Item 1A.
Risk Factors
CohBar
operates in an environment that involves a number of risks and uncertainties. The risks and uncertainties described below are
not the only risks and uncertainties that we face. Additional risks and uncertainties that presently are not considered material
or are not known to us, and therefore are not mentioned herein, may impair our business operations. If any of the risks described
below actually occur, our business, operating results and financial position could be adversely affected.
We
will need additional funding and may be unable to raise additional capital when needed, which would force us to delay, reduce
or eliminate our research and development activities.
Our
operations to date have consumed substantial amounts of cash, and we expect our capital and operating expenditures to continue
to increase in the next few years. We may not be able to generate significant revenues for several years, if at all. Until we
can generate significant revenues, if ever, we expect to satisfy our future cash needs through equity or debt financing, and/or
through any future development collaborations with commercial partners. We cannot be certain that additional funding will be available
on acceptable terms, or at all. We have no committed source of additional capital and, in light of our current market capitalization,
it may be more difficult to raise the amount of capital needed to support planned development of our product candidates. In addition,
the ongoing COVID-19 pandemic has led to, and may continue to create, global economic disruption, uncertainty and volatility in
the global financial markets. These effects may make it increasingly difficult to raise additional capital. If we are unable to
raise additional capital in sufficient amounts or on terms acceptable to us, we may be required to significantly delay, reduce
the scope of, or eliminate one or more of our research and development activities. If we are unable to secure additional capital,
a Phase 2 clinical trial of CB4211 will be delayed or discontinued. We could also be required to seek collaborators for our product
candidate at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available
or relinquish or license on unfavorable terms our rights to such product candidates.
The
outbreak of the novel strain of coronavirus, SARS-CoV-2, which causes COVID-19, could adversely impact our business, including
our clinical trials and preclinical studies.
Public
health crises such as pandemics or similar outbreaks could adversely impact our business. In December 2019, a novel strain
of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019 or COVID-19, surfaced in Wuhan, China. Since then, COVID-19 has
spread to multiple countries, including the United States. In response to the spread of COVID-19, the Company has asked employees
to work from home and has temporarily closed its internal research facility. We continue to monitor the impact of COVID-19 on
ongoing activities at our external research and development partner sites.
Timely
enrollment in our clinical trials is dependent upon global clinical trial sites which may be adversely affected by global health
matters, such as pandemics. We are currently conducting a clinical trial for our lead product candidate in the United States,
which is currently, and may continue to be, affected by COVID-19. For example, enrollment for our CB4211 Phase 1b study has been
delayed due to suspension of study activities at some of our clinical sites, and we cannot provide any assurance that we will
be able to resume enrollment in the study in a timely manner prior to the exhaustion of our existing capital resources, or at
all. The continued delay of enrollment for our CB4211 Phase 1b study could increase our development costs, delay or prevent the
availability of topline data expected to be available from the trial, delay our product development and regulatory submission
process, result in the termination of the trial or make it difficult to raise additional capital.
As
a result of the COVID-19 outbreak, or similar pandemics, we may experience disruptions that could severely impact our
business, clinical trials and preclinical studies, including:
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delays
or difficulties in enrolling patients in our clinical trials;
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delays
or difficulties in clinical site initiation, including difficulties in recruiting clinical
site investigators and clinical site staff;
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delays
or disruptions in non-clinical experiments and investigational new drug application-enabling
good laboratory practice standard toxicology studies due to unforeseen circumstances
in the supply chain;
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increased
rates of patients withdrawing from our clinical trials following enrollment as a result
of contracting COVID-19, being forced to quarantine or not accepting home health
visits;
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diversion
of healthcare resources away from the conduct of clinical trials, including the diversion
of hospitals serving as our clinical trial sites and hospital staff supporting the conduct
of our clinical trials;
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interruption
of key clinical trial activities, such as clinical trial site data monitoring, due to
limitations on travel imposed or recommended by federal or state governments, employers
and others or interruption of clinical trial subject visits and study procedures (particularly
any procedures that may be deemed non-essential), which may impact the integrity
of subject data and clinical study endpoints;
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interruption
or delays in the operations of the U.S. Food and Drug Administration and comparable foreign
regulatory agencies, which may impact approval timelines;
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limitations
on employee resources that would otherwise be focused on the conduct of our preclinical
studies and clinical trials, including because of sickness of employees or their families,
the desire of employees to avoid contact with large groups of people, an increased reliance
on working from home or mass transit disruptions;
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disruptions
in the supply chain and the manufacture or shipment of both drug substance and finished
drug product for our product candidates for preclinical testing and clinical trials
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interruption
of, or delays in receiving, supplies of our product candidates from our contract manufacturing
organizations due to staffing shortages, production slowdowns or stoppages and disruptions
in delivery systems; and
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reduced
ability to engage with the medical and investor communities due to the cancellation of
conferences scheduled throughout the year.
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These
and other factors arising from the COVID-19 pandemic could worsen in locations that are already afflicted with COVID-19, could
continue to spread to additional locations, or could return to locations where the pandemic has been partially contained, each
of which could further adversely impact our ability to conduct clinical trials and our business generally, and could have a material
adverse impact on our operations and financial condition and results.
In
addition, the trading prices for our common stock and other biopharmaceutical companies have been highly volatile as a result
of the COVID-19 pandemic and the resulting impact on economic activity. As a result, we may face difficulties raising
capital through sales of our common stock or other equity-linked securities, and any such sales may be on unfavorable terms to
us and potentially dilutive to existing stockholders.
The COVID-19 pandemic
continues to rapidly evolve. The extent to which the outbreak may impact our business, clinical trials and preclinical studies
will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic
spread of COVID-19, the duration of the outbreak, travel restrictions and actions to contain the outbreak or treat its impact,
such as social distancing and quarantines or lock-downs in the United States and other countries, business closures or business
disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.
We
have had a history of losses and no revenue.
We
have generated substantial accumulated losses since our inception. We have not generated any revenues from our operations to date
and do not expect to generate any revenue in the near future. As a result, our management expects the business to continue to
experience negative cash flow for the foreseeable future. We can offer no assurance that we will ever operate profitably or that
we will generate positive cash flow in the future.
Until
we can generate significant revenues, if ever, we expect to satisfy our future cash needs through equity or debt financing. We
will need to raise additional funds, and such funds may not be available on commercially acceptable terms, if at all. If we are
unable to raise funds on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities,
or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and
results of operations. In the event we are not able to continue operations, investors will likely suffer a complete loss of their
investments in our securities.
We
are an early-stage biotechnology company and may never be able to successfully develop marketable products or generate any revenue.
We have a very limited relevant operating history upon which an evaluation of our performance and prospects can be made. There
is no assurance that our future operations will result in profits. If we cannot generate sufficient revenues, we may suspend or
cease operations.
We
are an early-stage company. Our operations to date have been limited to organizing and staffing our Company, business planning,
raising capital, identifying MDPs for further research, developing our intellectual property portfolio, performing research on
identified MDPs and advancing our lead MBT candidate into and through clinical studies. We have not generated any revenues to
date. All of our MBTs are in the concept, research or early clinical stages. Moreover, we cannot be certain that our research
and development efforts will be successful or, if successful, that our MBTs will ever be approved by the United States Food and
Drug Administration (“FDA”). Typically, it takes 10-12 years to develop one new medicine from the time it is discovered
to when it is available for treating patients, and longer timeframes are not uncommon. Even if approved, our products may not
generate commercial revenues. We have no relevant operating history upon which an evaluation of our performance and prospects
can be made. We are subject to all of the business risks associated with a new enterprise, including, but not limited to, risks
of unforeseen capital requirements, failure of potential drug candidates either in research, preclinical testing or in clinical
trials, failure to establish business relationships and competitive disadvantages against other companies. If we fail to become
profitable, we may be forced to suspend or cease operations.
If
we fail to demonstrate efficacy or safety in our research and clinical trials, our future business prospects, financial condition
and operating results will be materially adversely affected.
The
success of our research and development efforts will greatly depend on our ability to demonstrate efficacy of MBTs in non-clinical
studies, as well as in clinical trials. Non-clinical studies involve testing potential MBTs in appropriate non-human disease models
to demonstrate efficacy and safety. Regulatory agencies evaluate these data carefully before they will approve clinical testing
in humans. If certain non-clinical data reveals potential safety issues or the results are inconsistent with an expectation of
the potential drug’s efficacy in humans, the program may be discontinued or the regulatory agencies may require additional
testing before allowing human clinical trials. This additional testing will increase program expenses and extend timelines. We
may decide to suspend further testing on our potential drugs if, in the judgment of our management and advisors, the non-clinical
test results do not support further development.
Moreover,
success in research, preclinical testing and early clinical trials does not ensure that later clinical trials will be successful,
and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials and non-clinical
testing. The clinical trial process may fail to demonstrate that our potential drug candidates are safe for humans and effective
for indicated uses. This failure would cause us to abandon a drug candidate and may delay development of other potential drug
candidates. Any delay in, or termination of, our non-clinical testing or clinical trials will delay the filing of an investigational
new drug application and new drug application with the FDA or the equivalent applications with pharmaceutical regulatory authorities
outside the United States and, ultimately, our ability to commercialize our potential drugs and generate product revenues. In
addition, we expect that our early clinical trials will involve small patient populations. Because of the small sample size, the
results of these early clinical trials may not be indicative of future results.
If
our current and any future clinical trials are delayed, suspended or terminated, we may be unable to develop our product candidates
on a timely basis, which would adversely affect our ability to obtain regulatory approvals, increase our development costs and
delay or prevent commercialization of any approved products.
We
cannot predict whether we will encounter problems with our ongoing, planned or any future clinical trials that will cause regulatory
agencies, institutional review boards, or us to suspend or delay a trial. For example, in November 2018, the Company announced
the temporary suspension of the Phase 1 clinical trial for CB4211, our lead MBT candidate, in order to address injection site
reactions and we resumed the trial in June 2019. In November 2019, we announced the completion of the Phase 1a portion of the
clinical trial and the commencement of the recruiting phase of the final Phase 1b stage of the study. However, in March 2020,
we announced anticipated delays in the completion of our Phase 1b study for NASH and obesity. The delays were caused by a pause
by some of our clinical research organization partners in all of their activities related to the study in response to recent developments
relating to the COVID-19 pandemic. We announced the resumption of our Phase 1b study in July 2020. In response to a routine annual development safety update report (the “DSUR”) we submitted to the FDA on August
6, 2020, the FDA has requested additional details regarding injection site reaction safety data presented in the DSUR. We
are preparing to provide such details to the FDA, and the FDA’s review of such information could result in the delay
or suspension of our Phase 1b study to address any concerns. Clinical trials and clinical
data collection protocols can be delayed for a variety of reasons, including:
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unanticipated
consequences of the formulation of the product candidate requiring us to pause the trial to investigate alternative formulations;
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the
occurrence of unacceptable drug-related side effects or adverse events experienced by
participants in our clinical trials;
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discussions
with the FDA regarding the scope or design of our clinical trials and clinical data collection
protocols;
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delays
or the inability to obtain required approvals from institutional review boards or other
responsible entities at clinical sites selected for participation in our existing or
future clinical trials;
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adverse
findings in clinical or nonclinical studies related to the safety of our product candidates
in humans;
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the
amendment of clinical trial or data collection protocols to reflect changes in regulatory
requirements and guidance or other reasons, as well as subsequent re-examination of amendments
of clinical trial or data collection protocols by institutional review boards or other
responsible bodies; and
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the
need to repeat or conduct additional clinical trials as a result of inconclusive or negative
results, failure to replicate positive early clinical data in subsequent clinical trials,
failure to deliver an efficacious dose of a product candidate, poorly executed testing,
a failure of a clinical site to adhere to the clinical protocol, an unacceptable study
design or other problems.
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In
addition, a clinical trial or development program may be suspended or terminated by us, institutional review boards, the FDA or
other responsible bodies due to a number of factors, including:
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failure
to conduct the clinical trial in accordance with regulatory requirements or our clinical
protocols;
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inspection
of the clinical trial operations or trial sites by the FDA or other regulatory authorities
resulting in the imposition of a clinical hold;
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inability
to resume a suspended trial in a timely manner (which we cannot predict with certainty),
if at all;
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unforeseen
safety issues or any determination that a trial presents unacceptable health risks;
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inability
to deliver an efficacious dose of a product candidate; and
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lack
of adequate funding to continue the clinical trial.
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If
the results of our clinical trials are not available when we expect or if we encounter any delay in the analysis of data from
our clinical trials, we may be unable to conduct additional clinical trials on the schedule we anticipate. Many of the factors
that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of
regulatory approval of a product candidate. Any delays in completing a clinical trial could increase our development costs, delay
or prevent the availability of topline data expected to be available from the trial, delay our product development and regulatory
submission process or make it difficult to raise additional capital.
Interim
and preliminary or topline data from our clinical trials that we announce or publish from time to time may change as more patient
data become available and are subject to audit and verification procedures that could result in material changes in the final
data.
From
time to time, we may publish interim topline or preliminary data from our clinical trials. Interim data from clinical trials that
we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment
continues and more patient data become available. Preliminary or topline data also remain subject to audit and verification procedures
that may result in the final data being materially different from the preliminary or topline data we previously published. As
a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between
interim or preliminary or topline data and final data could significantly harm our reputation and business prospects.
If
we do not achieve our projected development goals in the time frames we announce and expect, the commercialization of our products
may be delayed and, as a result, our stock price may decline.
From time to
time, we estimate the timing of the anticipated accomplishment of various scientific, clinical, regulatory and other product development
goals, which we sometimes refer to as milestones. These milestones may include the commencement or completion of scientific studies
and clinical trials and the submission of regulatory filings. From time to time, we may publicly announce the expected timing
of some of these milestones. All of these milestones are and will be based on numerous assumptions, including positive clinical
and preclinical results, the addition of a corporate partner for the CB4211 program, and sufficient funding from partnering and
general fundraising. The actual timing of these milestones can vary dramatically compared to our estimates, in some cases for
reasons beyond our control. If we do not meet these milestones as publicly announced, or at all, our revenue may be lower than
expected, the commercialization of our products may be delayed or never achieved and, as a result, our stock price may decline.
Significant
disruptions of information technology systems or security breaches could adversely affect our business.
We are increasingly
dependent upon information technology systems, infrastructure and data to operate our business. In the ordinary course of business,
we collect, store and transmit large amounts of confidential information (including, among other things, trade secrets or other
intellectual property, proprietary business information and personal information). It is critical that we do so in a secure manner
to maintain the confidentiality and integrity of such confidential information. We also have outsourced elements of our operations
to third parties, and as a result we manage a number of third-party vendors who may or could have access to our confidential information.
Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity,
and they are being conducted by increasingly sophisticated and organized groups and individuals with a wide range of motives and
expertise. The size and complexity of our information technology systems, and those of third-party vendors with whom we contract,
and the large amounts of confidential information stored on those systems, make such systems vulnerable to service interruptions
or to security breaches from inadvertent or intentional actions by our employees, third-party vendors, and/or business partners,
or from cyber-attacks by malicious third parties. Cyber-attacks could include the deployment of harmful malware, ransomware, denial-of-service
attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability
of information.
Significant disruptions
of our information technology systems, or those of our third-party vendors, or security breaches could adversely affect our business
operations and/or result in the loss, misappropriation and/or unauthorized access, use or disclosure of, or the prevention of access
to, confidential information, including, among other things, trade secrets or other intellectual property, proprietary business
information and personal information, and could result in financial, legal, business and reputational harm to us.
Any
failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with
our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security
breaches that result in the unauthorized access, release or transfer of sensitive information, including personally identifiable
information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements
against us, could cause third parties to lose trust in us or could result in claims by third parties asserting that we have breached
our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation,
business, financial condition or results of operations. Moreover, data security incidents and other security breaches can be difficult
to detect, and any delay in identifying them may lead to increased harm. While we have implemented data security measures intended
to protect our information technology systems and infrastructure, there can be no assurance that such measures will successfully
prevent service interruptions or data security incidents.
Our
future success depends on key members of our scientific team and our ability to attract, retain and motivate qualified personnel.
Recruiting
and retaining qualified senior management and scientific, clinical, and operations management and personnel will be critical to
our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous
pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific
and clinical personnel from universities and research institutions.
We
are highly dependent on our key management and scientific teams, including our Chief Executive Officer, Chief Financial Officer
and Chief Scientific Officer who are all employed “at will,” meaning they may terminate the employment relationship
at any time. We do not maintain “key person” insurance for any of the key members of our team. The loss of the services
of any of these persons could impede the achievement of our research, development and commercialization objectives.
Our
consultants and advisors, including our founders, may be employed by employers other than us and may have commitments under consulting
or advisory contracts with other entities that may limit their availability to us. Our founders, Dr. Pinchas Cohen and Dr. Nir
Barzilai, are members of our board of directors and provide oversight and guidance on scientific, research and development topics
in that capacity. In addition, we rely on other consultants and advisors from time to time, including drug discovery and development
advisors, to assist us in formulating our research and development strategy. Agreements with these advisors typically may be terminated
by either party, for any reason, on relatively short notice.
We
may seek to establish development and commercialization collaborations, and, if we are not able to establish them on commercially
reasonable terms, we may have to alter our development and commercialization plans.
Our
potential drug development programs and the potential commercialization of our drug candidates will require substantial additional
cash to fund expenses. We may decide to collaborate with pharmaceutical or biotechnology companies in connection with the development
or commercialization of our potential drug candidates.
We
face significant competition in seeking appropriate collaborators. Whether we reach a definitive collaboration agreement will
depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions
of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include
the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the
United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering
such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership
of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry
and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar
disease indications on which to collaborate, and whether such alternative collaboration project could be more attractive than
one with us for our product candidate.
There
are a limited number of large pharmaceutical companies with whom we could potentially collaborate, and collaborations are complex
and time-consuming to negotiate and document. We may not be able to negotiate collaborations on a timely basis, on acceptable
terms or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking
to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential
commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development
or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization
activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all.
If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate
product revenue.
We
may not be successful in our efforts to identify or discover potential drug development candidates.
A
key element of our strategy is to identify and test MDPs that play a role in cellular processes underlying our targeted disease
indications. A significant portion of the research that we are conducting involves emerging scientific knowledge and drug discovery
methods. Our drug discovery efforts may not be successful in identifying MBTs that are useful in treating disease. Our research
programs may initially show promise in identifying potential drug development candidates, yet fail to yield candidates for preclinical
and clinical development for a number of reasons, including:
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the
research methodology used may not be successful in identifying appropriate potential drug development candidates; or
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potential
drug development candidates may, on further study, be shown not to be effective in humans,
or to have unacceptable toxicities, harmful side effects or other characteristics that
indicate that they are unlikely to be medicines that will receive marketing approval
and achieve market acceptance.
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Research
programs to identify new product candidates require substantial technical, financial and human resources. We may choose to focus
our efforts and resources on a potential product candidate that ultimately proves to be unsuccessful. As a result, we may forego
or delay pursuit of opportunities with other product candidates or for other disease indications that later prove to have greater
commercial potential. Our resource allocation decisions may cause us to fail to timely capitalize on viable commercial products
or profitable market opportunities. If we are unable to advance our lead MBT candidate through clinical development or identify
other MBTs that are suitable for preclinical and clinical development, we will not be able to obtain product revenues in future
periods, which likely would result in significant harm to our financial position and negatively affect our ability to continue
our operations.
Our
research and development plans will require substantial additional future funding which could impact our operational and financial
condition. Without the required additional funds, we will likely cease operations.
It
will take several years before we are able to develop potentially marketable products, if at all. Our research and development
plans will require substantial additional capital to:
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conduct
research, preclinical testing and human studies;
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manufacture
any future drug development candidate or product at pilot and commercial scale; and
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establish
and develop quality control, regulatory, and administrative capabilities to support these
programs.
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Our
future operating and capital needs will depend on many factors, including:
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the
pace of scientific progress in our research programs and the magnitude of these programs;
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the
scope and results of preclinical testing and human studies;
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the
time and costs involved in obtaining regulatory approvals;
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the
time and costs involved in preparing, filing, prosecuting, securing, maintaining and
enforcing intellectual property rights;
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competing
technological and market developments;
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our
ability to establish additional collaborations;
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changes
in any future collaborations;
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the
cost of manufacturing our drug products; and
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the
effectiveness of efforts to commercialize and market our products.
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We
base our outlook regarding the need for funds on many uncertain variables. Such uncertainties include the success of our research
and development initiatives, regulatory approvals, the timing of events outside our direct control such as negotiations with potential
strategic partners, and other factors. Any of these uncertain events can significantly change our cash requirements as they determine
such one-time events as the receipt or payment of major milestones and other payments.
Additional
funds will be required to support our operations, and if we are unable to obtain them on favorable terms, we may be required to
cease or reduce further research and development of our drug product programs, sell or abandon some or all of our intellectual
property, merge with another entity or cease operations.
Even
if we are able to develop our potential drugs, we may not be able to obtain regulatory approval, or if approved, we may not be
able to generate significant revenues or successfully commercialize our products, which will adversely affect our financial results
and financial condition, and we will have to delay or terminate some or all of our research and development plans, which may force
us to cease operations.
All
our potential drug candidates will require extensive additional research and development, including preclinical testing and clinical
trials, as well as regulatory approvals, before we can market them. We cannot predict if or when any potential drug candidate
we intend to develop will be approved for marketing. There are many reasons that we may fail in our efforts to develop our potential
drug candidates. These include:
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the
possibility that preclinical testing or clinical trials may show that our potential drugs
are ineffective and/or cause harmful side effects or toxicities;
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our
potential drugs may prove to be too expensive to manufacture or administer to patients;
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our
potential drugs may fail to receive necessary regulatory approvals from the FDA or foreign
regulatory authorities in a timely manner, or at all;
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even
if our potential drugs are approved, we may not be able to produce them in commercial
quantities or at reasonable costs;
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even
if our potential drugs are approved, they may not achieve commercial acceptance;
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regulatory
or governmental authorities may apply restrictions to any of our potential drugs, which
could adversely affect their commercial success; and
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the
proprietary rights of other parties may prevent us or our potential collaborative partners
from marketing our potential drugs.
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If
we fail to develop our potential drug candidates, our financial results and financial condition will be adversely affected, we
will have to delay or terminate some or all of our research and development plans and may be forced to cease operations.
If
we do not maintain the support of qualified scientific collaborators, our revenue, growth and profitability will likely be limited,
which would have a material adverse effect on our business.
We
will need to maintain our existing relationships with leading scientists and/or establish new relationships with scientific collaborators.
We believe that such relationships are pivotal to establishing products using our technologies as a standard of care for various
disease indications. There is no assurance that our founders, scientific advisors or research partners will continue to work with
us or that we will be able to attract additional research partners. If we are not able to establish scientific relationships to
assist in our research and development, we may not be able to successfully develop our potential drug candidates. If this happens,
our business will be adversely affected.
We
expect to rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing. These
third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research
or preclinical testing.
We
currently rely on third parties to conduct some aspects of our research and expect to continue to rely on third parties to conduct
additional aspects of our research and preclinical testing, as well as any future clinical trials. Any of these third parties
may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it would delay our product
research and development activities.
Our
reliance on these third parties for research and development activities will reduce our control over these activities but will
not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials
is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to
comply with standards, commonly referred to as Good Clinical Practices, for conducting, recording and reporting the results of
clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality
of trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed
clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result
in fines, adverse publicity and civil and criminal sanctions.
Furthermore,
these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties
do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with
regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals
for our drug candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our medicines.
We
currently rely, and expect to continue to rely, on other third parties to store and distribute drug supplies for our clinical
trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our
drug candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue.
We
contract with third parties for the manufacture of our peptide materials for research and preclinical testing and expect to continue
to do so for any future product candidate advanced to clinical trials and commercialization. This reliance on third parties increases
the risk that we will not have sufficient quantities of our research peptide materials, product candidates or medicines, or that
such supply will not be available to us at an acceptable cost, which could delay, prevent or impair our research, development
or commercialization efforts.
We
do not have manufacturing facilities adequate to produce our research peptide materials or supplies of any future product candidate.
We currently rely, and expect to continue to rely, on third-party manufacturers for the manufacture of our peptide materials,
our current and any future product candidates for preclinical and clinical testing, and for commercial supply of any of these
product candidates for which we or future collaborators obtain marketing approval. We do not have long term supply agreements
with any third-party manufacturers, and we purchase our research peptides on a purchase order basis.
We
may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able
to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:
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reliance
on the third party for producing the peptide materials or product candidates according
to the detailed specifications;
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reliance
on the third party for regulatory compliance and quality assurance;
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the
possible breach of the manufacturing agreement by the third party;
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the
possible termination or nonrenewal of the agreement by the third party at a time that
is costly or inconvenient for us; and
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reliance
on the third party for regulatory compliance, quality assurance, and safety and pharmacovigilance
reporting.
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Third-party
manufacturers may not be able to comply with current good manufacturing practices (“cGMP”), regulations or similar
regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with
applicable regulations could result in us being subject to sanctions, including fines, injunctions, civil penalties, delays, suspension
or withdrawal of approvals, license revocation, seizures or recalls of product candidates or medicines, operating restrictions
and criminal prosecutions, any of which could significantly and adversely affect supplies of our medicines and harm our business
and results of operations.
Any
drug candidate that we may develop may compete with other drug candidates and products for access to manufacturing facilities.
There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for
us.
Our
current and anticipated future dependence upon others for the manufacture of our investigational materials or future product candidates
or medicines may adversely affect our future profit margins and our ability to commercialize any medicines that receive marketing
approval on a timely and competitive basis.
We
may not be able to develop drug candidates, market or generate sales of our products to the extent anticipated. Our business may
fail, and investors could lose all of their investment in our Company.
Assuming
that we are successful in developing our potential drug candidates and receiving regulatory clearances to market our potential
products, our ability to successfully penetrate the market and generate sales of those products may be limited by a number of
factors, including the following:
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if
our competitors receive regulatory approvals for and begin marketing similar products
in the United States, the European Union (“EU”), Japan and other territories
before we do, greater awareness of their products as compared to ours will cause our
competitive position to suffer;
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information
from our competitors or the academic community indicating that current products or new
products are more effective or offer compelling other benefits than our future products
could impede our market penetration or decrease our future market share; and
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the
pricing and reimbursement environment for our future products, as well as pricing and
reimbursement decisions by our competitors and by payers, may have an effect on our revenues.
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If
any of these occur, our business could be adversely affected.
Any
product candidate we are able to develop and commercialize would compete in the marketplace with existing therapies and new therapies
that may become available in the future. These competitive therapies may be more effective, less costly, more easily administered
or offer other advantages over any product we seek to market.
Although
there are no currently approved therapies for the treatment of NAFLD and NASH, there are numerous therapies in development, including
those in clinical trials that are more advanced than ours. Additionally, there are numerous therapies currently marketed to treat
diabetes, cancer, Alzheimer’s disease and other diseases for which our potential product candidates may be indicated. For
example, if we develop an approved treatment for T2D, it would compete with several classes of drugs for T2D that are approved
to improve glucose control. These include the insulin sensitizers pioglitazone (Actos) and rosiglitazone (Avandia), which are
administered as oral once daily pills, and metformin, which is sometimes called an insulin sensitizer and is available as a generic
once daily formulation. If we develop an approved treatment for Alzheimer’s disease, it would compete with approved therapies
such as donepezil (Aricept), galantamine (Razadyne), memantine (Namenda), rivastigmine (Exelon) and tacrine (Cognex). These therapies
are varied in their design, therapeutic application and mechanism of action and may provide significant competition for any of
our product candidates for which we obtain market approval. New products may also become available that provide efficacy, safety,
convenience and other benefits that are not provided by currently marketed therapies. As a result, they may provide significant
competition for any of our product candidates for which we obtain market approval. Our commercial opportunity could be reduced
or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe
side effects, are more conveniently administered or stored or are less expensive than any products that we may develop. Our competitors
also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could
result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability
to compete may be affected in many cases by insurers’ or other third-party payers’ reimbursement polices seeking to
encourage the use of existing products which are generic or are otherwise less expensive to provide.
We
expect to expand our drug development and regulatory capabilities, and as a result, we may encounter difficulties in managing
our growth, which could disrupt our operations.
We
expect to experience significant growth in the scope of our operations, particularly in the areas of drug development and commercialization
and regulatory affairs. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational
and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. We expect that
if our drug candidates continue to progress into and in development, we may require significant additional investment in personnel,
management systems and resources, particularly in the build out of our clinical and commercial capabilities. Over the next several
years, we may experience significant growth in the number of our employees and the scope of our operations, particularly in the
areas of drug development, regulatory affairs and sales and marketing. Due to our limited financial resources and our limited
operating history, we may not be able to effectively manage the expected expansion of our operations. The physical expansion of
our operations may lead to significant costs and may divert our management and business development resources. Any inability to
manage growth could delay the execution of our business plans or disrupt our operations.
The
use of any of our products in clinical trials may expose us to liability claims, which may cost us significant amounts of money
to defend against or pay out, causing our business to suffer.
The
nature of our business exposes us to potential liability risks inherent in the testing, manufacturing and marketing of our products.
Our leading product candidate, CB4211, is currently in clinical trials, and if any of our drug candidates enter into clinical
trials, or if any of our drug candidates become marketed products, they could potentially harm people or allegedly harm people,
possibly subjecting us to costly and damaging product liability claims. Some of the patients who participate in clinical trials
are already ill when they enter a trial or may intentionally or unintentionally fail to meet the exclusion criteria. The waivers
we obtain may not be enforceable and may not protect us from liability or the costs of product liability litigation. Though we
obtained product liability insurance, which we believe is adequate, we are subject to the risk that our insurance will not be
sufficient to cover claims. We anticipate that we will need to increase our insurance coverage if we successfully commercialize
any product candidate. The insurance costs along with the defense or payment of liabilities above the amount of coverage could
cost us significant amounts of money and management distraction from other elements of the business, decrease demand for any product
candidates that we may develop, injure our reputation and attract significant negative media attention, and lead to the withdrawal
of clinical trial participants, causing our business to suffer. We may not be able to maintain insurance coverage at a reasonable
cost or in an amount adequate to satisfy any liability that may arise.
Compliance
with laws and regulations pertaining to the privacy and security of health information may be time consuming, difficult and costly,
particularly in light of increased focus on privacy issues in countries around the world, including the United States and the
EU.
We
are subject to various domestic and international privacy and security regulations. The confidentiality, collection, use and disclosure
of personal data, including clinical trial patient-specific information, are subject to governmental regulation generally in the
country that the personal data were collected or used. In the United States, we are subject, or expect to be subject, to various
state and federal privacy and data security regulations, including but not limited to the Health Insurance Portability and Accountability
Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009. HIPAA mandates,
among other things, the adoption of uniform standards for the electronic exchange of information in common health care transactions,
as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption
of administrative, physical and technical safeguards to protect such information. In the EU, personal data includes any information
that relates to an identified or identifiable natural person with health information carrying additional obligations, including
obtaining the explicit consent from the individual for collection, use or disclosure of the information. In addition, the protection
of and cross-border transfers of such data out of the EU has become more stringent with the EU’s General Data Protection
Regulation which came into effect in May 2018. Furthermore, the legislative and regulatory landscape for privacy and data protection
continues to evolve, and there has been an increasing amount of focus on privacy and data protection issues. The United States
and the EU and its member states continue to issue new privacy and data protection rules and regulations that relate to personal
data and health information. Compliance with these laws may be time consuming, difficult and costly. If we fail to comply with
applicable laws, regulations or duties relating to the use, privacy or security of personal data, we could be subject to the imposition
of significant civil and criminal penalties, be forced to alter our business practices and suffer reputational harm.
Any
product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and
could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to
comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of
them are approved.
Our
product candidates and the activities associated with their development and potential commercialization, including their testing,
manufacturing, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive
regulation by the FDA and other U.S. and international regulatory authorities. These requirements include submissions of safety
and other post-marketing information and reports, registration and listing requirements, requirements relating to manufacturing,
including current cGMPs, quality control, quality assurance and corresponding maintenance of records and documents, including
periodic inspections by the FDA and other regulatory authorities and requirements regarding the distribution of samples to providers
and recordkeeping.
The
FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or
efficacy of any approved product. The FDA closely regulates the post-approval marketing and promotion of drugs and biologics to
ensure drugs and biologics are marketed only for the approved disease indications and in accordance with the provisions of the
approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding use of their products.
If we promote our product candidates in a manner inconsistent with FDA-approved labeling or otherwise not in compliance
with FDA regulations, we may be subject to enforcement action. Violations of the Federal Food, Drug, and Cosmetic Act relating
to the promotion of prescription drugs may lead to investigations alleging violations of federal and state healthcare fraud and
abuse laws, as well as state consumer protection laws and similar laws in international jurisdictions.
In
addition, later discovery of previously unknown adverse events or other problems with our product candidates, manufacturers or
manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:
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restrictions
on such product candidates, manufacturers or manufacturing processes;
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restrictions
on the labeling or marketing of a product;
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restrictions
on product distribution or use;
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requirements
to conduct post-marketing studies or clinical trials;
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warning
or untitled letters;
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withdrawal
of any approved product from the market;
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refusal
to approve pending applications or supplements to approved applications that we submit;
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recall
of product candidates;
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restrictions
on product distribution or use;
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fines,
restitution or disgorgement of profits or revenues;
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suspension
or withdrawal of marketing approvals;
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refusal
to permit the import or export of our product candidates;
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injunctions
or the imposition of civil or criminal penalties.
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Non-compliance with
European requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products
for the pediatric population, can also result in significant financial penalties. Similarly, failure to comply with the EU’s
requirements regarding the protection of personal information can also lead to significant penalties and sanctions.
The
patent positions of biopharmaceutical products are complex and uncertain, and we may not be able to protect our patented or other
intellectual property. If we cannot protect this property, we may be prevented from using it, or our competitors may use it, and
our business could suffer significant harm. Also, the time and money we spend on acquiring and enforcing patents and other intellectual
property will reduce the time and money we have available for our research and development, possibly resulting in a slow down
or cessation of our research and development.
We
own or exclusively license patents and patent applications related to our MDPs and potential MBTs and we anticipate continuing
to develop our intellectual property portfolio. However, neither patents nor patent applications ensure the protection of our
intellectual property for a number of reasons, including the following:
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The
United States Supreme Court rendered a decision in Molecular Pathology vs. Myriad Genetics,
Inc., 133 S.Ct. 2107 (2013) (“Myriad”), in which the court held that
naturally occurring DNA segments are products of nature and not patentable as compositions
of matter. On March 4, 2014, the U.S. Patent and Trademark Office (“USPTO”)
issued guidelines for examination of such claims that, among other things, extended the
Myriad decision to any natural product. Since MDPs are natural products isolated from
cells, the USPTO guidelines may affect allowability of some of our patent claims (pertaining
to natural MDP sequences) that are filed in the USPTO but are not yet issued. Further,
while the USPTO guidelines are not binding on the courts, it is likely that as the law
of subject matter eligibility continues to develop, Myriad will be extended to natural
products other than DNA. Thus, our issued U.S. patent claims directed to MDPs as compositions
of matter may be vulnerable to challenge by competitors who seek to have our claims rendered
invalid. While Myriad and the USPTO guidelines described above will affect our patents
only in the United States, there is no certainty that similar laws or regulations will
not be adopted in other jurisdictions.
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Competitors
may interfere with our patenting process in a variety of ways. Competitors may claim
that they invented the claimed invention prior to us. Competitors may also claim that
we are infringing their patents and restrict our freedom to operate. Competitors may
also contest our patents and patent applications, if issued, by showing in various patent
offices that, among other reasons, the patented subject matter was not original, was
not novel or was obvious. In litigation, a competitor could claim that our patents and
patent applications are not valid or enforceable for a number of reasons. If a court
agrees, we would lose some or all of our patent protection.
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As
a company, we have no meaningful experience with competitors interfering with our patents
or patent applications. In order to enforce our intellectual property, we may need to
file a lawsuit against a competitor. Enforcing our intellectual property in a lawsuit
can take significant time and money. We may not have the resources to enforce our intellectual
property if a third party infringes an issued patent claim. Infringement lawsuits may
require significant time and money resources. If we do not have such resources, the licensor
is not obligated to help us enforce our patent rights. If the licensor does take action
by filing a lawsuit claiming infringement, we will not be able to participate in the
suit and therefore will not have control over the proceedings or the outcome of the suit.
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Because
of the time, money and effort involved in obtaining and enforcing patents, our management
may spend less time and resources on developing potential drug candidates than they otherwise
would, which could increase our operating expenses and delay product programs.
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Our
licensed patent applications directed to the composition and methods of using MOTS-c,
an MDP, and SHLP-6, which we consider as a research peptide for the potential treatment
of cancer, have not yet been issued. There can be no assurance that these or our other
licensed patent applications will result in the issuance of patents, and we cannot predict
the breadth of claims that may be allowed in our currently pending patent applications
or in patent applications we may file or license from others in the future.
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Issuance
of a patent may not provide much practical protection. If we receive a patent of narrow
scope, then it may be easy for competitors to design products that do not infringe our
patent(s).
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We
have limited ability to expand coverage of our licensed patent related to SHLP-2 and
our licensed patent application related to SHLP-6 outside of the United States. The lack
of patent protection in international jurisdictions may inhibit our ability to advance
MBT drug candidates in these markets.
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If
a court decides that the method of manufacture or use of any of our drug candidates infringes
on a third-party patent, we may have to pay substantial damages for infringement.
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A
court may prohibit us from making, selling or licensing a potential drug candidate unless
the patent holder grants a license. A patent holder is not required to grant a license.
If a license is available, we may have to pay substantial royalties or grant cross licenses
to our patents, and the license terms may be unacceptable.
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Redesigning
our potential drug candidates so that they do not infringe on other patents may not be
possible or could require substantial funds and time.
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It
is also unclear whether our trade secrets are adequately protected. While we use reasonable efforts to protect our trade secrets,
our employees or consultants may unintentionally or willfully disclose our information to competitors. Enforcing a claim that
someone illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. In
addition, courts outside the United States are sometimes less willing to protect trade secrets. Our competitors may independently
develop equivalent knowledge, methods and know-how. We may also support and collaborate in research conducted by government organizations,
hospitals, universities or other educational institutions. These research partners may be unable or unwilling to grant us exclusive
rights to technology or products derived from these collaborations prior to entering into the relationship.
If
we do not obtain required intellectual property rights, we could encounter delays in our drug development efforts while we attempt
to design around other patents or even be prohibited from developing, manufacturing or selling potential drug candidates requiring
these rights or licenses. There is also a risk that disputes may arise as to the rights to technology or potential drug candidates
developed in collaboration with other parties.
Because
of our status as an emerging growth company, our independent registered public accountants are not required to provide an attestation
report as to our internal control over financial reporting for several years.
Our
independent registered public accounting firm will not be required to attest formally to the effectiveness of our internal control
over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act) until we are no longer
an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012 (JOBS Act). We will be
an emerging growth company until December 31, 2020, although circumstances could cause us to lose that status earlier, including
if the market value of our common stock held by non-affiliates exceeds $700 million as of any June 30th before that time, in which
case we would no longer be an emerging growth company as of the following December 31st. Accordingly, you will not likely be able
to depend on any attestation concerning our internal control over financial reporting from our independent registered public accountants
until we file our annual report on Form 10-K for the year ending December 31, 2020.
If
we fail to establish and maintain proper and effective internal control over financial reporting in the future, our ability to
produce accurate and timely financial statements could be impaired, which could harm our operating results, investors’ views
of us and, as a result, the value of our common stock.
While
we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial
reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the
prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which
is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside
consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue
steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement
a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a
risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial
reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an
adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements.
In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on The Nasdaq Capital
Market (Nasdaq).
As
we continue to grow, we expect to hire additional personnel and may utilize external temporary resources to implement, document
and modify policies and procedures to maintain effective internal controls. However, it is possible that we may identify deficiencies
and weaknesses in our internal controls. If material weaknesses or deficiencies in our internal controls exist and go undetected
or unremediated, our consolidated financial statements could contain material misstatements that, when discovered in the future,
could cause us to fail to meet our future reporting obligations and cause the price of our common stock to decline
If
securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or
if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The
trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish
about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding
our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline.
If any analysts who may cover us were to cease coverage of our Company or fail to regularly publish reports on us, we could lose
visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
The
market price of our common stock may be highly volatile.
The
market for our common stock has been characterized by significant price volatility when compared to more established issuers,
and we expect that it will continue to be so for the foreseeable future. The market price of our common stock is likely to be
volatile for a number of reasons. First, our common stock is likely to be sporadically and/or thinly traded. As a consequence
of this lack of liquidity, the trading of relatively small quantities of common stock by our stockholders may disproportionately
influence the price of the common stock in either direction. The price of the common stock could, for example, decline precipitously
if even a relatively small number of shares are sold on the market without commensurate demand, as compared to a market for shares
of an established issuer which could better absorb those sales without adverse impact on its share price. Second, we are a speculative
investment due to our lack of profits to date and substantial uncertainty regarding our ability to develop and commercialize a
drug product from our new or existing technologies. As a consequence of this enhanced risk, more risk-adverse investors may, under
the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell
their shares on the market more quickly and at greater discounts than would be the case with the shares of an established issuer.
We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time
or as to what effect the sale of common stock or the availability of common stock for sale at any time will have on the prevailing
market price.
Our
management owns, and could acquire, a significant percentage of our outstanding common stock. If the ownership of our common stock
continues to be highly concentrated in management, it may prevent other stockholders from influencing significant corporate decisions.
As
of June 30, 2020, our executive officers and directors own, as a group, approximately 28.6% of the outstanding shares of our common
stock. Additionally, our executive officers and directors own, as a group, options and warrants exercisable for approximately
9.3% of our outstanding common stock, assuming exercise of such options and warrants. As a result, our management could exert
significant influence over matters requiring stockholder approval, including the election of our board of directors, the approval
of mergers and other extraordinary transactions, as well as the terms of any of these transactions. This concentration of ownership
could have the effect of delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting
to obtain control of us, which could in turn have an adverse effect on the fair market value of our Company and our common stock.
These actions may be taken even if they are opposed by our other stockholders.
The
requirements of being a public company may strain our resources, divert management’s attention and require us to disclose
information that is helpful to competitors, make us more attractive to potential litigants and make it more difficult to attract
and retain qualified personnel.
As
a public company, we are subject to the reporting requirements of the Securities Act of 1933, as amended, the Exchange Act, the
Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and applicable Canadian securities
rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations creates
significant legal and financial compliance costs and makes some activities difficult, time-consuming or costly. The Exchange Act
and applicable Canadian provincial securities legislation require, among other things, that we file annual, quarterly and current
reports with respect to our business and operating results.
Additionally,
the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Nasdaq Capital Market require us to implement
particular corporate governance practices and adhere to a variety of reporting requirements and complex accounting rules. Among
other things, we are subject to rules regarding the independence of the members of our board of directors and committees of the
board and their experience in finance and accounting matters, and certain of our executive officers are required to provide certifications
in connection with our quarterly and annual reports filed with the SEC. The perceived personal risk associated with these rules
may deter qualified individuals from accepting these positions. Accordingly, we may be unable to attract and retain qualified
officers and directors. If we are unable to attract and retain qualified officers and directors, our business and our ability
to maintain the listing of our shares of common stock on the Nasdaq or another stock exchange could be adversely affected.
Changes
in U.S. federal income and other tax laws could adversely affect us.
New
U.S. legislation or regulations which could affect our tax burden could be enacted by the U.S. government. We cannot predict the
timing or extent of such tax-related developments which could have a negative impact on our financial results.
Additionally, we use our best judgment in attempting to quantify and reserve for these tax obligations. However, a challenge by
a taxing authority, our ability to utilize tax benefits such as carryforwards or tax credits, or a deviation from other tax-related assumptions could
have a material adverse effect on our business, results of operations, or financial condition.
Unfavorable
global economic conditions could adversely affect our business, financial condition or results of operations.
Our
results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.
For example, the global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe
or prolonged economic downturn, such as a global financial crisis, could result in a variety of risks to our business, including,
weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at
all. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruptions. Any of the foregoing
could harm our business, and we cannot anticipate all of the ways in which the current economic climate and financial market conditions
could adversely impact our business.
We
or the third parties upon whom we depend may be adversely affected by natural disasters, and our business continuity and disaster
recovery plans may not adequately protect us from a serious disaster.
Natural
disasters could severely disrupt our operations and have a material adverse effect on our business, results of operations, financial
condition and prospects. If a natural disaster, power outage or other event occurred that prevented us from using all or a significant
portion of our headquarters, that damaged critical infrastructure or that otherwise disrupted operations, it may be difficult
or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business
continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial
expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material
adverse effect on our business.
Our
employees, principal investigators, CROs and consultants may engage in misconduct or other improper activities, including non-compliance
with regulatory standards and requirements and insider trading.
We
are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and commercial partners.
Misconduct by these parties could include intentional failures to comply with the regulations of FDA and non-U.S. regulators,
provide accurate information to the FDA and non-U.S. regulators, comply with healthcare fraud and abuse laws and regulations in
the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. In particular,
sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to
prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit
a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business
arrangements. Such misconduct could also involve the improper use of information obtained in the course of clinical studies, which
could result in regulatory sanctions and cause serious harm to our reputation. We have adopted a code of ethics, but it is not
always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this 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 to comply with these 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, including the imposition of significant fines or other sanctions.