our product candidates under development or to be acquired or licensed,
entails a risk of product liability claims. We could be subject to product liability claims if our product candidates, processes, or
products under development fail to perform as intended. Even unsuccessful claims could result in the expenditure of funds in litigation
and the diversion of management time and resources, and could damage our reputation and impair the marketability of our product candidates
and processes. While we plan to maintain liability insurance for product liability claims, we may not be able to obtain or maintain such
insurance at a commercially reasonable cost. If a successful claim were made against us, and we lacked insurance or the amount of insurance
were inadequate to cover the costs of defending against or paying such a claim or the damages payable by us, we would experience a material
adverse effect on our business, financial condition and results of operations.
We
could be subject to product liability lawsuits based on the use of our product candidates in clinical testing or, if obtained, following
marketing approval and commercialization. If product liability lawsuits are brought against us, we may incur substantial liabilities
and may be required to cease clinical testing or limit commercialization of our product candidates.
We
could be subject to product liability lawsuits if any product candidate we develop allegedly causes injury or is found to be otherwise
unsuitable for human use during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations
of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and
a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves
against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates,
if approved. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual
outcome, liability claims may result in:
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demand for our product candidates; |
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withdrawal
of clinical trial participants; |
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initiation
of investigations by regulators; |
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to defend the related litigation; |
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diversion of management’s time and our resources; |
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substantial
monetary awards to trial participants or patients; |
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product
recalls, withdrawals or labeling, marketing or promotional restrictions; |
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of revenues from product sales; and |
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inability to commercialize our product candidates. |
Our
inability to retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims
could prevent or inhibit the clinical testing and commercialization of products we develop. We may wish to obtain additional such insurance
covering studies or trials in other countries should we seek to expand those clinical trials or commence new clinical trials in other
jurisdictions or increase the number of patients in any clinical trials we may pursue. We also may determine that additional types and
amounts of coverage would be desirable at later stages of clinical development of our product candidates or upon commencing commercialization
of any product candidate that obtains required approvals. However, we may not be able to obtain any such additional insurance coverage
when needed on acceptable terms or at all. If we do not obtain or retain sufficient product liability insurance, we could be responsible
for some or all of the financial costs associated with a product liability claim relating to our preclinical and clinical development
activities, in the event that any such claim results in a court judgment or settlement in an amount or of a type that is not covered,
in whole or in part, by any insurance policies we may have or that is in excess of the limits of our insurance coverage. We may not have,
or be able to obtain, sufficient capital to pay any such amounts that may not be covered by our insurance policies.
We
rely on third parties to conduct preclinical and clinical trials of our product candidates. If these third parties do not successfully
carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize
our product candidates and our business could be substantially harmed.
We
rely, and expect to continue to rely, upon third-party CROs to execute our preclinical and clinical trials and to monitor and manage
data produced by and relating to those trials. However, we may not be able to establish arrangements with CROs when needed or on terms
that are acceptable to us, or at all, which could negatively affect our development efforts with respect to our drug product candidates
and materially harm our business, operations and prospects.
We
will have only limited control over the activities of the clinical research organization (CRO) we will engage to conduct our clinical
trials. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol,
legal, regulatory and scientific standards, and our reliance on any CRO does not relieve us of our regulatory responsibilities. Based
on our present expectations, we, our CROs and our clinical trial sites are required to comply with good clinical practices (GCPs), for
all our product candidates in clinical development. Regulatory authorities enforce GCPs through periodic inspections of trial sponsors,
principal investigators and trial sites. If we or any of our CROs fail to comply with applicable GCPs, the clinical data generated in
the applicable trial may be deemed unreliable and the FDA, EMA or comparable foreign regulatory authorities may require us to perform
additional clinical trials before approving a product candidate for marketing, which we may not have sufficient cash or other resources
to support and which would delay our ability to generate revenue from any sales of such product candidate. In addition, our clinical
trials are required to be conducted with product produced in compliance with current good manufacturing practice requirements, or cGMPs.
Our or our CROs’ failure to comply with those regulations may require us to repeat clinical trials, which would also require significant
cash expenditures and delay the regulatory approval process.
Agreements
governing relationships with CROs generally provide those CROs with certain rights to terminate a clinical trial under specified circumstances.
If a CRO that we have engaged terminates its relationship with us during the performance of a clinical trial, we would be forced to seek
an engagement with a substitute CRO, which we may not be able to do on a timely basis or on commercially reasonable terms, if at all,
and the applicable trial would experience delays or may not be completed. In addition, our CROs are not our employees, and except for
remedies available to us under any agreements we enter with them, we are unable to control whether or not they devote sufficient time
and resources to our clinical, nonclinical and preclinical programs. If CROs do not successfully carry out their contractual duties or
obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is
compromised due to a failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may
be extended, delayed or terminated and we may not be able to obtain regulatory approval for, or successfully commercialize, the affected
product candidates. As a result, our operations and the commercial prospects for the effected product candidates would be harmed, our
costs could increase and our ability to generate revenues could be delayed.
We
contract with third parties for the supply of product candidates for clinical testing and expect to contract with third parties for the
manufacturing of our product candidates for large-scale testing and commercial supply. This reliance on third parties increases the risk
that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost, which could
delay, prevent or impair our development or commercialization efforts.
We
anticipate continuing our engagement of third parties to provide our clinical supply as we advance our product candidates into and through
clinical development, and we depend on third parties to produce and maintain sufficient quantities of material to supply our clinical
trials. If these third parties do not produce and maintain adequate supplies of clinical material, our development efforts could be significantly
delayed, or could incur substantially higher costs. We expect in the future to use third parties for the manufacture of our product candidates
for clinical testing, as well as for commercial manufacture. We plan to enter into long-term supply agreements with several manufacturers
for commercial supplies. We may be unable to reach agreement on satisfactory terms with contract manufacturers to manufacture our product
candidates. Additionally, the facilities to manufacture our product candidates must be the subject of a satisfactory inspection before
the FDA or other regulatory authorities approve a marketing authorization for the product candidate manufactured at that facility. We
will depend on these third-party manufacturers for compliance with the FDA’s and international regulatory authority requirements
for the manufacture of our finished products. We do not control the manufacturing process of, and are completely dependent on, our contract
manufacturers for compliance with cGMPs. If our manufacturers cannot successfully manufacture material that conforms to our specifications
and the FDA and other regulatory authorities’ cGMP requirements, they will not be able to secure and/or maintain regulatory approval
for their manufacturing facilities. In addition, we have no control over the ability of our contract manufacturers to maintain adequate
quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve
these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find
alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market
our product candidates, if approved, and may subject us to recalls or enforcement action for products already on the market.
If
any of our product candidates are approved and contract manufacturers fail to deliver the required commercial quantities of finished
product on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement manufacturers capable
of production at a substantially equivalent cost, in substantially equivalent volumes and quality and on a timely basis, we would likely
be unable to meet demand for our products and could lose potential revenue. It may take several years to establish an alternative source
of supply for our product candidates and to have any such new source approved by the FDA or any other relevant regulatory authorities.
We
currently have no marketing and sales force. If we are unable to establish effective marketing and sales capabilities or enter into agreements
with third parties to market and sell our product candidates, we may not be able to effectively market and sell our product candidates,
if approved, or generate product revenues.
We
currently do not have a marketing or sales team for the marketing, sales and distribution of any of our product candidates that are able
to obtain regulatory approval. To commercialize any product candidates, we must build on a territory-by-territory basis marketing, sales,
distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services, and
we may not be successful in doing so. If our product candidates receive regulatory approval, we intend to establish an internal sales
and marketing team with technical expertise and supporting distribution capabilities to commercialize our product candidates, which will
be expensive and time consuming and will require significant attention of our executive officers to manage. Any failure or delay in the
development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of any of our
products that we obtain approval to market. With respect to the commercialization of all or certain of our product candidates, we may
choose to collaborate, either globally or on a territory-by-territory basis, with third parties that have direct sales forces and established
distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution
systems. If we are unable to enter into such arrangements when needed on acceptable terms or at all, we may not be able to successfully
commercialize any of our product candidates that receive regulatory approval or any such commercialization may experience delays or limitations.
If we are not successful in commercializing our product candidates, either on our own or through collaborations with one or more third
parties, our future product revenue will suffer and we may incur significant additional losses.
Our
business and operations would suffer in the event of system failures.
Despite
the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable to
damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While
we have not experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions
in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical trial
data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and we may incur
substantial costs to attempt to recover or reproduce the data. If any disruption or security breach resulted in a loss of or damage to
our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and/or the
further development of our product candidates could be delayed.
Our
operations are vulnerable to interruption by natural disasters, power loss, terrorist activity and other events beyond our control, the
occurrence of which could materially harm our business.
Businesses
located in California have, in the past, been subject to electrical blackouts as a result of a shortage of available electrical power,
and any future blackouts could disrupt our operations. We are vulnerable to a major earthquake, wildfire and other natural disasters,
and we have not undertaken a systematic analysis of the potential consequences to our business as a result of any such natural disaster
and do not have an applicable recovery plan in place. We do not carry any business interruption insurance that would compensate us for
actual losses from interruption of our business that may occur, and any losses or damages incurred by us could cause our business to
materially suffer.
Epidemic
or pandemic outbreaks such as COVID-19 (coronavirus), natural disasters, whether or not caused by climate change, unusual weather conditions,
terrorist acts and political events, could disrupt business and result in halting our clinical trials and otherwise adversely affect
our financial performance.
The
occurrence of one or more natural disasters, such as tornadoes, hurricanes, fires, floods and earthquakes, unusual weather conditions,
epidemic outbreaks, terrorist attacks or disruptive political events in certain regions where our operations are located could adversely
affect our business. Epidemic or pandemic outbreaks, such as COVID-19 (coronavirus) could impact our management and our ability to conduct
clinical trials. This also may affect the market conditions that would limit our ability to raise additional capital. This could have
a sustained material adverse effect on our business, financial condition and results of operations.
Risks
Related to Our Common Stock
There
has been a limited public market for our common stock , and we do not know whether one will develop to provide you
adequate liquidity. Furthermore, the trading price for our common stock, should an active trading market develop, may be volatile and
could be subject to wide fluctuations in per-share price.
Our
common stock is listed for trading on the Nasdaq Capital Market under the trading symbol “GTBP”; historically, however, there
has been a limited public market for our common stock. We cannot assure you that an active trading market for our common stock will develop
or be sustained. The liquidity of any market for the shares of our common stock will depend on a number of factors, including:
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number of stockholders; |
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our
operating performance and financial condition; |
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the
market for similar securities; |
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the
extent of coverage of us by securities or industry analysts; and |
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the
interest of securities dealers in making a market in the shares of our common stock. |
Even
if an active trading market develops, the market price for our common stock may be highly volatile and could be subject to wide fluctuations.
In addition, the price of shares of our common stock could decline significantly if our future operating results fail to meet or exceed
the expectations of market analysts and investors and actual or anticipated variations in our quarterly operating results could negatively
affect our share price.
Other
factors may also contribute to volatility of the price of our common stock and could subject our common stock to wide fluctuations. These
include, but are not limited to:
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developments
in the financial markets and worldwide or regional economies; |
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announcements
of innovations or new products or services by us or our competitors; |
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announcements
by the government relating to regulations that govern our industry; |
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significant
sales of our common stock or other securities in the open market; |
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variations
in interest rates; |
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changes
in the market valuations of other comparable companies; and |
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changes
in accounting principles. |
We may not be able to maintain compliance with
the continued listing requirements of The Nasdaq Capital Market.
Our common stock is listed on The Nasdaq Capital Market. In order to maintain
that listing, we must satisfy minimum financial and other requirements including, without limitation, a requirement that our closing bid
price be at least $1.00 per share. On February 22, 2023, we received a deficiency letter from The
Nasdaq Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying us
that, for the last 30 consecutive business days, the closing bid price for our common stock had been below the minimum $1.00 per share
required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (“Rule 5550(a)(2)”).
The Nasdaq deficiency letter had no immediate effect on the listing of our common stock. In
accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been given 180 calendar days, or until August 21, 2023, to regain compliance
with Rule 5550(a)(2). If at any time before August 21, 2023, the bid price of our common stock closes at $1.00 per share or more for a
minimum of 10 consecutive business days, the Staff will provide written confirmation that we have achieved compliance and the matter will
be closed. If we do not regain compliance with Rule 5550(a)(2) by August 21, 2023, we may be afforded a second 180 calendar day period
to regain compliance. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares
and all other initial listing standards for The Nasdaq Capital Market, except for the minimum bid price requirement. In addition, we would
be required to provide written notice to Nasdaq of our intent to cure the deficiency during the second compliance period. If we
fail to continue to meet all applicable continued listing requirements for The Nasdaq Capital Market in the future and Nasdaq determines
to delist our common stock, the delisting could adversely affect the market liquidity of our common stock, and our ability to obtain financing
to repay debt and fund our operations.
Our
outstanding warrants may affect the market price of our common stock.
As
of December 31, 2022, we had approximately 32.7 million shares of common stock issued and outstanding and warrants outstanding for the
purchase of up to 2,337,274 additional shares of common stock at an average exercise price of $5.30 per share, all of which are exercisable
as of the date of this Annual Report (subject to certain beneficial ownership limitations). The amount of common stock reserved for issuance
may have an adverse impact on our ability to raise capital and may affect the price and liquidity of our common stock in the public market.
In addition, the issuance of these shares of common stock will have a dilutive effect on current stockholders’ ownership.
Because
our common stock may be deemed a “penny” stock, an investment in our common stock should be considered high-risk and subject
to marketability restrictions.
Historically,
the trading price of our common stock has been $5.00 per share or lower, and deemed a penny stock, as defined in Rule 3a51-1 under the
Exchange Act, and subject to the penny stock rules of the Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker–dealers,
before effecting transactions in any penny stock, to:
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to the customer, and obtain a written receipt for, a disclosure document; |
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certain price information about the stock; |
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disclose
the amount of compensation received by the broker–dealer or any associated person of the broker–dealer; |
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monthly statements to customers with market and price information about the penny stock; and |
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in
some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer
with information specified in the rules. |
Consequently,
the penny stock rules may restrict the ability or willingness of broker–dealers to sell the common stock and may affect the ability
of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These
additional procedures could also limit our ability to raise additional capital
in
the future.
Financial
Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and
sell our common stock, which could depress the price of our common stock.
In
addition to the “penny stock” rules described above, FINRA has adopted rules that require a broker-dealer to have reasonable
grounds for believing that the investment is suitable for that customer before recommending an investment to a customer. Prior to recommending
speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these
rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some
customers. Thus, the FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock,
which may limit your ability to buy and sell our shares of common stock, have an adverse effect on the market for our shares of common
stock, and thereby depress our price per share of common stock.
If
securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion
regarding our stock, our stock price and trading volume could decline.
The
trading market for our common stock may be influenced by the research and reports that industry or securities analysts publish about
us or our business. We currently have research coverage by one securities analyst, and we may never obtain research coverage by additional
analysts. If no or few securities or industry analysts commence coverage of us, the trading price for our common stock may be negatively
affected. In the event that we receive additional securities or industry analyst coverage, if any of the analysts who cover us issue
an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our operating
results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage
of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock
price or trading volume to decline.
Anti-takeover
provisions may limit the ability of another party to acquire us, which could cause our stock price to decline.
Delaware
law and our charter, bylaws, and other governing documents contain provisions that could discourage, delay or prevent a third party from
acquiring us, even if doing so may be beneficial to our stockholders, which could cause our stock price to decline. In addition, these
provisions could limit the price investors would be willing to pay in the future for shares of our common stock.
We
do not currently or for the foreseeable future intend to pay dividends on our common stock.
We
have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the
development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable
future. As a result, any return on your investment in our common stock will be limited to the appreciation in the price of our common
stock, if any.