As filed with the U.S. Securities and
Exchange Commission on August 17, 2020
Registration No. 333-[___]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
AIKIDO PHARMA INC.
(Exact name of registrant as specified
in its charter)
Delaware
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8731
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52-0849320
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(State
or other jurisdiction of
incorporation or organization)
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(Primary
Standard Industrial
Classification Code Number)
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(I.R.S.
Employer
Identification Number)
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One Rockefeller Plaza, 11th
Floor
New York, NY 10020
Phone: (703) 992-9325
(Address, including zip code, and telephone
number, including area code, of registrant’s principal executive offices)
Anthony Hayes
Chief Executive Officer
AIkido Pharma Inc.
One Rockefeller Plaza, 11th
Floor
New York, NY 10020
Phone: (703) 992-9325
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copies to:
Robert
F. Charron, Esq.
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Jeffrey
J. Fessler, Esq.
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Sarah E. Williams,
Esq.
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Sheppard, Mullin,
Richter & Hampton LLP
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Ellenoff Grossman
& Schole LLP
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30 Rockefeller Plaza
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1345 Avenue of the
Americas
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New York, NY 10112
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New York, NY 10105
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Tel: (212) 653-8700
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Telephone: (212)
370-1300
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Fax: (212) 653-8701
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Approximate date of commencement of
proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box. ☒
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth company ☐
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If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
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Proposed
Maximum
Aggregate
Offering
Price
(1)(4)
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Amount of
Registration
Fee
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Common Stock, $0.0001 par value per share
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$
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20,000,000
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$
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2,596
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Placement Agent’s Warrant to purchase shares of Common Stock (2)(5)
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Common Stock issuable upon exercise of Placement Agent Warrants (3)
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$
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1,600,000
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$
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208
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Total
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$
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21,600,000
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$
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2,804
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(1)
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Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.
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(2)
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Represents warrants issuable to H.C. Wainwright & Co., LLC (the “Placement Agent’s Warrants”) to purchase a number of shares of Common Stock equal to 8.0% of the number of shares of Common Stock and pre-funded warrants being offered at an exercise price equal to 125% of the public offering price of the Common Stock. See “Plan of Distribution”.
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(3)
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Resales of the Placement Agent’s Warrants on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, are registered hereby. Resales of shares of the Common Stock issuable upon exercise of the Placement Agent’s Warrants are also being registered on a delayed or continuous basis hereby.
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(4)
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Pursuant to Rule 416(a), the securities being registered hereunder include such indeterminate number of additional securities as may be issuable to prevent dilution resulting from stock splits, stock dividends or similar transactions.
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(5)
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No fee pursuant to Rule 457(g) under the Securities Act of 1933, as amended.
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The Registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the U.S. Securities
and Exchange Commission, acting pursuant to Section 8(a), may determine.
The information
in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS
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Subject
to Completion
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Dated
August 17, 2020
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Shares of Common Stock
We are offering in a best-efforts offering up to [ ] shares
of our common stock, par value $0.0001 per share.
There is no minimum number of shares or
minimum aggregate amount of proceeds for this offering to close. The offering will terminate on the first date that we enter into
securities purchase agreements to sell the securities offered hereby.
Our common stock is listed on the Nasdaq
Capital Market under the symbol “AIKI”. On August 14, 2020, the closing price as reported on the Nasdaq Capital Market
was $0.886 per share. The public offering price per share of common stock will be determined at the time of pricing, and may be
at a discount to the then current market price. The recent market price used throughout
this prospectus may not be indicative of the final offering price. The final public offering price will be determined through negotiation
between us and investors based upon a number of factors, including our history and our prospects, the industry in which we operate,
our past and present operating results, the previous experience of our executive officers and the general condition of the securities
markets at the time of this offering.
Investing in our common stock involves
a high degree of risk. See “Risk Factors” beginning on page 3 of this prospectus.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
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Per
Share
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Total
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Public offering price
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$
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$
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Placement Agent’s fees(1)
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$
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$
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Proceeds, before expenses, to us(2)
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$
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$
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(1)
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We
have agreed to reimburse H.C.
Wainwright & Co., LLC (the “Placement Agent”) for certain of its
offering-related expenses, including a management fee of 1.0% of the gross proceeds raised in this offering. In addition, we
have agreed to issue to the Placement Agent warrants to purchase up to a number of shares of our common
stock equal to 8.0% of the number of shares of common stock being offered at an exercise price equal to 125% of
the public offering price of the shares of common stock. See “Plan of
Distribution” for additional information and a description of the compensation payable to the Placement
Agent.
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(2)
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We estimate the total expenses of this offering payable by us, excluding the Placement Agent’s fees, will be approximately $ .
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We engaged H.C. Wainwright & Co., LLC
as our exclusive placement agent to use its reasonable best efforts to solicit offers to purchase the shares of common stock in
this offering. The Placement Agent has no obligation to buy any of the shares from us or to arrange for the purchase or sale of
any specific number or dollar amount of the shares.
We anticipate that delivery of the shares
against payment will be made on or about , 2020.
H.C. Wainwright & Co., LLC
Prospectus dated
, 2020
TABLE OF CONTENTS
We and the Placement Agent have not
authorized anyone to provide any information or to make any representations other than those contained in or incorporated by reference
in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We take
no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This
prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful
to do so. The information contained in or incorporated by reference in this prospectus is accurate only as of its date regardless
of the time of delivery of this prospectus or of any sale of common stock.
To the extent there is a conflict between
the information contained in this prospectus, on the one hand, and the information contained in any document incorporated by reference
filed with the U.S. Securities and Exchange Commission (the “SEC”) before the date of this prospectus, on the other
hand, you should rely on the information in this prospectus. If any statement in a document incorporated by reference is inconsistent
with a statement in another document incorporated by reference having a later date, the statement in the document having the later
date modifies or supersedes the earlier statement.
Neither we nor the Placement Agent have
done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action
for that purpose is required, other than in the United States. Persons who come into possession of this prospectus and any free
writing prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions
as to this offering and the distribution of this prospectus and any free writing prospectus applicable to that jurisdiction.
This prospectus and the documents incorporated
by reference in this prospectus contain market data and industry statistics and forecasts that are based on independent industry
publications and other publicly available information. Although we believe that these sources are reliable, we do not guarantee
the accuracy or completeness of this information and we have not independently verified this information. Although we are not
aware of any misstatements regarding the market and industry data presented or incorporated by reference in this prospectus, these
estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under
the heading “Risk Factors” and any related free writing prospectus. Accordingly, investors should not place undue
reliance on this information.
PROSPECTUS SUMMARY
This summary highlights certain information
about us, this offering and selected information contained elsewhere in this prospectus and in the documents incorporated by reference.
This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest
in our securities. For a more complete understanding of our company and this offering, we encourage you to read and consider carefully
the more detailed information contained in or incorporated by reference in this prospectus, including the information contained
under the heading “Risk Factors” beginning on page 3 of this prospectus, and the information included in any free
writing prospectus that we have authorized for use in connection with this offering.
Throughout this prospectus, the terms
“we,” “us,” “our,” and “the Company” refer to AIkido Pharma Inc., a Delaware corporation,
and its consolidated subsidiaries unless the context requires otherwise.
Company Overview
AIkido Pharma Inc., formerly known as
Spherix Incorporated, was initially formed in 1967 and is currently a biotechnology company with a diverse portfolio of small-molecule
anti-cancer therapeutics in development. The Company’s platform consists of patented technology from leading universities
and researchers and we are currently in the process of developing an innovative therapeutic drug platform through strong partnerships
with world renowned educational institutions, including the University of Texas at Austin, the University of Maryland, Baltimore
and Wake Forest University. Our diverse pipeline of therapeutics includes therapies for pancreatic cancer, acute myeloid leukemia
(“AML”) and acute lymphoblastic leukemia (“ALL”). The Company is also developing a broad spectrum antiviral
platform that may potentially inhibit replication of multiple viruses including Influenza virus, SARS-CoV (coronavirus), MERS-CoV,
Ebolavirus and Marburg virus.
The Company previously focused its efforts
on owning, developing, acquiring and monetizing intellectual property assets. Since May 2016, the Company has received limited
funds from its intellectual property monetization. In addition to its patent monetization efforts, since the fourth quarter of
2017, the Company has been transitioning to focus its efforts as a technology and biotechnology development company. These efforts
have focused on biotechnology research and blockchain technology research. The Company’s biotechnology research development
includes: (i) an investment in Hoth Therapeutics Inc. (“Hoth”), a development stage biopharmaceutical company focused
on unique targeted therapeutics for patients suffering from indications such as atopic dermatitis, also known as eczema, (ii)
an investment in DatChat, Inc. (“DatChat”), a privately held personal privacy platform focused on encrypted communication,
internet security and digital rights management, and (iii) the acquisition of assets of CBM BioPharma, Inc. (“CBM”),
a pharmaceutical company focusing on the development of cancer treatments.
As a result of the Company’s biotechnology
research development and associated investments and acquisitions, our business portfolio now focuses on the treatment of three
different cancers, including pancreatic cancer, AML and ALL. Our AML and ALL compounds, developed at the Wake Forest University,
are targeted therapeutics designed to overcome multiple resistance mechanisms observed with the current standard of care. DHA-dFdC,
our pancreatic drug candidate developed at the University of Texas at Austin, is a new compound that we hope will become the next
generation of chemotherapy treatment for advanced pancreatic cancer. DHA-dFdC overcomes tumor cell resistance to current chemotherapeutic
drugs and is well tolerated in preclinical toxicity tests. Preclinical studies have also indicated that DHA-dFdC inhibits pancreatic
cancer cell growth (up to 100,000-fold more potent that gemcitabine, a current standard therapy), targets pancreatic tumors and
has demonstrated activities against other cancers, including leukemia, lung and melanoma. In addition, we are constantly seeking
to grow our pipe to treat unmet medical needs in oncology.
In addition, the Company owns an exclusive
world-wide license to patented technology from the University of Maryland Baltimore (“UMB”). Our license is for a
broad spectrum antiviral drug platform. The licensed technology is a broadly acting pan-viral inhibitory compound targeting multiple
viral pathogens. The technology works to inhibit replication of multiple viruses including Influenza virus, SARS-CoV (coronavirus),
MERS-CoV, Ebolavirus and Marburg virus. The technology is covered by two patent applications already on file with the United States
Patent and Trademark Office. The UMB inventors are Drs. Matthew Frieman, Alexander MacKerell and Stuart Watson. The Company has
also executed a Sponsored Research Agreement with UMB to support the development of the technology.
Our principal executive offices are located
at One Rockefeller Plaza, 11th Floor, New York, New York 10020, and our telephone number is (703) 992-9325.
Our common stock trades on the Nasdaq Capital Market under
the symbol “AIKI”.
Available Information
Our principal Internet address is www.aikidopharma.com. We
make available free of charge on www.aikidopharma.com our annual, quarterly and current reports, and amendments to those reports,
as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. You may also read
and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains
an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov.
THE OFFERING
Common stock outstanding prior to this offering
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34,920,219
shares.
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Common stock offered
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[___] shares.
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Common stock to be outstanding after this offering
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[___] shares.
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Use of proceeds
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We estimate that our net proceeds from this offering will be approximately $[___] million.
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We intend to use the net proceeds of this offering for working capital and general corporate purposes.
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Risk factors
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See “Risk
Factors” beginning on page 3 of this prospectus, as well as other information included in this prospectus, for a
discussion of factors you should read and consider carefully before investing in our securities.
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Nasdaq Capital Markets symbol
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Our common stock is listed on the Nasdaq Capital Markets under the symbol “AIKI”.
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The number of shares of our common stock to be outstanding after
this offering as shown above is based on 34,920,219 shares outstanding as of August 14, 2020 and excludes as of that date:
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85,234 shares of our common stock issuable upon exercise of outstanding options at a weighted
average exercise price of $178.99 per share;
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801,167 shares of our common stock issuable upon exercise of outstanding warrants at a
weighted average exercise price of $9.86 per share (without giving effect to any of the anti-dilution adjustment provisions
thereof);
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688 shares of
common stock issuable upon the conversion of our Series D and D-1 Preferred Stock; and
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51,732 shares of our common stock to be reserved for potential future issuance pursuant to
our 2012, 2013 and 2014 Equity Incentive Plans, combined.
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RISK FACTORS
There are numerous risks affecting our
business, some of which are beyond our control. An investment in our common stock involves a high degree of risk and may not be
appropriate for investors who cannot afford to lose their entire investment. If any of the following risks actually occur, our
business, financial condition or operating results could be materially harmed. This could cause the trading price of our common
stock to decline, and you may lose all or part of your investment. In addition to the risks outlined below, risks and uncertainties
not presently known to us or that we currently consider immaterial may also impair our business operations. Potential risks and
uncertainties that could affect our operating results and financial condition include, without limitation, the following:
Risks Related to Our Business
Because we have a limited operating
history to evaluate our company, the likelihood of our success must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered by an early-stage company.
Since we have a limited operating history
in our current business of technology and biotechnology development, it will make it difficult for investors and securities analysts
to evaluate our business and prospects. You must consider our prospects in light of the risks, expenses and difficulties
we face as an early stage company with a limited operating history. Investors should evaluate an investment in our
securities in light of the uncertainties encountered by early stage companies in an intensely competitive industry. There
can be no assurance that our efforts will be successful or that we will be able to become profitable.
Our cancer
treatment business is pre-revenue, pre-development and subject to the risks of an early stage biotechnology company.
Since the Company’s
primary focus for the foreseeable future will likely be our cancer treatment business, shareholders should understand that we
are primarily an early stage biotechnology company with no history of revenue-generating operations, and our only assets consist
of our proprietary drug and the know-how of our officers. Therefore we are subject to all the risks and uncertainties inherent
in a new business, in particular new businesses engaged in the early detection of certain cancers. DHA-dFdC is in its
early stages of development, and we still must establish and implement many important functions necessary to commercialize
the biotechnology.
Accordingly,
you should consider the Company’s prospects in light of the costs, uncertainties, delays and difficulties frequently encountered
by companies in their pre-revenue and pre-development generating stages, particularly those in the biotechnology field. Shareholders
should carefully consider the risks and uncertainties that a business with no operating history will face. In particular, shareholders
should consider that there is a significant risk that we will not be able to:
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demonstrate the
effectiveness of DHA-dFdC;
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implement or execute
our current business plan, or that our current business plan is sound;
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raise sufficient
funds in the capital markets or otherwise to fully effectuate our business plan;
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maintain our management
team;
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conduct the required
clinical studies;
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determine that the
processes and technologies that we have developed or will develop are commercially viable; and/or
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attract, enter into
or maintain contracts with potential commercial partners such as licensors of technology and suppliers.
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Any of the foregoing risks may adversely
affect the Company and result in the failure of our business. In addition, we expect to encounter unforeseen expenses, difficulties,
complications, delays and other known and unknown factors. At some point, we will need to transition from a company with
a research and development focus to a company capable of supporting commercial activities. We may not be able to reach such achievements,
which would have a material adverse effect on our Company.
We continue to incur operating losses
and may not achieve profitability.
Our loss from operations for the six months
ended June 30, 2020 and 2019 was $4.2 million and $1.6 million, respectively. Our net loss for the six months ended June 30, 2020
and 2019 was $10.6 million and $1.8 million, respectively. Our accumulated deficit was $154.9 million at June 30, 2020. Our ability
to become profitable depends upon our ability to generate revenue from biotechnology products. We do not know when, or if, we
will generate any revenue from such biotechnology products. Even though our revenue may increase, we expect to incur significant
additional losses while we grow and expand our business. We cannot predict if and when we will achieve profitability. Our failure
to achieve and sustain profitability could negatively impact the market price of our common stock.
We expect to need additional capital
to fund our growing operations and if we are unable to obtain sufficient capital, we may be forced to limit the scope of our operations.
We expect that for our business to grow
we will need additional working capital. If adequate additional debt and/or equity financing is not available on reasonable
terms or at all, we may not be able to continue to expand our business or pay our outstanding obligations, and we will have to
modify our business plans accordingly. These factors would have a material adverse effect on our future operating results
and our financial condition.
If we reach a point where we are unable
to raise needed additional funds to continue as a going concern, we will be forced to cease our activities and dissolve the Company. In
such an event, we will need to satisfy various creditors and other claimants, severance, lease termination and other dissolution-related
obligations and we may not have sufficient funds to pay to our stockholders.
If we fail to maintain an effective
system of internal controls over financial reporting, we may not be able to accurately report our financial results or prevent
fraud and our business may be harmed and our stock price may be adversely impacted.
Effective internal controls over financial
reporting are necessary for us to provide reliable financial reports and to effectively prevent fraud. Any inability to provide
reliable financial reports or to prevent fraud could harm our business. The Sarbanes-Oxley Act of 2002 requires management
to evaluate and assess the effectiveness of our internal control over financial reporting. In order to continue to comply
with the requirements of the Sarbanes-Oxley Act, we are required to continuously evaluate and, where appropriate, enhance our
policies, procedures and internal controls. If we fail to maintain the adequacy of our internal controls over financial reporting,
we could be subject to litigation or regulatory scrutiny and investors could lose confidence in the accuracy and completeness
of our financial reports. We cannot assure you that in the future we will be able to fully comply with the requirements of
the Sarbanes-Oxley Act or that management will conclude that our internal control over financial reporting is effective. If
we fail to fully comply with the requirements of the Sarbanes-Oxley Act, our business may be harmed and our stock price may decline.
Our assessment, testing and evaluation
of the design and operating effectiveness of our internal control over financial reporting resulted in our conclusion that, as
of June 30, 2020, our internal control over financial reporting was not effective, due to our lack of segregation of duties, and
lack of controls in place to ensure that all material transactions and developments impacting the financial statements are reflected. We
can provide no assurance as to conclusions of management with respect to the effectiveness of our internal control over financial
reporting in the future.
Our independent auditors have expressed
substantial doubt about our ability to continue as a going concern.
Due to our net losses, negative cash flow
and negative working capital, in their report on our audited financial statements for the years ended December 31, 2019 and 2018,
our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to continue as a going
concern.
We may seek to internally develop
additional new inventions and intellectual property, which would take time and be costly. Moreover, the failure to
obtain or maintain intellectual property rights for such inventions would lead to the loss of our investments in such activities.
Part of our business may include the internal
development of new inventions or intellectual property that we will seek to monetize. For example, in December 2019, we acquired
substantially all of the assets of CBM, including the acquisition of certain licensing rights with respect to patents and other
intellectual property related to pioneering drug compounds that were developed at the University of Wake Forest and the University
of Texas at Austin, in the areas of AML, ALL, acral lentiginous melanoma and pancreatic cancer (collectively, the “University
Developments”). Should we choose to assist in the development of the University Developments and/or internally develop any
other inventions or intellectual property, such aspect of our business will require significant capital and will take time to
achieve. Such activities may also distract our management team from its present business initiatives, which could have
a material and adverse effect on our business. There is also the risk that our initiatives in this regard would not yield
any viable new inventions or technology, which would lead to a loss of our investments in time and resources in such activities.
Our ability to raise additional
capital may be adversely affected by certain of our agreements.
Our ability to raise additional capital
for use in our operating activities may be adversely impacted by the terms of a securities purchase agreement, dated as of July
15, 2015 (the “Securities Purchase Agreement”), between us and the investors who purchased securities in our July
2015 offering of our common stock and warrants for the purchase of our common stock. The Securities Purchase Agreement provides
that, until the warrants issued thereunder are no longer outstanding, we will not effect or enter into a variable rate transaction,
which includes issuances of securities whose prices or conversion prices may vary with the trading prices of or quotations for
the shares of our common Stock at any time after the initial issuance of such securities, as well as the entry into agreements
where our stock would be issued at a future-determined price. These warrants may remain outstanding as late as January 22, 2021,
when the warrants expire in accordance with their terms. These restrictions may have an adverse impact on our ability to raise
additional capital, or to use our cash to make certain payments that we are contractually obligated to make.
We may also identify targets with patent
or other intellectual property assets that cost more than we are prepared to spend with our own capital resources. We
may incur significant costs to organize and negotiate a structured acquisition that does not ultimately result in an acquisition
of any patent assets or, if consummated, proves to be unprofitable for us. Acquisitions involving issuance of our securities
could be dilutive to existing stockholders and could be at prices lower than those prices reflected in the trading markets. These
higher costs could adversely affect our operating results and, if we incur losses, the value of our securities will decline.
The integration of acquired assets may place a significant burden on management and our internal resources. The diversion
of management attention and any difficulties encountered in the integration process could harm our business.
As we are targeting technology companies
in the development stage, their patents and technologies are in the early stages of adoption. Demand for some of these
technologies will likely be untested and may be subject to fluctuation based upon the rate at which our licensees or others adopt
our patents and technologies in their products and services. As a result, there can be no assurance as to whether technologies
we acquire or develop will have value that can be realized through licensing or other activities.
We are exploring and evaluating
strategic alternatives and there can be no assurance that we will be successful in identifying, or completing any strategic alternative
or that any such strategic alternative will yield additional value for shareholders.
Our management and Board of Directors
(“Board of Directors”) has commenced a review of strategic alternatives which could result in, among other things,
a sale, a merger, consolidation or business combination, asset divestiture, partnering or other collaboration agreements, or potential
acquisitions or recapitalizations, in one or more transactions, or continuing to operate with our current business plan and strategy.
There can be no assurance that the exploration of strategic alternatives will result in the identification or consummation of
any transaction. In addition, we may incur substantial expenses associated with identifying and evaluating potential strategic
alternatives. The process of exploring strategic alternatives may be time consuming and disruptive to our business operations
and if we are unable to effectively manage the process, our business, financial condition and results of operations could be adversely
affected. We also cannot assure you that any potential transaction or other strategic alternative, if identified, evaluated and
consummated, will provide greater value to our shareholders than that reflected in the current stock price. Any potential transaction
would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions,
industry trends, the interest of third parties in our business and the availability of financing to potential buyers on reasonable
terms.
We may be unsuccessful at integrating
future acquisitions.
If we find appropriate opportunities in
the future, we may acquire businesses to further the Company’s strategic business objectives. For example, in December 2019,
we acquired substantially all of the assets of CBM, including the acquisition of certain licensing rights with respect to patents
and other intellectual property related to pioneering drug compounds that were developed at the University of Wake Forest and
the University of Texas at Austin, in the areas of AML, ALL, acral lentiginous melanoma and pancreatic cancer. There can be no
guarantee that we will be able to successfully integrate the business or assets of CBM into the Company.
As we acquire businesses or substantial
stakes in certain businesses, the process of integration may produce unforeseen operating difficulties and expenditures, fail
to result in expected synergies or other benefits and absorb significant attention of our management that would otherwise be available
for the ongoing development of our business. In addition, in the event of any future acquisitions, we may record a portion of
the assets we acquire as goodwill, other indefinite-lived intangible assets or finite-lived intangible assets. We do not amortize
goodwill and indefinite-lived intangible assets, but rather review them for impairment on an annual basis or whenever events or
changes in circumstances indicate that their carrying value may not be recoverable. The recoverability of goodwill and indefinite-lived
intangible assets is dependent on our ability to generate sufficient future earnings and cash flows. Changes in estimates, circumstances
or conditions, resulting from both internal and external factors, could have a significant impact on our fair valuation determination,
which could then have a material adverse effect on our business, financial condition and results of operations. We cannot guarantee
that we will be able to identify suitable acquisition opportunities, consummate any pending or future acquisitions or that we
will realize any anticipated benefits from any such acquisitions.
Our pre-CBM acquisition stockholders
have a reduced ownership and voting interest after the acquisition of CBM’s assets and exercise less influence over our
management and policies than they did prior to the acquisition.
Our pre-CBM acquisition stockholders had
the right to vote in the election of our Board of Directors on other matters affecting us. As a result of the CBM Purchase Agreement,
because of the issuance of shares of common stock to the CBM shareholders, our pre-CBM acquisition stockholders hold a percentage
ownership of the Company that is much smaller than the pre-CBM acquisition stockholder’s previous percentage ownership.
Because of this, our pre-CBM acquisition stockholders have less influence over the management and policies of the Company than
they now have after the consummation of the acquisition of CBM’s assets.
Any failure to maintain or protect
our patent assets or other intellectual property rights could significantly impair our return on investment from such assets and
harm our brand, our business and our operating results.
Our ability to operate our new line of
business and compete in the intellectual property market largely depends on the superiority, uniqueness and value of our acquired
patent assets and other intellectual property. To protect our proprietary rights, we will rely on a combination of patent, trademark,
copyright and trade secret laws, confidentiality agreements with our employees and third parties, and protective contractual provisions. No
assurances can be given that any of the measures we undertake to protect and maintain our assets will have any measure of success.
We are required to spend significant time
and resources to maintain the effectiveness of our assets by paying maintenance fees and making filings with the USPTO. We
may acquire patent assets, including patent applications, which require us to spend resources to prosecute the applications with
the USPTO prior to issuance of patents. Further, there is a material risk that patent related claims (such as, for
example, infringement claims (and/or claims for indemnification resulting therefrom), unenforceability claims, or invalidity claims)
will be asserted or prosecuted against us, and such assertions or prosecutions could materially and adversely affect our business.
Despite our efforts to protect our intellectual
property rights, any of the following or similar occurrences may reduce the value of our intellectual property:
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our applications
for patents, trademarks and copyrights may not be granted and, if granted, may be challenged or invalidated;
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issued trademarks,
copyrights, or patents may not provide us with any competitive advantages when compared to potentially infringing other properties;
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our efforts to protect
our intellectual property rights may not be effective in preventing misappropriation of our technology; or
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our efforts may
not prevent the development and design by others of products or technologies similar to or competitive with, or superior to
those we acquire and/or prosecute.
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Moreover, we may not be able to effectively
protect our intellectual property rights in certain foreign countries where we may do business or enforce our patents against
infringers in foreign countries. If we fail to maintain, defend or prosecute our patent assets properly, the value of those
assets would be reduced or eliminated, and our business would be harmed.
We may be unable to issue securities
under our shelf registration statement, which may have an adverse effect on our liquidity.
We have filed a shelf registration statement
on Form S-3 with the SEC. The registration statement, which has been declared effective, was filed in reliance on Instruction
I.B.6. of Form S-3, which imposes a limitation on the maximum amount of securities that we may sell pursuant to the registration
statement during any twelve-month period. At the time we sell securities pursuant to the registration statement, the
amount of securities to be sold plus the amount of any securities we have sold during the prior twelve months in reliance on Instruction
I.B.6. may not exceed one-third of the aggregate market value of our outstanding common stock held by non-affiliates as of a day
during the 60 days immediately preceding such sale as computed in accordance with Instruction I.B.6. Whether we sell securities
under the registration statement will depend on a number of factors, including availability of our existing S-3 under the 1/3
limitation calculations set forth in Instruction I.B.6 of Form S-3, the market conditions at that time, our cash position at that
time and the availability and terms of alternative sources of capital. Furthermore, Instruction I.B.6. of Form S-3 requires
that the issuer have at least one class of common equity securities listed and registered on a national securities exchange. If
we are not able to maintain compliance with applicable Nasdaq rules, we will no longer be able to rely upon that Instruction.
If we cannot sell securities under our shelf registration, we may be required to utilize more costly and time-consuming means
of accessing the capital markets, which could materially adversely affect our liquidity and cash position.
We may be at risk for delay in technology
development and other economic repercussions as a result of the COVID-19 pandemic.
We may be at risk as a result of the current
COVID-19 pandemic. Risks that could affect our business include the duration and scope of the COVID-19 pandemic and the impact
on the demand for our products; actions by governments, businesses and individuals taken in response to the pandemic; the length
of time of the COVID-19 pandemic and the possibility of its reoccurrence; the timing required to develop effective treatments
and a vaccine in the event of future outbreaks; the eventual impact of the pandemic and actions taken in response to the pandemic
on global and regional economies; and the pace of recovery when the COVID-19 pandemic subsides.
Additionally, New York, where our U.S.
operations are based, has been significantly affected by COVID-19, which led to measures taken by the New York government trying
to contain the spread of COVID-19, such as shelter in place, closure of schools and travel restrictions. Additional travel and
other restrictions may be put in place to further control the outbreak in U.S. Accordingly, our operation and business have been
and will continue to be adversely affected as the results of the COVID-19 pandemic.
The extent to which COVID-19 negatively
impacts our business is highly uncertain and cannot be accurately predicted. We believe that the coronavirus outbreak and the
measures taken to control it may have a significant negative impact on not only our business, but economic activities globally.
The magnitude of this negative effect on the continuity of our business operations in the U.S. remains uncertain. These uncertainties
impede our ability to conduct our daily operations and could materially and adversely affect our business, financial condition
and results of operations, and as a result affect our stock price and create more volatility.
Risks Related to the Product Development,
Regulatory Approval, Manufacturing and Commercialization
We are early
in our development efforts and currently have no clinical-stage product candidates. If we are unable to clinically develop and
ultimately commercialize DHA-dFdC, antiviral compounds or other product candidates, or experience significant delays in doing so,
our business will be materially harmed.
We are early in our development efforts
and have no clinical-stage product candidates as of the date of this prospectus. For example, we have the exclusive U.S. rights
to develop DHA-dFdC for the treatment of cancer in the licensed field. We are presently planning on filing an IND for DHA-dFdC,
and we hope to begin human testing for this indication in 2021, although no assurance can be given that we will be able to achieve
this goal. We also have rights to assist in the development of various antiviral compounds with UMB, including UMB18, the initial
compound, and two additional undisclosed hit compounds.
Therefore, our
ability to generate product or royalty revenues, which we do not expect will occur for several years, if ever, will depend heavily
on our ability to develop and eventually commercialize our product candidate. The positive development of our product candidate
will depend on several factors, including the following:
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positive
commencement and completion of clinical trials;
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successful
preparation of regulatory filings and receipt of marketing approvals from applicable regulatory authorities;
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obtaining
and maintaining patent and trade secret protection and potential regulatory exclusivity for our product candidate and protecting
our rights in our intellectual property portfolio;
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launching
commercial sales of our product, if and when approved for one or more indications, whether alone or in collaboration with
others;
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acceptance
of the product for one or more indications, if and when approved, by patients, the medical community and third-party payors;
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protection
from generic substitution based upon our own or licensed intellectual property rights;
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effectively
competing with other therapies;
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obtaining
and maintaining adequate reimbursement from healthcare payors; and
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maintaining
a continued acceptable safety profile of our product following approval, if any.
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If we do not achieve
one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to clinically
develop and commercialize DHA-dFdC as a therapy for cancer and UMB18 as an antiviral therapy, which would materially harm our business.
If we are
unable to convince physicians as to the benefits of DHA-dFdC as a therapy for cancer or UMB18 as an antiviral therapy, if and when
it is approved, we may incur delays or additional expense in our attempt to establish market acceptance.
Use of DHA-dFdC
as a cancer therapy and UMB18 as an antiviral therapy will require physicians to be informed regarding the intended benefits of
the product for a new indication. The time and cost of such an educational process may be substantial. Inability to carry out this
physician education process may adversely affect market acceptance of DHA-dFdC as a therapy for cancer and UMB18 as an antiviral
therapy. We may be unable to timely educate physicians in sufficient numbers regarding our intended application of DHA-dFdC and
UMB18 to achieve our marketing plans or to achieve product acceptance. Any delay in physician education or acceptance may materially
delay or reduce demand for our product candidate. In addition, we may expend significant funds toward physician education before
any acceptance or demand for DHA-dFdC as a therapy for cancer or UMB18 as an antiviral therapy is created, if at all.
Clinical
drug development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience
delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidate.
The risk of failure
for product candidates in clinical development is high. It is impossible to predict when our product candidates, including DHA-dFdC
and UMB18, will prove effective and safe in humans or will receive regulatory approval for the treatment of any disease, the indication
for which is licensed to us. Before obtaining marketing approval from regulatory authorities for the sale of DHA-dFdC as a cancer
therapy and UMB18 as an antiviral therapy, we must conduct one or more clinical trials to demonstrate the safety and efficacy of
our product candidate in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete
and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. Moreover, the outcome
of early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial
do not necessarily predict final results. In addition, preclinical and clinical data are often susceptible to varying interpretations
and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless
failed to obtain marketing approval of their products.
We may experience
numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing
approval or commercialize our product candidate, including:
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regulators
or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical
trial at a prospective trial site;
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we
may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols
with prospective trial sites;
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clinical
trials of our product candidate may produce negative or inconclusive results, and we may decide, or regulators may require
us, to conduct additional clinical trials or abandon product development programs, which would be time consuming and costly;
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the
number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in
these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate
than we anticipate;
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we
may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the
participants are being exposed to unacceptable health risks;
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regulators
or institutional review boards may require that we or our investigators suspend or terminate clinical research for various
reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable
health risks;
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the
cost of clinical trials may be greater than we anticipate;
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the
supply or quality of materials necessary to conduct clinical trials of our product candidate may be insufficient or inadequate;
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our
product candidate may have undesirable side effects or other unexpected characteristics, causing us or our investigators,
regulators or institutional review boards to suspend or terminate the trials; and
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interactions
with other drugs.
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If we are required
to conduct additional clinical trials or other testing of our product candidate beyond those that we currently contemplate, if
we are unable to complete clinical trials of our product candidates or other testing, if the results of these trials or tests
are not positive or are only modestly positive or if there are safety concerns, we may:
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be
delayed in obtaining marketing approval for our product candidate for one or more indications;
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not
obtain marketing approval at all for one or more indications;
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obtain
approval for indications or patient populations that are not as broad as intended or desired (particularly, in our case, for
different types of cancer);
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obtain
approval with labeling that includes significant use or distribution restrictions or safety warnings;
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be
subject to additional post-marketing testing requirements; or
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have
the product removed from the market after obtaining marketing approval.
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Our product development
costs will also increase if we experience delays in testing or marketing approvals. We do not know which, if any, of our clinical
trials will need to be restructured or will be completed on schedule, or at all. Significant preclinical or clinical trial delays
also could shorten any periods during which we may have the right to commercialize our product candidate or allow our competitors
to bring products to market before we do and impair our ability to commercialize our product candidate and may harm our business
and results of operations.
If we experience
delays or difficulties in the enrollment of patients in any future clinical trials, our receipt of necessary regulatory approvals
could be delayed or prevented.
We may not be
able to initiate or continue future clinical trials for DHA-dFdC, UMB 18 or our present or future product candidates if we are
unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the U.S. Food
and Drug Administration (“FDA”) or similar regulatory authorities outside the United States. In addition, some of our
competitors have ongoing clinical trials for product candidates that treat the same indications as our product candidate, and patients
who would otherwise be eligible for our future clinical trials may instead enroll in clinical trials of our competitors’
product candidates.
Patient enrollment
is affected by other factors including:
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the
severity of the disease under investigation;
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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
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.
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Our inability
to enroll a sufficient number of patients for any future 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 candidate, which would cause the value of our company to decline and otherwise materially and adversely
affect our company.
If serious
adverse or unacceptable side effects are identified during the development of our product candidate, we may need to abandon or
limit such development, which would adversely affect our company.
If clinical testing
of our product candidates results in undesirable side effects or demonstrates characteristics that are unexpected, we may need
to abandon such development or limit such development to more narrow uses or subpopulations in which the undesirable side effects
or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that
initially showed promise in early stage testing for treating cancer or antiviral therapy have later been found to cause side effects
that prevented further development of the compound.
For the
foreseeable future, we expect to expend our limited resources primarily to pursue a particular product candidate, leaving us unable
to capitalize on other product candidates or indications that may be more profitable or for which there is a greater likelihood
of clinical and commercial development.
Because we have
limited financial and managerial resources, we will focus for the foreseeable future on the clinical development of DHA-dFdC for
the treatment of prostate cancer and UMB 18 for antiviral therapy. As a result, we may forego or be unable to pursue opportunities
with other product candidates or for indications other than those we intend to pursue that later prove to have greater commercial
potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market
opportunities. Our spending on research and development programs related to DHA-dFdC for the treatment of cancer and UMB18 for
antiviral therapy may not yield any commercially viable therapies. Because of this concentration of our efforts, our business will
be particularly subject to significant risk of failure of our one current product candidate.
We expect
to rely on collaborations with third parties for key aspects of our business. If we are unable to secure or maintain any of these
collaborations, or if these collaborations do not achieve their goals, our business would be adversely affected.
We presently
have very limited capabilities for drug development and do not yet have any capability for manufacturing, sales, marketing or
distribution. Accordingly, we expect to enter into collaborations with other companies that we believe can provide such capabilities.
These collaborations may also provide us with important funding for our development programs.
There is a risk
that we may not be able to maintain our current collaboration or to enter into additional collaborations on acceptable terms or
at all, which would leave us unable to progress our business plan. We will face significant competition in seeking appropriate
collaborators. Our ability to reach a definitive agreement for a collaboration 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. If we are unable to maintain or reach agreements with suitable collaborators on a timely basis,
on acceptable terms, or at all, we may have to curtail the development of our product candidate, reduce or delay its development
program, 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.
Moreover, even
if we are able to maintain and/or enter into such collaborations, such collaborations may pose a number of risks, including the
following:
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collaborators
may not perform their obligations as expected;
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disagreements
with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development,
might cause delays or termination of the research, development or commercialization of our product candidate, might lead to
additional responsibilities for us with respect to such product candidate, or might result in litigation or arbitration, any
of which would be time-consuming and expensive;
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collaborators
could independently develop or be associated with products that compete directly or indirectly with our product candidate;
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collaborators
could have significant discretion in determining the efforts and resources that they will apply to our arrangements with them;
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should
our product candidate achieve regulatory approval, a collaborator with marketing and distribution rights to our product candidate
may not commit sufficient resources to the marketing and distribution of such product;
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collaborators
may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way
as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose
us to potential litigation;
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collaborators
may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;
and
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collaborations
may be terminated for the convenience of the collaborator and, if terminated, we could be required to either find alternative
collaborators (which we may be unable to do) or raise additional capital to pursue further development or commercialization
of our product candidate on our own.
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Our business
could be materially harmed if any of the foregoing or similar risks comes to pass with respect to our key collaborations.
Even if
any of our product candidates receive marketing approval for any indication, they may fail to achieve the degree of market acceptance
by physicians, patients, third-party payors and others in the medical community necessary for commercial success.
Even if DHA-dFdC
for the treatment of cancer or UMB 18 for antiviral therapy receives marketing approval for any indication, it may nonetheless
fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. For
example, current cancer treatments such as chemotherapy, immunotherapy and radiation therapy are well established in the medical
community, and doctors may continue to rely on these treatments. If our product candidate does not achieve an adequate level of
acceptance, we may not generate significant product revenues and we may not become profitable. The degree of market acceptance
of DHA-dFdC for the treatment of cancer and UMB18 for antiviral therapy, if approved for commercial sale, will depend on a number
of factors, including:
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the
efficacy and potential advantages compared to alternative treatments;
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our
ability to offer our products for sale at competitive prices;
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the
convenience and ease of administration compared to alternative treatments;
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the
willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
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the
strength of marketing and distribution support;
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the
availability of third-party coverage and adequate reimbursement;
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the
prevalence and severity of any side effects; and
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any
restrictions on the use of our product together with other medications.
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If we are
unable to establish sales, marketing and distribution capabilities, we may not be able to commercialize our product candidate
if and when it is approved.
We currently
do not have a sales or marketing infrastructure. To achieve any level of commercial success for any product for which we have
obtained marketing approval, we will need to establish a sales and marketing organization or outsource sales and marketing functions
to third parties, and achieve the following:
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successful
preparation of regulatory filings and receipt of marketing approvals from applicable regulatory authorities;
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obtaining
and maintaining patent and trade secret protection and potential regulatory exclusivity for our product candidate and protecting
our rights in our intellectual property portfolio;
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launching
commercial sales of our product, if and when approved for one or more indications, whether alone or in collaboration with
others;
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acceptance
of the product for one or more indications, if and when approved, by patients, the medical community and third-party payors;
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protection
from generic substitution based upon our own or licensed intellectual property rights;
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effectively
competing with other therapies;
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obtaining and maintaining
adequate reimbursement from healthcare payors; and
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maintaining a continued
acceptable safety profile of our product following approval, if any.
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If we do not
achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to clinically
develop and commercialize DHA-dFdC as a therapy for cancer or UMB18 as an antiviral therapy, which would materially harm our business.
In addition,
given our current limited financial resources, we are currently focusing our efforts on one key cancer indication, namely prostate
cancer. We are thus faced with the risk that DHA-dFdC could be ineffective in addressing this particular cancer indication, and
if our efforts to demonstrate the efficacy of DHA-dFdC in prostate cancer are not positive, we may lack the resources to expand
our efforts into other cancer indications.
We face
substantial competition, which may result in others discovering, developing or commercializing products before or more successfully
than we do.
The development
and commercialization of new drug products is highly competitive. We face competition with respect to our current product candidate
and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from
major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of
large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products
for the treatment of cancer. Potential competitors also include academic institutions, government agencies and other public and
private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research,
development, manufacturing and commercialization.
Our commercial
opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective,
have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors
also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could
result in our competitors establishing a strong market position before we are able to enter the market.
Many of the companies
against which we are competing or against which we may compete in the future have significantly greater financial resources and
expertise in research and development, manufacturing, conducting clinical trials, obtaining regulatory approvals and marketing
approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more
resources being concentrated among a smaller number of our competitors. Smaller and other early stage companies may also prove
to be significant competitors, particularly through collaborative arrangements with large and established companies. These third
parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial
sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our
programs, and we may be unable to effectively compete with these companies for these or other reasons.
Even if
we are able to commercialize any product candidates, the products may become subject to unfavorable pricing regulations, third-party
reimbursement practices or healthcare reform initiatives, which would harm our business.
The regulations
that govern marketing approvals, pricing, coverage and reimbursement for new drug products vary widely from country to country.
Current and future legislation may significantly change the approval requirements in ways that could involve additional costs
and cause delays in obtaining approvals.
Our ability to
commercialize any product candidate also will depend in part on the extent to which coverage and adequate reimbursement for our
product candidate will be available from government health administration authorities, private health insurers and other organizations.
Government authorities and third party payors, such as private health insurers and health maintenance organizations, decide which
medications they will pay for and establish reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere
is cost containment. Government authorities and third party payors have attempted to control costs by limiting coverage and the
amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide
them with predetermined discounts from list prices and are challenging the prices charged for medical products. Coverage and reimbursement
may not be available for any product that we commercialize and, even if these are available, the level of reimbursement may not
be satisfactory. Reimbursement may affect the demand for, or the price of, any product candidate for which we obtain marketing
approval. Obtaining and maintaining adequate reimbursement for our products may be difficult. We may be required to conduct expensive
pharmacoeconomic studies to justify coverage and reimbursement or the level of reimbursement relative to other therapies. If coverage
and adequate reimbursement are not available or reimbursement is available only to limited levels, we may not be able to commercialize
any product candidate for which we obtain marketing approval.
In addition,
there may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the
purposes for which the drug is approved by the FDA. Moreover, eligibility for reimbursement does not imply that a drug will be
paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution.
Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent.
Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement
levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs
may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors. Third-party payors
often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Our inability to
promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products
that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize
products and our overall financial condition.
Product
liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that
we may develop.
We face an inherent
risk of product liability exposure related to the testing of DHA-dFdC and UMB18 in human clinical trials and will face an even
greater risk if we commercially sell any products that we may develop. If we cannot defend ourselves against claims that our product
candidate or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability
claims may result in:
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decreased
demand for any product candidates or products that we may develop;
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damage
to our reputation and significant negative media attention;
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withdrawal
of clinical trial participants;
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significant
costs to defend the related litigation;
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substantial
monetary awards to trial participants or patients;
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reduced
resources of our management to pursue our business strategy; and
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the
inability to commercialize any products that we may develop.
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We currently
do not have product liability insurance coverage, which leaves us exposed to any product-related liabilities that we may incur.
We may be unable to obtain insurance on reasonable terms or at all. Insurance coverage is increasingly expensive. 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.
If we fail to comply with healthcare
regulations, we could face substantial enforcement actions, including civil and criminal penalties and our business, operations
and financial condition could be adversely affected.
We could be subject to healthcare fraud
and abuse laws and patient privacy laws of both the federal government and the states in which we conduct our business. The laws
include:
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the
federal healthcare program anti-kickback law, which prohibits, among other things, persons from soliciting, receiving or providing
remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing
or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and
Medicaid programs;
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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 payers that are false or fraudulent, and which
may apply to entities like us which provide coding and billing information to customers;
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the
federal Health Insurance Portability and Accountability Act of 1996, which prohibits executing a scheme to defraud any healthcare
benefit program or making false statements relating to healthcare matters and which also imposes certain requirements relating
to the privacy, security and transmission of individually identifiable health information;
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the
FDCA which among other things, strictly regulates drug manufacturing and product marketing, prohibits manufacturers from marketing
drug products for off-label use and regulates the distribution of drug sample; and
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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 payer, including commercial insurers, and state laws governing the privacy and security
of health information in certain circumstances, many of which differ from each other in significant ways and often are not
preempted by federal laws, thus complicating compliance efforts.
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If our operations are found to be in violation
of any of the laws described above or any governmental regulations that apply to us, we may be subject to penalties, including
civil and criminal penalties, 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.
Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot
be entirely eliminated. 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 management’s attention from the operation of our business. Moreover, achieving
and sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly.
Members of our management team lack
experience in the pharmaceutical field.
Members of our management team lack experience
in the pharmaceutical field. This lack of experience may impair our ability to commercialize our pharmaceutical products and attain
profitability. We will need to hire or engage managerial personnel with relevant experience in the pharmaceutical field; however,
there can be no assurance that such personnel will be available to us or, that once engaged, will be retained by us. Failure to
establish and maintain an effective management team with experience in the pharmaceutical field and commercialization of pharmaceuticals
products would have a material adverse effect on our business and results of operations.
The marketing approval process of
the FDA is lengthy, time consuming and inherently unpredictable, and if were ultimately are unable to obtain marketing approval
for the product candidates we intend to develop, our business will be substantially harmed.
None of the product candidates we intend
to develop have gained marketing approval in the U.S. and we cannot guarantee that we will ever have marketable products. Our
business is substantially dependent on our ability to complete the development of, obtain marketing approval for, and successfully
commercialize our product candidates in a timely manner. We cannot commercialize our product candidates in the United States without
first obtaining approval from the FDA to market each product candidate. Our product candidates could fail to receive marketing
approval for many reasons.
In addition, the process of seeking regulatory
clearance or approval to market the product candidates we intend to develop is expensive and time consuming and, notwithstanding
the effort and expense incurred, clearance or approval is never guaranteed. If we are not successful in obtaining timely clearance
or approval of our product candidates from the FDA, we may never be able to generate significant revenue and may be forced to
cease operations. The FDA process is costly, lengthy and uncertain. Any FDA application filed by the Company will have to be supported
by extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing and labeling data, to
demonstrate to the FDA’s satisfaction the safety and efficacy of the product for its intended use.
Obtaining clearances or approvals from
the FDA and from the regulatory agencies in other countries is an expensive and time consuming process and is uncertain as to
outcome. The FDA and other agencies could ask us to supplement our submissions, collect non-clinical data, conduct additional
clinical trials or engage in other time-consuming actions, or it could simply deny our applications. In addition, even if we obtain
an FDA approval or pre-market approvals in other countries, the approval could be revoked or other restrictions imposed if post-market
data demonstrates safety issues or lack of effectiveness. We cannot predict with certainty how, or when, the FDA will act. If
we are unable to obtain the necessary regulatory approvals, our financial condition and cash flow may be adversely affected, and
our ability to grow domestically and internationally may be limited. Additionally, even if cleared or approved, the Company’s
products may not be approved for the specific indications that are most necessary or desirable for successful commercialization
or profitability.
Modifications to our products may
require new FDA approvals.
Once a particular product receives FDA
approval or clearance, expanded uses or uses in new indications of our products may require additional human clinical trials and
new regulatory approvals or clearances, including additional IND and FDA submissions and premarket approvals before we can begin
clinical development, and/or prior to marketing and sales. If the FDA requires new clearances or approvals for a particular use
or indication, we may be required to conduct additional clinical studies, which would require additional expenditures and harm
our operating results. If the products are already being used for these new indications, we may also be subject to significant
enforcement actions. Conducting clinical trials and obtaining clearances and approvals can be a time consuming process, and delays
in obtaining required future clearances or approvals could adversely affect our ability to introduce new or enhanced products
in a timely manner, which in turn would harm our future growth.
Additional delays to the completion
of clinical studies may result from modifications being made to the protocol during the clinical trial, if such modifications
are warranted and/or required by the occurrences in the given trial.
Each modification to the protocol during
a clinical trial has to be submitted to the FDA. This could result in the delay or halt of a clinical trial while the modification
is evaluated. In addition, depending on the quantity and nature of the changes made, the FDA could take the position that the
data generated by the clinical trial is not poolable because the same protocol was not used throughout the trial. This might require
the enrollment of additional subjects, which could result in the extension of the clinical trial and the FDA delaying clearance
or approval of a product. Any such delay could have a material adverse effect on our business and results of operations.
There can be no assurance that the
data generated from our clinical trials using modified protocols will be acceptable to FDA.
There can be no assurance that the data
generated using modified protocols will be acceptable to the FDA or that if future modifications during the trial are necessary,
that any such modifications will be acceptable to the FDA. If the FDA believes that its prior approval is required for a particular
modification, it can delay or halt a clinical trial while it evaluates additional information regarding the change.
Serious injury or death resulting from
a failure of one of our drug candidates during current or future clinical trials could also result in the FDA delaying our clinical
trials or denying or delaying clearance or approval of a product.
Even though an adverse event may not be the result of the failure of our drug candidate, the FDA or an Internal Review Board (“IRB”)
could delay or halt a clinical trial for an indefinite period of time while an adverse event is reviewed, and likely would do
so in the event of multiple such events.
Any delay or termination of our current
or future clinical trials as a result of the risks summarized above, including delays in obtaining or maintaining required approvals
from IRBs, delays in patient enrollment, the failure of patients to continue to participate in a clinical trial, and delays or
termination of clinical trials as a result of protocol modifications or adverse events during the trials, may cause an increase
in costs and delays in the filing of any product submissions with the FDA, delay the approval and commercialization of our products
or result in the failure of the clinical trial, which could adversely affect our business, operating results and prospects.
The future results of our current
or future clinical trials may not support our product candidate claims or may result in the discovery of unexpected adverse side
effects.
Even if our clinical trials are completed
as planned, we cannot be certain that their results will support our drug candidate claims or that the FDA or foreign authorities
will agree with our conclusions regarding them. Success in preclinical studies and early clinical trials does not ensure that
later clinical trials will be successful, and we cannot be sure that the later trials will replicate the results of prior trials
and preclinical studies. The clinical trial process may fail to demonstrate that our drug candidates are safe and effective for
the proposed indicated uses. If the FDA concludes that the clinical trials for DHA-dFdC, UMB18 or any other product for which
we might seek clearance, has failed to demonstrate safety and effectiveness, we would not receive FDA clearance to market that
product in the United States for the indications sought.
In addition, such an outcome could cause
us to abandon the product candidate and might delay development of others. Any delay or termination of our clinical trials will
delay the filing of any product submissions with the FDA and, ultimately, our ability to commercialize our product candidates
and generate revenues. It is also possible that patients enrolled in clinical trials will experience adverse side effects that
are not currently part of the product candidate’s profile.
Current and future legislation may
increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the
prices we may obtain for such product candidates.
In the United States and some foreign
jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system
that could prevent or delay marketing approval for our product candidates, restrict or regulate post-approval activities and affect
our ability to profitably sell our product candidates. Legislative and regulatory proposals have been made to expand post-approval
requirements and restrict sales and promotional activities for pharmaceutical products. We do not know whether additional legislative
changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such
changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress
of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent
product labeling and post-marketing testing and other requirements.
In the United States, the Medicare Modernization
Act (“MMA”) changed the way Medicare covers and pays for pharmaceutical products. As a result of this legislation
and the expansion of federal coverage of drug products, we expect that there will be additional pressure to contain and reduce
costs. These cost reduction initiatives and other provisions of this legislation could decrease the coverage and price that we
receive for our product candidates and could seriously harm our business.
The Patient Protection and Affordable
Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010 (collectively, the “Health
Care Reform Law”) is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare
spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries,
impose new taxes and fees on the health industry and impose additional health policy reforms. The Health Care Reform Law remains
subject to legislative efforts to repeal, modify or delay the implementation of the law. However, if the Health Care Reform Law
is repealed or modified, or if implementation of certain aspects of the Health Care Reform Law are delayed, such repeal, modification
or delay may materially adversely impact our business, strategies, prospects, operating results or financial condition.
In addition, other legislative changes
have been proposed and adopted in the United States since the Health Care Reform Law was enacted. We expect that additional federal
healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments
will pay for healthcare products and services, and in turn could significantly reduce the projected value of certain development
projects and reduce or eliminate our profitability.
Upon commercialization of our products,
we may be dependent on third parties to market, distribute and sell our products.
Our ability to receive revenues may be
dependent upon the sales and marketing efforts of any future co-marketing partners and third-party distributors. At this time,
we have not entered into an agreement with any commercialization partner and only plan to do so after the successful completion
of Phase 1 clinical trials and prior to commercialization. If we fail to reach an agreement with any commercialization partner,
or upon reaching such an agreement that partner fails to sell a large volume of our products, it may have a negative impact on
our business, financial condition and results of operations.
Adverse events involving our products
may lead the FDA to delay or deny clearance for our products or result in product recalls that could harm our reputation, business
and financial results.
Once a product receives FDA clearance
or approval, the agency has the authority to require the recall of commercialized products in the event of adverse side effects,
material deficiencies or defects in design or manufacture. The authority to require a recall must be based on an FDA finding that
there is a reasonable probability that the product would cause serious injury or death. Manufacturers may, under their own initiative,
recall a product if any material deficiency in a product is found. A government-mandated or voluntary recall by us or one of our
distributors could occur as a result of adverse side effects, impurities or other product contamination, manufacturing errors,
design or labeling defects or other deficiencies and issues. Recalls of any of our products would divert managerial and financial
resources and have an adverse effect on our financial condition and results of operations. The FDA requires that certain classifications
of recalls be reported to FDA within ten working days after the recall is initiated. Companies are required to maintain certain
records of recalls, even if they are not reportable to the FDA. We may initiate voluntary recalls involving our products in the
future that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, they could require
us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect
our sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.
Risks Related to Ownership of Our Common
Stock
We face evolving regulation of corporate
governance and public disclosure that may result in additional expenses and continuing uncertainty.
As a public company, we incur significant
legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002, or SOX, the Dodd-Frank Wall Street Reform and Consumer Protection
Act, the listing requirements of The Nasdaq Global Market and other applicable securities rules and regulations impose various
requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate
governance practices. Our management and other personnel devote a substantial amount of time towards maintaining compliance
with these requirements. These rules, regulations and standards are subject to varying interpretations, and, as a result, their
application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could
result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure
and governance practices. We intend to invest the resources necessary to comply with evolving laws, regulations and
standards, and this investment may result in increased general and administrative expenses and a diversion of management time
and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed
laws, regulations and standards differ from the activities intended by regulatory or governing bodies, regulatory authorities
may initiate legal proceedings against us, which could be costly and time-consuming, and our reputation and business may be harmed.
Our common stock may be delisted
from The Nasdaq Capital Market if we fail to comply with continued listing standards.
Our common stock is currently traded on
The Nasdaq Capital Market under the symbol “AIKI”. If we fail to meet any of the continued listing standards
of The Nasdaq Capital Market, our common stock could be delisted from The Nasdaq Capital Market. These continued listing
standards include specifically enumerated criteria, such as:
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a $1.00 minimum
closing bid price;
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stockholders’
equity of $2.5 million;
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500,000 shares of
publicly-held common stock with a market value of at least $1 million;
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300 round-lot stockholders;
and
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compliance with
Nasdaq’s corporate governance requirements, as well as additional or more stringent criteria that may be applied in
the exercise of Nasdaq’s discretionary authority.
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On April 28,
2020, we received a staff deficiency notice from Nasdaq informing the Company that its common stock failed to comply with the
$1.00 minimum bid price required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). Nasdaq’s
letter advised the Company that, based upon the closing bid price during the period from March 16, 2020 to April 27, 2020, the
Company no longer met this test.
Given the current extraordinary market
conditions, Nasdaq had determined to toll the compliance periods for the bid price and market value of publicly held shares requirements
through June 30, 2020. Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company had been provided with a compliance period
of 180 calendar days, or until December 28, 2020, to regain compliance with the minimum bid price requirement. To regain compliance,
the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive
business days prior to December 28, 2020. As of the close of trading on July 30, 2020, the closing bid price of our common stock
was at least $1.00 per share for 10 consecutive trading days and, accordingly, we regained compliance with NASDAQ’s continued
listing requirements.
There can be no assurance that we will
be able to maintain compliance and remain in compliance in the future. In particular, our share price may continue to decline
for a number of reasons, including many that are beyond our control. See “Our share price may be volatile and there may
not be an active trading market for our common stock”.
If we fail to comply with Nasdaq’s
continued listing standards, we may be delisted and our common stock will trade, if at all, only on the over-the-counter market,
such as the OTC Bulletin Board or OTCQX market, and then only if one or more registered broker-dealer market makers comply with
quotation requirements. In addition, delisting of our common stock could depress our stock price, substantially limit
liquidity of our common stock and materially adversely affect our ability to raise capital on terms acceptable to us, or at all.
Further, delisting of our common stock would likely result in our common stock becoming a “penny stock” under the
Exchange Act.
Our share price may be volatile
and there may not be an active trading market for our common stock.
There can be no assurance that the market
price of our common stock will not decline below its present market price or that there will be an active trading market for our
common stock. The market prices of technology or technology related companies have been and are likely to continue to be
highly volatile. Fluctuations in our operating results and general market conditions for technology or technology related
stocks could have a significant impact on the volatility of our common stock price. We have experienced significant volatility
in the price of our common stock. From January 1, 2019 through December 31, 2019, the share price of our common stock
(on a split-adjusted basis) ranged from a high of $3.92 to a low of $1.05. The reason for the volatility in our stock is not well
understood and may continue. Factors that may have contributed to such volatility include, but are not limited to:
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developments regarding
regulatory filings;
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our funding requirements
and the terms of our financing arrangements;
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technological innovations;
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introduction of
new technologies by us or our competitors;
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material changes
in existing litigation;
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changes in the enforceability
or other matters surrounding our patent portfolios;
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government regulations
and laws;
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public sentiment
relating to our industry;
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developments in
patent or other proprietary rights;
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the number of shares
issued and outstanding;
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the number of shares
trading on an average trading day;
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performance of companies
in the non-performing entity space generally;
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announcements regarding
other participants in the technology and technology related industries, including our competitors;
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block sales of our
shares by stockholders to whom we have sold stock in private placements, or the cessation of transfer restrictions with respect
to those shares; and
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market speculation
regarding any of the foregoing.
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We could fail in future financing
efforts or be delisted from The Nasdaq Capital Market if we fail to receive stockholder approval when needed.
We are required under the Nasdaq rules
to obtain stockholder approval for any issuance of additional equity securities that would comprise more than 20% of the total
shares of our common stock outstanding before the issuance of such securities sold at a discount to the greater of book or market
value in an offering that is not deemed to be a “public offering” by Nasdaq. Funding of our operations and acquisitions
of assets may require issuance of additional equity securities that would comprise more than 20% of the total shares of our common
stock outstanding, but we might not be successful in obtaining the required stockholder approval for such an issuance. If we are
unable to obtain financing due to stockholder approval difficulties, such failure may have a material adverse effect on our ability
to continue operations.
Our shares of common stock are thinly
traded and, as a result, stockholders may be unable to sell at or near ask prices, or at all, if they need to sell shares to raise
money or otherwise desire to liquidate their shares.
Our common stock has been “thinly-traded”
meaning that the number of persons interested in purchasing our common stock at or near ask prices at any given time may be relatively
small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company that
is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate
or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be
reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we
become more seasoned and viable. Our trading volumes are further adversely affected by the 1-for-19 reverse stock split that was
effective as of March 4, 2016. In addition, we believe that due to the limited number of shares of our common stock outstanding,
an options market has not been established for our common stock, limiting the ability of market participants to hedge or otherwise
undertake trading strategies available for larger companies with broader shareholder bases which prevents institutions and others
from acquiring or trading in our securities. Consequently, there may be periods of several days or more when trading activity
in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share price. We cannot give stockholders any assurance
that a broader or more active public trading market for our common shares will develop or be sustained, or that current trading
levels will be sustained.
Because of the “anti-takeover”
provisions in our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware General Corporation
Law, a third party may be discouraged from making a takeover offer that could be beneficial to our stockholders.
The effect of certain provisions of our
Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and the anti-takeover provisions of the Delaware
General Corporation Law (the “DGCL”), could delay or prevent a third party from acquiring us or replacing members
of our Board of Directors, or make more costly any attempt to acquire control of the Company, even if the acquisition or the Board
designees would be beneficial to our stockholders. These factors could also reduce the price that certain investors might be willing
to pay for shares of the common stock and result in the market price being lower than it would be without these provisions.
Dividends on our common stock are
not likely.
During the last five years, we have not
paid cash dividends on our common stock, and we do not anticipate paying cash dividends on our common stock in the foreseeable
future. Investors must look solely to the potential for appreciation in the market price of the shares of our common
stock to obtain a return on their investment.
It may be difficult to predict our
financial performance because our quarterly operating results may fluctuate.
Our revenues, operating results and valuations
of certain assets and liabilities may vary significantly from quarter to quarter due to a variety of factors, many of which are
beyond our control. You should not rely on period-to-period comparisons of our results of operations as an indication of our future
performance. Our results of operations may fall below the expectations of market analysts and our own forecasts. If this happens,
the market price of our common stock may fall significantly. The factors that may affect our quarterly operating results include
the following:
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fluctuations in
results of our enforcement and licensing activities or outcome of cases;
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fluctuations in
duration of judicial processes and time to completion of cases;
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the timing and amount
of expenses incurred to negotiate with licensees and obtain settlements from infringers;
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the impact of our
anticipated need for personnel and expected substantial increase in headcount;
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fluctuations in
the receptiveness of courts and juries to significant damages awards in patent infringement cases and speed to trial in the
jurisdictions in which our cases may be brought and the accepted royalty rates attributable to damages analysis for patent
cases generally, including the royalty rates for industry standard patents which we may own or acquire;
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worsening economic
conditions which cause revenues or profits attributable to infringer sales of products or services to decline;
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changes in the regulatory
environment, including regulation of NPE activities or patenting practices, that may negatively impact our or infringers practices;
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the timing and amount
of expenses associated with litigation, regulatory investigations or restructuring activities, including settlement costs
and regulatory penalties assessed related to government enforcement actions;
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Any changes we make
in our Critical Accounting Estimates described in the Management’s Discussion and Analysis of Financial Condition and
Results of Operations sections of our periodic reports;
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the adoption of
new accounting pronouncements, or new interpretations of existing accounting pronouncements, that impact the manner in which
we account for, measure or disclose our results of operations, financial position or other financial measures; and
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costs related to
acquisitions of technologies or businesses.
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If we fail to retain our key personnel,
we may not be able to achieve our anticipated level of growth and our business could suffer.
Our future depends, in part, on our ability
to attract and retain key personnel and the continued contributions of our executive officers, each of whom may be difficult to
replace. In particular, Anthony Hayes, our Chief Executive Officer, is important to the management of our business and operations
and the development of our strategic direction. The loss of the services of any such individual and the process to replace any
key personnel would involve significant time and expense and may significantly delay or prevent the achievement of our business
objectives.
Because an increasing amount of our outstanding shares
may become freely tradable, sales of these shares could cause the market price of our common stock to drop significantly, even
if our business is performing well.
As of August 14, 2020, we had outstanding 34,920,219 shares
of common stock, of which our directors and executive officers owned 24,283 shares which are subject to the limitations of Rule
144 under the Securities Act.
In general, Rule 144 provides that any
non-affiliate of ours, who has held restricted common stock for at least six-months, is entitled to sell their restricted stock
freely, provided that we are then current in our filings with the SEC.
An affiliate of the Company may sell after
six months with the following restrictions:
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we are current in
our filings;
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certain manner of
sale provisions;
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filing of Form 144;
and
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volume limitations
limiting the sale of shares within any three-month period to a number of shares that does not exceed the greater of 1% of
the total number of outstanding shares or, the average weekly trading volume during the four calendar weeks preceding the
filing of a notice of sale.
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Because almost all of our outstanding
shares are freely tradable (subject to certain restrictions imposed by lockup agreements executed by the holders thereof) and
the shares held by our affiliates may be freely sold (subject to the Rule 144 limitations), sales of these shares could cause
the market price of our common stock to drop significantly, even if our business is performing well.
Risk Related to this Offering
Management will have broad discretion
as to the use of the net proceeds from this offering, and we may not use these proceeds effectively.
We intend to use the net proceeds from
this offering for working capital and general corporate purposes. Our management will have broad discretion in the application
of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance
the value of our common stock. Accordingly, you will be relying on the judgment of our management with regard to the use of these
net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being
used appropriately. Our failure to apply these funds effectively could have a material adverse effect on our business, delay the
development of our product candidates and cause the price of our common stock to decline.
You will experience immediate and
substantial dilution in the net tangible book value per share of the common stock you purchase.
Because the price per share of our common
stock being offered is substantially higher than the net tangible book value per share of our common stock, you will suffer substantial
dilution in the net tangible book value of the common stock you purchase in this offering. Based on a public offering price of
$[____] per share, if you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution
of approximately ($[____]) per share in the net tangible book value of the common stock. See the section entitled “Dilution”
in this prospectus for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.
In addition, we have a significant number
of stock options, warrants and convertible preferred stock outstanding. To the extent that outstanding stock options, warrants
have been or may be exercised or other shares issued, you may experience further dilution.
Future sales of substantial amounts
of our common stock could adversely affect the market price of our common stock.
We may choose to raise additional capital
due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating
plans. If additional capital is raised through the sale of equity or convertible debt securities, or perceptions that those sales
could occur, the issuance of these securities could result in further dilution to investors purchasing our common stock in this
offering or result in downward pressure on the price of our common stock, and our ability to raise capital in the future.
A large number of shares issued
in this offering may be sold in the market following this offering, which may depress the market price of our common stock.
A large number of shares issued in this
offering may be sold in the market following this offering, which may depress the market price of our common stock. Sales of a
substantial number of shares of our common stock in the public market following this offering could cause the market price of
our common stock to decline. If there are more shares of our common stock offered for sale than buyers are willing to purchase,
then the market price of our common stock may decline to a market price at which buyers are willing to purchase the offered shares
of our common stock and sellers remain willing to sell the shares. All of the securities issued in the offering will be freely
tradable without restriction or further registration under the Securities Act.
This is a best efforts offering, no minimum number or
dollar amount of securities is required to be sold, and we may not raise the amount of capital we believe is required for our
business plans.
The Placement Agent has agreed to use
its reasonable best efforts to solicit offers to purchase the securities in this offering. The Placement Agent has no
obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar
amount of the securities. There is no required minimum number of securities that must be sold as a condition to completion of
this offering. Because there is no minimum offering amount required as a condition to the closing of this offering, the
actual offering amount, Placement Agent fees and proceeds to us are not presently determinable and may be substantially less
than the maximum amounts set forth above. We may sell fewer than all of the securities offered hereby, which may
significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund in the
event that we do not sell an amount of securities sufficient to fund research and development of our lead product candidates,
including clinical trial activities. Thus, we may not raise the amount of capital we believe is required for our operations
in the short-term and may need to raise additional funds, which may not be available or available on terms acceptable to
us.
CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This
prospectus contains forward-looking statements, which reflect the views of our management with respect to future events and financial
performance. These forward-looking statements are subject to a number of uncertainties and other factors that could cause actual
results to differ materially from such statements. Forward-looking statements are identified by words such as “anticipates,”
“believes,” “estimates,” “expects,” “intends,” “plans,” “projects,”
“targets” and similar expressions. Such forward-looking statements may be contained in the sections “Risk Factors,”
and “Business,” among other places in this prospectus. Readers are cautioned not to place undue reliance on these
forward-looking statements, which are based on the information available to management at this time and which speak only as of
this date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise. For a discussion of some of the factors that may cause actual results to differ materially from those
suggested by the forward-looking statements, please read carefully the information under “Risk Factors.”
The
identification in this document of factors that may affect future performance and the accuracy of forward-looking statements is
meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding
of their inherent uncertainty. You may rely only on the information contained in this prospectus.
We
have not authorized anyone to provide information different from that contained in this prospectus. Neither the delivery of this
prospectus nor the sale of our common stock means that information contained in this prospectus is correct after the date of this
prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy these securities in any circumstances under
which the offer or solicitation is unlawful.
DILUTION
If
you purchase shares of our common stock in this offering, you will experience dilution to the extent of the difference between
the price per share you pay in this offering and the net tangible book value per share of our common stock immediately after this
offering. The net tangible book value of our common stock on June 30, 2020 was approximately [ ],
or approximately $[ ] per share. Net tangible book value per share is equal
to the amount of our total tangible assets, less total liabilities, divided by the aggregate number of shares of our common stock
outstanding.
After giving effect to the assumed sale by
us of shares of our common stock in this offering at an assumed combined public offering price of $[____] per share of common
stock, after deducting the Placement Agent’s fees and estimated offering expenses payable by us, our as adjusted net tangible
book value as of [____] would have been approximately $[____], or approximately $[____] per share of common stock. This
represents an immediate increase in net tangible book value of approximately $[____] per share to existing stockholders and
an immediate dilution of approximately $[____] per share to new investors purchasing shares of our common stock in this offering.
The following table illustrates this per share dilution:
Assumed public offering price per share
|
|
$
|
|
|
Net tangible book value per share as of June 30, 2020
|
|
$
|
|
|
Increase per share attributable to new investors
in this offering
|
|
|
|
|
|
|
|
|
|
As adjusted net tangible book value per share as of June 30, 2020 after
giving effect to this offering
|
|
$
|
|
|
|
|
|
|
|
Dilution per share to investors participating in this offering
|
|
$
|
|
|
Each $[____] increase (decrease) in the
assumed public offering price of $[____] per share would increase (decrease) our as adjusted net tangible book value after
this offering by $[____] million, or $[____] per share, and the dilution per share to new investors by $[____] per share,
assuming that the number of shares of common stock offered by us, as set forth above, remains the same and after deducting the
Placement Agent’s fees and estimated offering expenses payable by us. We may also increase or decrease the number of shares
of common stock we are offering from the assumed number of shares of common stock set forth above. An increase (decrease) of [____] shares
of common would increase (decrease) our as adjusted net tangible book value after this offering by $[____] million, or $[____]
per share, and the dilution per share to new investors by $[____] per share, assuming that the combined public offering price
remains the same and after deducting the Placement Agent’s fees and estimated offering expenses payable by us. The information
discussed above is illustrative only and will adjust based on the actual public offering price, the actual number of shares that
we offer in this offering, and other terms of this offering determined at pricing.
The number of shares of our outstanding common
stock reflected in the discussion and table above is based on 34,920,219 shares of common stock outstanding as of August 14, 2020
and excludes, as of that date:
|
●
|
85,234 shares of our common stock issuable upon
exercise of outstanding options at a weighted average exercise price of $178.99 per share;
|
|
●
|
801,167 shares of our common stock issuable upon
exercise of outstanding warrants at a weighted average exercise price of $9.86 per share (without giving effect to any of the
anti-dilution adjustment provisions thereof);
|
|
●
|
688
shares of common stock issuable upon the conversion of our Series D and D-1 Preferred Stock; and
|
|
●
|
51,732 shares of our common stock to be reserved
for potential future issuance pursuant to our 2012, 2013 and 2014 Equity Incentive Plans, combined.
|
CAPITALIZATION
The following table sets forth our actual cash and cash equivalents
and capitalization, each as of June 30, 2020, and as adjusted to give effect to the issuance and sale of shares of our common stock
in this offering at an assumed public offering price of $[____] per share, which is the last reported sale price for our common
stock on the Nasdaq Capital Market on [____], after deducting the discounts and commissions and estimated offering expenses payable
by us.
The as adjusted
information set forth below is illustrative only and will be adjusted based on the actual public offering price and other terms
of this offering determined at pricing. You should read this information together with our consolidated financial statements and
related notes incorporated by reference in this prospectus.
|
|
As of June 30, 2020
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
Actual
|
|
|
As Adjusted
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
(Dollars in thousands, except per share data)
|
|
Cash and cash equivalents
|
|
$
|
2,831
|
|
|
$
|
|
|
Accounts payable and accrued expenses
|
|
|
969
|
|
|
|
|
|
Total liabilities
|
|
|
969
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 50,000,000 shares authorized; 4,725 shares of Series D Preferred Stock issued and outstanding at June 30, 2020; 834 shares of Series D-1 Preferred Stock issued and outstanding at June 30, 2020
|
|
|
-
|
|
|
|
|
|
Common stock, $0.0001 par value, 100,000,000 shares authorized; 34,920,219 shares issued and outstanding, actual, and , as adjusted, at June 30, 2020
|
|
|
3
|
|
|
|
|
|
Additional paid-in-capital
|
|
|
186,667
|
|
|
|
|
|
Treasury stock, at cost, 3 shares at June 30, 2020
|
|
|
(264
|
)
|
|
|
|
|
Accumulated deficit
|
|
|
(154,912
|
)
|
|
|
|
|
Total stockholders’ equity
|
|
|
31,494
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
32,463
|
|
|
|
|
|
The number of shares of our common stock to be outstanding after
this offering is based on 34,920,219 shares of common stock outstanding as of August 14, 2020 and excludes as of that date:
|
●
|
85,234 shares of our common stock issuable upon exercise of outstanding options at a weighted average exercise price of $178.99 per share;
|
|
●
|
801,167 shares of our common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $9.86 per share (without giving effect to any of the anti-dilution adjustment provisions thereof);
|
|
●
|
688 shares of common stock issuable upon the conversion of our Series D and D-1 Preferred Stock; and
|
|
●
|
51,732 shares of our common stock to be reserved for potential future issuance pursuant to our 2012, 2013 and 2014 Equity Incentive Plans in the aggregate.
|
USE
OF PROCEEDS
We estimate that our net proceeds from
this offering will be approximately $[____] based on an assumed offering price of $[____], the last reported sale price of our
common stock on the Nasdaq Capitals Markets on [____].
An $[____] increase (decrease) in the assumed
public offering price of $[____] per share of our common stock would increase (decrease) the expected net cash proceeds of the
offering to us by approximately $[____]. An increase (decrease) of [____] in the assumed number of shares sold in this
offering would increase (decrease) the expected net cash proceeds of the offering to us by approximately $[____], assuming a public
offering price of $[____] per share.
We intend to use the net proceeds of this
offering for working capital and general corporate purposes. As of the date of this prospectus, we cannot specify with certainty
all of the particular uses for the net proceeds we will have upon completion of the offering. Accordingly, we will retain broad
discretion over the use of these proceeds.
The Company may also use a portion of the
net proceeds of this offering to acquire or invest in complementary businesses, products or technologies, or to obtain the right
to use such complementary technologies. The Company has no commitments with respect to any acquisition or investment and is not
currently involved in any negotiations with respect to any such transactions.
As of the date of this prospectus, the
Company cannot specify with certainty all of the particular uses for the net proceeds to be received upon the completion of this
offering. The amounts and timing of its actual expenditures will depend on numerous factors, including the status of its product
development efforts, sales and marketing activities, technological advances, amount of cash generated or used by its operations
and competition. Accordingly, the Company’s management will have broad discretion in the application of the net proceeds
and investors will be relying on the judgment of its management regarding the application of the proceeds of this offering.
MARKET
PRICE OF OUR COMMON STOCK
Our
common stock is listed on the Nasdaq Capital Market under the symbol “AIKI”.
Holders
As of August 14, 2020, the last reported
sales price reported on the Nasdaq Capital Market for our common stock was $0.886 per share. As of the date of this prospectus,
we had approximately 123 holders of our common stock. The number of record holders was determined from the records of
our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security
brokers, dealers, and registered clearing agencies.
Dividends
We have never declared or paid any cash dividends on our capital stock,
and we do not anticipate paying cash dividends in the future.
BUSINESS
Overview
AIkido
Pharma Inc., formerly known as Spherix Incorporated, was initially formed in 1967 and is currently a biotechnology company with
a diverse portfolio of small-molecule anti-cancer therapeutics in development. The Company’s platform consists of patented
technology from leading universities and researchers and we are currently in the process of developing an innovative therapeutic
drug platform through strong partnerships with world renowned educational institutions, including the University of Texas at Austin,
the University of Maryland, Baltimore and Wake Forest University. Our diverse pipeline of therapeutics includes therapies for
pancreatic cancer, AML and ALL. The Company is also developing a broad spectrum antiviral platform that may potentially inhibit
replication of multiple viruses including Influenza virus, SARS-CoV (coronavirus), MERS-CoV, Ebolavirus and Marburg virus.
The
Company previously focused its efforts on owning, developing, acquiring and monetizing intellectual property assets. Since May
2016, the Company has received limited funds from its intellectual property monetization. In addition to its patent monetization
efforts, since the fourth quarter of 2017, the Company has been transitioning to focus its efforts as a technology and biotechnology
development company. These efforts have focused on biotechnology research and blockchain technology research. The Company’s
biotechnology research development includes: (i) an investment in Hoth, a development stage biopharmaceutical company focused
on unique targeted therapeutics for patients suffering from indications such as atopic dermatitis, also known as eczema, (ii)
an investment in DatChat, a privately held personal privacy platform focused on encrypted communication, internet security and
digital rights management, and (iii) the acquisition of assets of CBM, a pharmaceutical company focusing on the development of
cancer treatments.
As
a result of the Company’s biotechnology research development and associated investments and acquisitions, our business portfolio
now focuses on the treatment of three different cancers, including pancreatic cancer, AML and ALL. Our AML and ALL compounds,
developed at the Wake Forest University, are targeted therapeutics designed to overcome multiple resistance mechanisms observed
with the current standard of care. DHA-dFdC, our pancreatic drug candidate developed at the University of Texas at Austin, is
a new compound that we hope will become the next generation of chemotherapy treatment for advanced pancreatic cancer. DHA-dFdC
overcomes tumor cell resistance to current chemotherapeutic drugs and is well tolerated in preclinical toxicity tests. Preclinical
studies have also indicated that DHA-dFdC inhibits pancreatic cancer cell growth (up to 100,000-fold more potent that gemcitabine,
a current standard therapy), targets pancreatic tumors and has demonstrated activities against other cancers, including leukemia,
lung and melanoma. In addition, we are constantly seeking to grow our pipe to treat unmet medical needs in oncology.
In
addition, the Company owns an exclusive world-wide license to patented technology from the University of Maryland Baltimore (“UMB”).
Our license is for a broad spectrum antiviral drug platform. The licensed technology is a broadly acting pan-viral inhibitory
compound targeting multiple viral pathogens. The technology works to inhibit replication of multiple viruses including Influenza
virus, SARS-CoV (coronavirus), MERS-CoV, Ebolavirus and Marburg virus. The technology is covered by two patent applications already
on file with the United States Patent and Trademark Office. The UMB inventors are Drs. Matthew Frieman, Alexander MacKerell and
Stuart Watson. The Company has also executed a Sponsored Research Agreement with UMB to support the development of the technology.
Our
Products and Services
The
acquisition of the CBM assets has transformed the Company into an innovative pharmaceutical company dedicated to translating fundamental
biological insights into new drugs and treatments that address unmet medical needs. Our drug platform focuses on the treatment
of three cancers, including pancreatic cancer, acute myeloid leukemia (AML) and acute lymphoblastic leukemia (ALL).
Our
Drug Platform
DHA-dFdC
4-(N)-Docosahexaenoyl 2´, 2´-Difluorodeoxycytidine, referred to as DHA-dFdC, is patented technology licensed to the
Company from the University of Texas at Austin. DHA-dFdC is a new compound poised to become the next generation of second-line
chemotherapy treatment for advanced pancreatic cancer. DHA-dFdC overcomes tumor cell resistance to current chemotherapeutic drugs
and is well tolerated in preclinical toxicity tests. Preclinical studies have also indicated that DHA-dFdC inhibits pancreatic
cancer cell growth (up to 100,000-fold more potent that gemcitabine, a current standard therapy (for example, the IC50
value of DHA-dFdC is more than 100,000-fold smaller than gemcitabine), targets pancreatic tumors and has demonstrated activities
against other cancer cell lines, including leukemia, lung and melanoma. Our AML and ALL compounds, developed at the Wake Forest
University and called KPC34, are next generation targeted therapeutics designed to overcome multiple resistance mechanisms observed
with the current standard of care. Combined, the Company’s drug platform offers a robust drug pipeline focused on the development
and commercialization of drugs to treat unmet medical needs in oncology. In addition, we are constantly seeking to grow our pipeline
to treat unmet medical needs in oncology.
Background*
Pancreatic
cancer is the 3rd leading cause of cancer-related death in the United States, surpassing breast cancer. It is expected to become
the 2nd leading cause of cancer-related death in the United States by the year 2020, surpassing colorectal cancer. In fact, pancreatic
cancer has the highest mortality rate of all major cancers. Approximately 91% of pancreatic cancer patients will die within five
years of diagnosis, only 8% will survive more than five years and 74% of patients die within the first year of diagnosis.
Pancreatic
cancer is one of the few cancers for which survival has not improved substantially over nearly 40 years. Treatment options for
pancreatic cancer include surgery, radiation therapy and chemotherapy, which extend survival or relieve symptoms, but seldom produce
a cure. Surgical removal of the tumor is possible in less than 20% of patients diagnosed with pancreatic cancer because detection
is often in late stages and has spread beyond the pancreas. The current state of the art chemotherapy treatment is gemcitabine,
Folfirinox cocktail or gemcitabine in combination with Abraxane.
|
*
|
Hirshberg
Foundation for Pancreatic Cancer Research
|
The
University of Texas at Austin has identified a new drug, DHA-dFdC, that has shown positive results in preclinical studies, inhibiting
pancreatic tumor growth in clinically relevant transgenic mouse models. In preclinical studies, DHA-dFdC has:
|
●
|
inhibited
pancreatic cancer cell growth (up to 100,000-fold more potent that gemcitabine, a current standard therapy);
|
|
●
|
targets
pancreatic tumors;
|
|
●
|
has
overcome tumor cell resistance to current chemotherapeutic drugs;
|
|
●
|
is
well tolerated in preclinical toxicity test;
|
|
●
|
has
demonstrated activities against other cancers (e.g. leukemia, lung, melanoma); and
|
|
●
|
may
stimulate immunogenic cell death to activate host antitumor immunity.
|
Gem-DHA
Technology Summary
Gem-DHA
is a conjugate molecule containing gemcitabine linked to a fatty acid called docosahexaenoic acid (DHA). The structure is:
The
DHA structure is illustrated above the dashed line in the graphic above and the gemcitabine structure is illustrated below the
dashed line. The DHA patent states that Gem-DHA was more effective than gemcitabine alone in killing cancer cells in vitro and
in vivo in a certain mouse model. The patent also states that conjugation of gemcitabine with fatty acids other than DHA did not
increase effectiveness over gemcitabine.
Gem-DHA
Published Data
The
science behind Gem-DHA has been published in the following peer-reviewed scientific journals:
|
●
|
Naguib
et al. (2016) Synthesis, characterization, and in vitro and in vivo evaluations of 4-(N)-docosahexaenoyl 2 ́, 2 ́-
difluorodeoxycytidine with potent and broad-spectrum antitumor activity, NeoPlasia 18: 33-48.
|
|
●
|
Valdes
et al. (2017) Preclinical evaluation of the short-term toxicity of 4-(N)-docosahexaenoyl 2 ́, 2 ́- difluorodeoxycytidine
(DHA-dFdC), Pharm. Res. 34: 1224-1232.
|
|
●
|
Valdes
et al. (2019) A solid lipid nanoparticle formulation of 4-(N)-docosahexaenoyl 2 ́, 2 ́- difluorodeoxycytidine
with increased solubility, stability, and antitumor activity, Int. J. Pharm. 570:118609.
|
The
portions of the published data state the following:
|
●
|
The
drug unexpectedly concentrates itself in the pancreas relative to other organs.
|
|
●
|
It
significantly increases the lifespan of mice with pancreatic cancer in either mice predisposed to develop the cancer, or into
which human pancreatic cancer has been injected.
|
|
●
|
It
significantly decreases the growth of pancreatic tumors in mice, better than gemcitabine, the current standard of care.
|
|
●
|
An
oral formulation using lipid nanoparticles is highly effective and stable and has outstanding bioavailability.
|
Gem-DHA
Patent Coverage
Gem-DHA
has one issued patent on the drug itself and one application on the oral formulation, as listed in the following table:
Number
|
|
Priority
|
|
Expiration
|
|
Title
|
App.
Serial No. 16/576,127, filed 9/19/2019 as continuation of App. Serial No. 15/115,393, filed 1/29/2015
|
|
1/29/2014
|
|
N/A
|
|
Nucleobase
Analogue Derivatives and Their Applications
|
U.S.
Patent No. 10,463,684, issued 11/5/2019 from App. Serial No. 15/115,393, filed 1/29/2015
|
|
1/29/2014
|
|
10/07/2035
|
|
Nucleobase
Analogue Derivatives and Their Applications
|
Provisional
App. Serial No. 62/858,114, filed 06/06/2019
|
|
6/06/2019
|
|
N/A
|
|
Lipid
Nanoparticles Containing Pharmaceutical and/or Nutraceutical agents and methods thereof
|
All
of this technology has been exclusively licensed to the Company for commercial development.
AML
& ALL Cancer
Our
AML and ALL compounds, developed at the Wake Forest University and called KPC34, are next generation targeted therapeutics designed
to overcome multiple resistance mechanisms observed with the current standard of care.
Background
Approximately
70% of all AML patients are over the age of 60 and only 6.6% of patients are still alive 5 years after diagnosis. Gemcitabine
and Cytarabine are the backbone of AML and ALL therapy, but life expectancy is poor and relapses are much harder to treat.
Cytarabine
(Ara-C) has been a major drug for acute myeloid leukemia (AML) treatment for more than three decades, but KPC34 has shown superior
results when tested against Cytarabine.
KPC34
Technology Summary
KPC34,
a conjugate molecule made of a gemcitabine molecule linked to a phospholipid, has the following structure:
Picture
in the illustration above, to the left of the dashed line is the phospholipid portion and to the right of the dashed line is gemcitabine.
Gemcitabine
is a chemotherapy drug used to treat a wide array of cancers, including breast cancer, ovarian cancer, non-small cell lung cancer,
pancreatic cancer and bladder cancer. The drug interferes with DNA and its function of the phospholipid to which the gemcitabine
is linked in KPC34, is to inhibit protein kinase C-type enzymes, which are involved in multiple signaling pathways in leukemia.
The
strategy behind targeting both DNA synthesis and protein kinase C with one molecule is to double-target different mechanisms of
action in leukemia cells and greatly reduce the possibility of development of resistance to the drug.
KPC34
is intended to treat the relatively small population of patients with AML and acute ALL. In 2019, an estimated 21,450 people of
all ages (11,650 men and boys and 9,800 women and girls) in the United States will be diagnosed with AML. AML is the second most
common type of leukemia diagnosed in adults and children, but most cases occur in adults. AML makes up 32% of all adult leukemia
cases (source: https://www.cancer.net/cancer-types/leukemia-acute-myeloid-aml/statistics). In 2019, an estimated 5,930 people
of all ages (3,280 men and boys and 2,650 women and girls) in the United States were diagnosed with ALL (source: https://www.cancer.net/cancer-types/leukemia-acute-lymphocytic-all/statistics).
The
drug is intended for oral application, unlike standard chemotherapy drugs, which are given by injection.
Because
of the low patient population, and the imminent expiration of the patent, FDA orphan drug status will be sought, which provides
expedited review and seven years of exclusivity from approval of the new drug application.
Preliminary
data from preclinical studies at Wake Forest on the drug includes the following results:
|
●
|
kills
leukemia cells in vitro;
|
|
●
|
inhibits
protein kinase C in biochemical assays;
|
|
●
|
targets
central nervous system leukemia;
|
|
●
|
targets
AML exhibiting phosphorylated protein kinase C;
|
|
●
|
Wake
Forest claims KPC34 targeted gemcitabine alone or cytarabine (another chemo drug) alone; and
|
|
●
|
KPC34
also appears to overcome resistance to gemcitabine; it is effective against gemcitabine-resistant cancer.
|
The
technology licensed is much broader than KPC34 represents, and includes both anticancer and antiviral conjugates, and could include
a much broader range of indications, but we have no such drug candidates in development other than KPC34.
KPC34
Patent Coverage
The
KPC34 license includes five issued patents, but only one of them covers KPC34. The patent is US7309696, entitled “Compositions
and methods for targeting cancer cells.” It expires on August 11, 2021. All five of the licensed patents will expire by
late 2022.
Licenses
On
April 12, 2018, CBM entered into a patent license agreement (the “UT Agreement”) with the University of Texas at Austin
on behalf of the Board of Regents of the University of Texas System. The UT Agreement granted to CBM an exclusive, royalty-bearing
license to certain patent applications related to nucleobase analogue derivatives and their applications, and specifically to
the DHA-dFdC drug candidate. On November 13, 2019, the University of Texas at Austin, the Company and CBM entered into an assignment
of agreement, whereby CBM assigned all of its rights, title and interest to, and obligations under the UT Agreement to the Company.
On
April 17, 2018, CBM entered into a license agreement (the “WF Agreement”) with Wake Forest University Health Sciences
(“WF”). The WF Agreement granted to CBM an exclusive, royalty-bearing license to WF’s and The University of
North Carolina at Chapel Hill’s patents relating to the KPC34 drug candidate. On November 13, 2019, WF, the Company and
CBM entered into an assignment of agreement, whereby CBM assigned all of its rights, title and interest to, and obligations under
the WF Agreement to the Company.
On
April 13, 2020, the Company executed a Master License Agreement (the “UMB License Agreement”) with UMB, pursuant to
which UMB agreed to license inventions collectively known as “Broad Spectrum Antiviral Compounds Which Target the SKI Complex”
(the “Inventions”) to the Company. The Inventions, which are covered by two patent applications on file with the United
States Patent and Trademark Office, are currently in the pre-clinical stage and seek to inhibit replication of multiple viruses,
including the Influenza virus, SARS-CoV, MERS-CoV, Ebolavirus and Marburg virus. In addition, the Company entered into a Sponsored
Research Agreement with UMB to support the development of various technologies.
Pursuant
to the UMB License Agreement, UMB grants to the Company the ability to utilize the licensed products (“Licensed Products”)
and patents associated with the Inventions, subject to certain limitations described in the UMB License Agreement. All improvements
to the Inventions are solely owned by the party improving the Inventions, unless jointly made, in which case both parties jointly
own the improvements; however, the Company grants to UMB the royalty-free license to practice the Company’s improvements.
The Company has agreed to deliver to UMB a commercialization plan setting forth the Company’s plan for research and development
required to develop the Licensed Products and the Company’s overall commercialization strategy by December 31, 2022.
The Company is required to pay UMB (i) a license fee of $100,000, (ii) an annual license maintenance fee of $25,000 on the fourth anniversary
of the UMB License Agreement, (iii) future milestone payments in an aggregate amount equal to $2,875,000, (iv) a royalty on sales of Licensed
Products by the Company, the Company’s affiliates and/or sublicensees at a rate of three percent (3%) until net revenues from sales
of Licensed Products reach a certain dollar amount and six percent (6%) after net revenues from sales of Licensed products reach a certain
dollar amount, provided, however, commencing the year in which the first commercial sale of Licensed Products occurs, if the royalty payments
do not reach the minimum amount of $1,000,000 (which amount shall be increased by twenty percent (20%) in each subsequent calendar year),
the Company shall pay an additional amount with the payment due on the next January 31, so that the total amount paid for such year reaches
the minimum amount (such payment not to exceed $3,000,000 per year), and (v) a percentage of income received from any sublicensing income.
The
UMB License Agreement, which continues on a Licensed Product-by-Licensed Product and country-by-country basis, will terminate
upon the later of (i) the date of expiration of the last to expire claim of patent rights covering the Licensed Products, (ii)
the expiration of data protection, new chemical entity, orphan drug exclusivity, regulatory exclusivity or other legally enforceable
market exclusivity, or (iii) ten years after the first commercial sale of a Licensed Product. If none of the previously listed
items occur, the UMB License Agreement will expire twenty years after the date of the UMB License Agreement. However, the parties
may terminate the UMB License Agreement under certain conditions described in the UMB License Agreement, including but not limited
to, missed payments and failure to achieve required milestones. The UMB License Agreement also contains various non-compete, non-solicitation
and indemnification provisions as well as representations and warranties made by each party.
Commercialization
Our
business success with our drug portfolio depends not only on the successful development and approval of the products but also
on the commercialization. At present, our plan anticipates us making the investments necessary to build an in-house marketing
and sales capability for the U.S. market for our drug pipeline, or to partner with a larger drug development company to commercialize
our drugs as they move through the FDA approval process. As our drug compounds make their way through clinical development in
the U.S., we intend to approach pharmaceutical and biotechnology companies outside the U.S. to negotiate and enter into strategic
partnerships that will enable development and commercialization of our platform outside the U.S., where we believe the market
opportunity is larger than that of the U.S. albeit far more complex to reach. We have no operations outside the U.S., nor are
we planning to have any non-U.S. operations.
Manufacturing
and Supply
We
do not have any manufacturing capabilities and therefore we will have to engage a third party to assist in manufacturing. Such
manufacturing will need to be done in accordance with good manufacturing practice requirements (“cGMP”) regulations,
to formulate and manufacture our product candidates. A list of third party manufacturers is currently being developed.
Government
Regulation
Governmental
authorities in the U.S. and other countries extensively regulate the research, development, testing, manufacture, labeling, promotion,
advertising, distribution and marketing of pharmaceutical products such as those being developed by us. In the U.S., the FDA regulates
such products under the FDCA and implements related regulations. Failure to comply with applicable FDA requirements, both before
and after approval, may subject us to administrative and judicial sanctions, such as a delay in approving or refusal by the FDA
to approve pending applications, warning letters, product recalls, product seizures, total or partial suspension of production
or distribution, injunctions and/or criminal prosecution.
U.S.
Food and Drug Administration Regulation
United
States Drug Development
In
the United States, the FDA regulates drugs, medical devices and combinations of drugs and devices, or combination products, under
the FDCA and its implementing regulations. Drugs are also subject to other federal, state and local statutes and regulations.
The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign
statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable
U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant
to administrative or judicial sanctions. These sanctions could include, among other actions, the FDA’s refusal to approve
pending applications, withdrawal of an approval, a clinical hold, untitled or warning letters, requests for voluntary product
recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution injunctions,
fines, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties. Any agency or judicial enforcement
action could have a material adverse effect on us.
The
process required by the FDA before a drug may be marketed in the United States generally involves the following:
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completion
of extensive pre-clinical laboratory tests, animal studies and formulation studies in accordance with applicable regulations,
including the FDA’s Good Laboratory Practice regulations;
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submission
to the FDA of an IND, which must become effective before human clinical trials may begin;
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performance
of adequate and well-controlled human clinical trials in accordance with an applicable IND and other clinical study related
regulations, sometimes referred to as good clinical practices, or GCPs, to establish the safety and efficacy of the proposed
drug for its proposed indication;
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submission
to the FDA of an NDA;
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satisfactory
completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the product, or components
thereof, are produced to assess compliance with the FDA’s cGMP requirements;
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potential
FDA audit of the clinical trial sites that generated the data in support of the NDA; and
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FDA
review and approval of the NDA prior to any commercial marketing or sale.
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Once
a pharmaceutical product candidate is identified for development, it enters the pre-clinical testing stage. Pre-clinical tests
include laboratory evaluations of product chemistry, toxicity, formulation and stability, as well as animal studies. An IND sponsor
must submit the results of the pre-clinical tests, together with manufacturing information, analytical data and any available
clinical data or literature, to the FDA as part of the IND. The sponsor must also include a protocol detailing, among other things,
the objectives of the initial clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to
be evaluated if the initial clinical trial lends itself to an efficacy evaluation. Some pre-clinical testing may continue even
after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns
or questions related to a proposed clinical trial and places the trial on a clinical hold within that 30-day period. In such a
case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical holds also
may be imposed by the FDA at any time before or during clinical trials due to safety concerns or non-compliance, and may be imposed
on all drug products within a certain class of drugs. The FDA also can impose partial clinical holds, for example, prohibiting
the initiation of clinical trials of a certain duration or for a certain dose.
All
clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCP regulations.
These regulations include the requirement that all research subjects provide informed consent in writing before their participation
in any clinical trial. Further, an IRB must review and approve the plan for any clinical trial before it commences at any institution,
and the IRB must conduct continuing review and reapprove the study at least annually. An IRB considers, among other things, whether
the risks to individuals participating in the clinical trial are minimized and are reasonable in relation to anticipated benefits.
The IRB also approves the information regarding the clinical trial and the consent form that must be provided to each clinical
trial subject or his or her legal Representative and must monitor the clinical trial until completed.
Each
new clinical protocol and any amendments to the protocol must be submitted for FDA review, and to the IRBs for approval. Protocols
detail, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria,
and the parameters to be used to monitor subject safety.
Human
clinical trials are typically conducted in three sequential phases that may overlap or be combined:
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Phase
1. The product is initially introduced into a small number of healthy human subjects or patients and tested for safety, dosage
tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain early evidence on effectiveness. In the
case of some products for severe or life-threatening diseases, especially when the product is suspected or known to be unavoidably
toxic, the initial human testing may be conducted in patients.
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Phase
2. Involves clinical trials in a limited patient population to identify possible adverse effects and safety risks, to preliminarily
evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage and schedule.
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Phase
3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at
geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit relationship
of the product and provide an adequate basis for product labeling.
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Post-approval
trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These studies are
used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances,
the FDA may mandate the performance of Phase 4 trials. Companies that conduct certain clinical trials also are required to register
them and post the results of completed clinical trials on a government-sponsored database, such as ClinicalTrials.gov in the United
States, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.
Progress
reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA,
and written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected adverse events, findings
from other studies that suggest a significant risk to humans exposed to the product, findings from animal or in vitro testing
that suggest a significant risk to human subjects, and any clinically important increase in the rate of a serious suspected adverse
reaction over that listed in the protocol or investigator brochure. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed
successfully within any specified period, if at all. The FDA or the clinical trial sponsor may suspend or terminate a clinical
trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable
health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial
is not being conducted in accordance with the IRB’s requirements or if the product has been associated with unexpected serious
harm to patients. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the
clinical trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether a
trial may move forward at designated check points based on access to certain data from the study. The clinical trial sponsor may
also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate.
Concurrent
with clinical trials, companies usually complete additional animal studies and must also develop additional information about
the chemistry and physical characteristics of the product and finalize a process for manufacturing the product in commercial quantities
in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the
product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and
purity of the final product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted
to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.
NDA
and FDA Review Process
The
results of product development, pre-clinical studies and clinical trials, along with descriptions of the manufacturing process,
analytical tests conducted on the drug, proposed labeling and other relevant information, are submitted to the FDA as part of
an NDA for a new drug, requesting approval to market the product. The submission of an NDA is subject to the payment of a substantial
user fee, and the sponsor of an approved NDA is also subject to an annual program user fee; although a waiver of such fee may
be obtained under certain limited circumstances. For example, the agency will waive the application fee for the first human drug
application that a small business or its affiliate submits for review.
The
FDA reviews all NDAs submitted before it accepts them for filing and may request additional information rather than accepting
an NDA for filing. The FDA typically makes a decision on accepting an NDA for filing within 60 days of receipt. The decision to
accept the NDA for filing means that the FDA has made a threshold determination that the application is sufficiently complete
to permit a substantive review. Under the goals and policies agreed to by the FDA under the Prescription Drug User Fee Act (“PDUFA”),
the FDA’s goal to complete its substantive review of a standard NDA and respond to the applicant is ten months from the
receipt of the NDA. The FDA does not always meet its PDUFA goal dates, and the review process is often significantly extended
by FDA requests for additional information or clarification and may go through multiple review cycles.
After
the NDA submission is accepted for filing, the FDA reviews the NDA to determine, among other things, whether the proposed product
is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMPs to assure and
preserve the product’s identity, strength, quality and purity. The FDA may refer applications for novel drug products or
drug products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes
clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and
under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations
carefully when making decisions. The FDA will likely re-analyze the clinical trial data, which could result in extensive discussions
between the FDA and us during the review process. The review and evaluation of an NDA by the FDA is extensive and time consuming
and may take longer than originally planned to complete, and we may not receive a timely approval, if at all.
Before
approving an NDA, the FDA will conduct a pre-approval inspection of the manufacturing facilities for the new product to determine
whether they comply with cGMPs. The FDA will not approve the product unless it determines that the manufacturing processes and
facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required
specifications. In addition, before approving an NDA, the FDA may also audit data from clinical trials to ensure compliance with
GCP requirements. After the FDA evaluates the application, manufacturing process and manufacturing facilities, it may issue an
approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the drug with specific prescribing
information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete
and the application will not be approved in its present form. A Complete Response Letter usually describes all the specific deficiencies
in the NDA identified by the FDA. The Complete Response Letter may require additional clinical data and/or an additional pivotal
Phase 3 clinical trial(s), and/or other significant and time-consuming requirements related to clinical trials, nonclinical studies
or manufacturing. If a Complete Response Letter is issued, the applicant may either resubmit the NDA, addressing all the deficiencies
identified in the letter, or withdraw the application. Even if such data and information are submitted, the FDA may ultimately
decide that the NDA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive,
and the FDA may interpret data differently than we interpret the same data.
There
is no assurance that the FDA will ultimately approve a product for marketing in the United States, and we may encounter significant
difficulties or costs during the review process. If a product receives marketing approval, the approval may be significantly limited
to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value
of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product
labeling or may condition the approval of the NDA on other changes to the proposed labeling, development of adequate controls
and specifications, or a commitment to conduct post-market testing or clinical trials and surveillance to monitor the effects
of approved products. For example, the FDA may require Phase 4 clinical trials to further assess drug safety and effectiveness
and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized. The
FDA may also place other conditions on approvals, including the requirement for a risk evaluation and mitigation strategy (“REMS”),
to assure the safe use of the drug. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS;
the FDA will not approve the NDA without an approved REMS, if required. A REMS could include medication guides, physician communication
plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization
tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or
dispensing of products. Product approvals may be withdrawn for non-compliance with regulatory requirements or if problems occur
following initial marketing.
Reimbursement
Potential
sales of any of our product candidates, if approved, will depend, at least in part, on the extent to which such products will
be covered by third-party payors, such as government health care programs, commercial insurance and managed healthcare organizations.
These third-party payors are increasingly limiting coverage and/or reducing reimbursements for medical products and services.
A third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate
will be approved. Further, one payor’s determination to provide coverage for a drug product does not assure that other payors
will also provide coverage for the drug product. In addition, the U.S. government, state legislatures and foreign governments
have continued implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements
for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive
policies in jurisdictions with existing controls and measures, could further limit our future revenues and results of operations.
Decreases in third-party reimbursement or a decision by a third-party payor to not cover a product candidate, if approved, or
any future approved products could reduce physician usage of our products, and have a material adverse effect on our sales, results
of operations and financial condition.
In
the United States, the Medicare Part D program provides a voluntary outpatient drug benefit to Medicare beneficiaries for certain
products. We do not know whether our product candidates, if approved, will be eligible for coverage under Medicare Part D, but
individual Medicare Part D plans offer coverage subject to various factors such as those described above. Furthermore, private
payors often follow Medicare coverage policies and payment limitations in setting their own coverage policies.
Pediatric
Exclusivity and Pediatric Use
The
Pediatric Research Equity Act, or PREA, requires a sponsor to conduct pediatric studies for most drugs and biologics, for a new
active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original NDAs,
biologics license applications and supplements thereto, must contain a pediatric assessment unless the sponsor has received a
deferral or waiver. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which an orphan
drug designation has been granted. The required assessment must assess the safety and effectiveness of the product for the claimed
indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for
which the product is safe and effective. The sponsor or FDA may request a deferral of pediatric studies for some or all of the
pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the drug or biologic is ready
for approval for use in adults before pediatric studies are complete or that additional safety or effectiveness data needs to
be collected before the pediatric studies begin.
Pediatric
exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment
of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent
and orphan exclusivity. This six-month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond
to a written request from the FDA for such data. The data does not need to show the product to be effective in the pediatric population
studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted.
If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever
statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months.
Healthcare
Laws and Regulations
Sales
of our product candidates, if approved, or any other future product candidate will be subject to healthcare regulation and enforcement
by the federal government and the states and foreign governments in which we might conduct our business. The healthcare laws and
regulations that may affect our ability to operate include the following:
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The
federal Anti-Kickback Statute makes it illegal for any person or entity to knowingly and willfully, directly or indirectly,
solicit, receive, offer, or pay any remuneration that is in exchange for or to induce the referral of business, including
the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal healthcare
program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything
of value.
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Federal
false claims and false statement laws, including the federal civil False Claims Act, prohibits, among other things, any person
or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including
Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent.
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Health
Insurance Portability and Accountability Act of 1996 (“HIPAA”) created additional federal criminal statutes
that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare
benefit program, including private third-party payors or making any false, fictitious or fraudulent statement in connection
with the delivery of or payment for healthcare benefits, items or services.
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HIPAA,
as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their implementing regulations,
impose obligations on certain types of individuals and entities regarding the electronic exchange of information in common
healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information.
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The
federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for
which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions,
to report annually to the Centers for Medicare & Medicaid Services information related to payments or other transfers
of value made to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their
immediate family members.
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Also,
many states have similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope and may
apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs. Additionally,
we may be subject to state laws that require pharmaceutical companies to comply with the federal government’s and/or pharmaceutical
industry’s voluntary compliance guidelines, state laws that require drug manufacturers to report information related to
payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, as well as state
and foreign laws governing the privacy and security of health information, many of which differ from each other in significant
ways and often are not preempted by HIPAA.
Additionally,
to the extent that our product is sold in a foreign country, we may be subject to similar foreign laws.
Employees
As of August 14, 2020, we have three full-time
employees, none of which are represented by a labor union or covered by a collective bargaining agreement.
PROPERTIES
Our
main office is located in New York, New York where we lease one office with a monthly payment of approximately $3,200. We also
lease space in Longview, Texas, on a month to month basis, for approximately $2,000 per month, and in Williamsburg, Virginia,
on a month to month basis, for approximately $500 per month. We believe that the New York, Texas and Virginia facilities are sufficient
to meet our needs. We leased office space in Bethesda, Maryland under a lease with monthly payments of $15,107 that expired on
March 31, 2018, which we did not renew.
LEGAL
PROCEEDINGS
Other
than ordinary routine litigation incidental to the business, we know of no material, active or pending legal proceedings or counterclaims
against us.
MANAGEMENT
Directors
The
following table sets forth the name, age and position of each current director of the Company.
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Director
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Name
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Age
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Position
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Since
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Robert
J. Vander Zanden (1)(2)
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75
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Director
and Chairman of the Board
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2004
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Anthony
Hayes
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52
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Chief
Executive Officer Director, and
Principal Accounting Officer
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2013
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Tim
S. Ledwick (1)
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63
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Director
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2015
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Gregory
James Blattner(1)(3)
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43
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Director
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2018
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Paul
LeMire(2)(3)
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65
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Director
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2020
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Robert
Dudley(2)(3)
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64
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Director
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2020
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(1)
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Member
of our Audit Committee.
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(2)
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Member
of our Compensation Committee.
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(3)
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Member
of our Nominating Committee.
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The
biographies of our current directors are as follows:
Dr.
Robert J. Vander Zanden
Dr. Robert
J. Vander Zanden, a member of the Board of Directors since 2004, having served as a Vice President of R&D at Kraft Foods International,
brings a long and distinguished career in applied technology, product commercialization, and business knowledge of the food science
industry to us. Additionally, Mr. Vander Zanden has specific experience in developing organizations designed to deliver against
corporate objectives. Dr. Vander Zanden holds a Ph.D. in Food Science and an M.S. in Inorganic Chemistry from Kansas State
University, and a B.S. in Chemistry from the University of Wisconsin - Platteville, where he was named a Distinguished Alumnus
in 2002. In his 30-year career, he has been with ITT Continental Baking Company as a Product Development Scientist; with Ralston
Purina’s Protein Technology Division as Manager Dietary Foods R&D; with Keebler as Group Director, Product and Process
Development (with responsibility for all corporate R&D and quality); with Group Gamesa, a Frito-Lay Company, as Vice President,
Technology; and with Nabisco as Vice President of R&D for their International Division. With the acquisition of Nabisco by
Kraft Foods, he became the Vice President of R&D for Kraft’s Latin American Division. Dr. Vander Zanden retired from
Kraft Foods in 2004. He currently holds the title of Adjunct Professor and Lecturer in the Department of Food, Nutrition and Packaging
Sciences at Clemson University, where he also is a member of their Industry Advisory Board. His focus on achieving product and
process innovation through training, team building and creating positive working environments has resulted in his being recognized
with many awards for product and packaging innovation. Mr. Vander Zanden executive experience provides him with valuable
business expertise, which the Board believes qualifies him to serve as a director of the Company.
Anthony
Hayes
Mr.
Anthony Hayes, a director and Chief Executive Officer since 2013, has served as the Chief Executive Officer of North South since
March 2013 and since June 2013, as a consultant to our Company. Mr. Hayes was the fund manager of JaNSOME IP Management LLC
and JaNSOME Patent Fund LP from August 2012 to August 2013, both of which he co-founded. Mr. Hayes was the founder and Managing
Member of Atwater Partners of Texas LLC from March 2010 to August 2012 and a partner at Nelson Mullins Riley & Scarborough
LLP from May 1999 to March 2010. Mr. Hayes received his Juris Doctorate from Tulane University School of Law and his B.A.
in economics from Mary Washington College. The Board believes Mr. Hayes is qualified to serve as a director of the Company
based on his intimate knowledge of the Company through his service as Chief Executive Officer. On March 10, 2017, as a result
of Mr. Frank Reiner’s resignation as Chief Financial Officer, Mr. Hayes began serving as the Company’s Principal Accounting
Officer.
Tim
S. Ledwick
Mr.
Tim S. Ledwick, who joined as a director in 2015, is currently the Chief Financial Officer of Management Health Solutions, a private
equity-backed company that provides software solutions and services to hospitals focused on reducing costs through superior inventory
management practices. In addition, since 2012 he has served on the board and as Chair of the Audit Committee of Telkonet, Inc.
(TKOI) a smart energy management technology company. From 2007 to 2011, Mr. Ledwick provided CFO consulting services to AdvantageResourcing
(former Advantage Human Resourcing, Inc.) a $150 million services firm and, in addition, from 2007-2008 also acted as special
advisor to The Dellacorte Group, a middle market financial advisory firm focused on transactions between $100 million and $1 billion.
From 2002 through 2006, Tim was a member of the Board of Directors and Executive Vice President-CFO of Dictaphone Corporation
playing a lead role in developing a business plan which revitalized the company, resulting in the successful sale of the firm
and delivering a seven times return to shareholders. From 2001-2002, Mr. Ledwick was brought on as CFO to lead the restructuring
efforts of Lernout & Hauspie Speech Products, a Belgium-based Nasdaq listed speech technology company, whose market cap had
at one point reached a high of $9 billion. From 1999 through 2001, he was CFO of Cross Media Marketing Corp, an $80 million public
company headquartered in New York City, playing a lead role in the firm’s acquisition activity, tax analysis and capital raising.
Mr. Ledwick is a member of the Connecticut Society of Certified Public Accountants and received his B.B.A. in accounting from
The George Washington University and his M.S. in Finance from Fairfield University. The Board of Directors believes that Mr. Ledwick’s
executive experience and financial expertise qualifies him to serve as a director of the Company.
Gregory
James Blattner
Mr.
Blattner, who joined as a member of our Board of Directors in 2018, has nearly five years of experience in the alternative investment
technology industry. Since January 2014, he has served as the Director of Business Development at Agio, a progressive managed
information technology and cybersecurity services provider, where he is responsible for sales and account management of enterprise
accounts. Prior to Agio, from May 2013 to December 2013, Mr. Blattner was a business development manager for the Eikon platform
at Thomson Reuters. From 2010 to 2013, Mr. Blattner was a sales manager at American Express for its foreign exchange business.
From 2005 to 2009, Mr. Blattner held various positions at JPMorgan, first in the operational risk management arm of the investment
bank and later in Foreign Exchange product sales for its treasury services business. From 2000 to 2004, Mr. Blattner was an Associate
at Morgan Stanley’s corporate treasury funding desk. He earned a bachelor’s degree from Iona College. The Board
of Directors believes Mr. Blattner’s extensive experience in technology and operations solutions make him a qualified appointee
as director.
Paul
LeMire
Mr.
LeMire, who joined as a member of our Board of Directors in 2020, is a high-performing investment sales manager and product specialist
with 25 years of verifiable success in positioning investment management solutions across multiple channels. Mr. LeMire currently
serves as the Managing Director of National Sales at Day Hagan Asset Management where he is responsible for managing the firm’s
asset management business. Before joining Day Hagan Asset Management, Mr. LeMire was a Senior Regional Vice President for State
Street Global Advisors and served in various other Vice President positions at Invesco, Old Mutual Investment Partners, Oppenheimer
Funds and CitiGroup. Mr. LeMire holds a Master of Science degree in Mechanical Engineering from Polytechnic University, a Master
of Business Administration from Adelphia University and a Bachelor of Science degree from Manhattan College. The Board of Directors
believes that Mr. LeMire’s executive experience and financial expertise qualifies him to serve as a director of
the Company.
Robert
Dudley
Mr.
Dudley, who joined as a member of our Board of Directors in 2020, currently serves as the Eastern Division and Metropolitan New
York City Regional Sales Manager for Select Sector Standard & Poor’s Depositary Receipts (“SPDRs”). Prior to joining
Select Sector SPDRs in 2008, Mr. Dudley held several managerial positions at Merrill Lynch within from 1981 through 2007. Mr.
Dudley began his career in the Merrill Lynch White Weld Capital Markets in Corporate Bond Syndicate, later moving to Sales Manager
for Taxable Fixed Income and Equity Marketing. Later, Mr. Dudley managed Merrill Lynch Consults for the New York City District
and ended his career as a Financial Advisor and Sales Manager at the Merrill Lynch Rockefeller Center Branch office. The
Board of Directors believes that Mr. Dudley’s executive experience and financial expertise qualifies him to serve
as a director of the Company.
Executive
Officers
The names of our executive officers and their
ages, positions, and biographies as of August 14, 2020 are set forth below. Mr. Hayes’ background is discussed above
under the section “Directors.”
Name
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Age
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|
Position
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Anthony
Hayes
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52
|
|
Chief
Executive Officer, Director & Principal Accounting Officer
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Meetings
of the Board of Directors and Committees
As of August 14, 2020, our Board of
Directors has held, during the year 2020, a total of 12 regularly scheduled and special meetings, the Audit Committee held 2
meetings, the Compensation Committee held 2 meetings, and the Nominating Committee did not hold any meetings. None of our
incumbent directors attended less than 100% of the Board or committee meetings.
Policy
Regarding Attendance at Annual Meetings of Stockholders
Our
Company does not have a policy with regard to Board members’ attendance at annual meetings. All of our directors attended
our last annual meeting of stockholders.
Code
of Ethics
We
have adopted a Code of Ethics, which is available on our website at www.aikidopharma.com.
Audit
Committee
We
have a standing Audit Committee. The Audit Committee members are Mr. Ledwick (Chairman), Dr. Vander Zanden and Mr. Blattner. The
Committee has authority to review our financial records, deal with our independent auditors, recommend financial reporting policies
to the Board of Directors, and investigate all aspects of our business. The Audit Committee Charter is available for your review
on our website at www.aikidopharma.com. Each member of the Audit Committee satisfies the independence requirements and other criteria
established by Nasdaq and the SEC applicable to audit committee members. The Board of Directors has determined that Mr. Ledwick
meets the requirements of an audit committee financial expert as defined in the SEC and Nasdaq rules.
Compensation
Committee
The
Compensation Committee oversees the compensation for our executive officers and recommends various incentives for key employees
to encourage and reward increased corporate financial performance, productivity and innovation. Its current members Dr. Vander
Zanden, Mr. Weisblum (Chairman), and Mr. Dudley. The Compensation Committee Charter is available on our website at www.aikidopharma.com.
Nominating
Committee
The
Nominating Committee presents and recommends to the Board of Directors, for approval by the Board of Directors, the proposed Board
of Directors for election by the stockholders. Its members are Mr. LeMire, Mr. Blattner (Chairman) and Mr. Dudley. The Nominating
Committee Charter is available on our website at www.aikidopharma.com. The Nominating Committee does not have any formal minimum
qualifications for director candidates. The Nominating Committee identifies candidates by first evaluating current members of
the Board of Directors who are willing to continue in service. If any member of the Board of Directors does not wish to continue
in service or if the Board of Directors decides not to re-nominate a member for re-election, the Nominating Committee then identifies
the desired skills and experience of a new candidate(s).
Among
other factors, when considering a prospective candidate, the Nominating Committee considers a candidate’s business experience
and skills, attributes pertinent to Company business, personal integrity and judgment, and possible conflicts of interest. To
date, the Nominating Committee has not utilized the services of any search firm to assist it in identifying director candidates.
The Nominating Committee’s policy is to consider director candidate recommendations from its stockholders which are received
prior to any annual meeting of stockholders, including confirmation of the candidate’s consent to serve as a director.
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of
the Exchange Act requires our directors and executive officers, and anyone who beneficially owns ten percent (10%) or more of
our common stock, to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership
of common stock. Anyone required to file such reports also needs to provide us with copies of all Section 16(a) forms
they file.
Based
solely upon a review of (i) copies of the Section 16(a) filings received during or with respect to 2019 and 2020 and (ii) certain
written representations of our officers and directors, we believe that all filings required to be made pursuant to Section 16(a)
of the Exchange Act during and with respect to 2019 and 2020 were filed in a timely manner.
EXECUTIVE AND DIRECTOR
COMPENSATION
The following Summary of Compensation
table sets forth the compensation paid by our Company during the two years ended December 31, 2019, to all executive officers
earning in excess of $100,000 during any such year.
Summary of Compensation
Name and
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Non-Equity
Incentive
Plan
|
|
|
Change
in
Pension
Value and
Non-
Qualified
Deferred
Compensation
|
|
|
All
Other
|
|
|
|
|
Principal
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Awards
($)
|
|
|
Awards
($)
|
|
|
Compensation
($)
|
|
|
Earnings
($)
|
|
|
Compensation
($)
|
|
|
Total
($)
|
|
Anthony Hayes, Chief Executive
Officer, Director,
|
|
2019
|
|
|
350,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
350,000
|
|
Principal Accounting Officer and Principal
Financial Officer
|
|
2018
|
|
|
349,010
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
349,010
|
|
Outstanding Equity Awards at December
31, 2019
|
|
Option
Awards
|
|
|
Number
of Securities
|
|
|
Number
of Securities
|
|
|
|
|
|
|
|
|
Underlying
Unexercised
|
|
|
Underlying
Unexercised
|
|
|
Option
Exercise
|
|
|
Option
|
Name
|
|
Options
(#) Exercisable
|
|
|
Options
(#) Unexercisable
|
|
|
Price
($)
|
|
|
Expiration
Date
|
Anthony Hayes
|
|
|
9,290
|
|
|
|
-
|
|
|
$
|
571.71
|
|
|
4/1/2023
|
|
|
|
930
|
|
|
|
-
|
|
|
$
|
8.42
|
|
|
5/2/2021
|
|
|
|
930
|
|
|
|
-
|
|
|
$
|
4.34
|
|
|
5/30/2022
|
Potential Payment upon Termination or Change in Control
Under the April 1, 2016 employment agreement
with Mr. Hayes, we have agreed to, in the event of termination by us without “cause” or pursuant to a change in control,
grant Mr. Hayes, in addition to reimbursement of any documented, unreimbursed expenses incurred prior to such date, (i) any unpaid
compensation and vacation pay accrued during the term of the Employment Agreement, and any other benefits accrued to him under
any of our benefit plans outstanding at such time, (ii) twelve (12) months base salary at the then current rate to be paid in
a single lump sum within thirty (30) days of Mr. Hayes’ termination, (iii) continuation for a period of twelve (12) months
of any benefits as extended to our executive officers from time to time, including but not limited to group health care coverage
and (iv) payment on a pro rata basis of any annual bonus or other payments earned in connection with any bonus plans to which
Mr. Hayes was a participant as of the date of termination. In addition, any options or restricted stock shall be immediately vested
upon termination of Mr. Hayes’s employment without “cause” or pursuant to a change in control.
Executive Officer Agreements
On April 1, 2016, we entered into an employment
agreement with Mr. Anthony Hayes pursuant to which Mr. Hayes serves as the Chief Executive Officer for a period of one
year, subject to renewal. In consideration for his employment, we agreed to pay Mr. Hayes a base salary of $350,000 per annum.
Mr. Hayes will be entitled to receive an annual bonus in an amount equal to up to 100% of his base salary if we meet or exceed
certain criteria adopted by our Compensation Committee. We further agreed to grant executive restricted stock units, pursuant
to the Corporation’s 2014 Equity Incentive Plan, with respect to 118,512 shares of the Company’s common stock. One-half
of the grant shall vest if as of December 31, 2016, the Corporation has pro-forma cash of at least five million dollars ($5,000,000)
(cash plus any cash used for a Board-approved extraordinary acquisition or transaction reconstituting the Company’s core
operations, less accrued bonuses) and one-half shall vest upon the Company meeting certain agreed upon criteria. As of June 30,
2020, 59,256 restricted stock units were vested and 59,256 restricted stock units were forfeited.
On October 19, 2017, the Company entered
into an amendment to the employment agreement of Mr. Hayes, pursuant to which, effective January 1, 2017, Mr. Hayes was entitled
to receive an annual cash bonus in an amount equal to up to $250,000 if the Company meets or exceeds certain criteria adopted
by the Compensation Committee of the Company’s Board of Directors. In addition, Mr. Hayes was awarded a restricted stock
unit grant for 30,000 shares of the Company’s common stock under the Company’s 2014 Equity Incentive Plan. Such grant
shall vest in installments, in tandem with the satisfaction of the same criteria to which the cash bonus is subject. If all criteria
are met, 100% of the grant of restricted stock units shall vest upon the determination of the Compensation Committee, which in
any event shall not be later than March 15, 2018. All other terms of Mr. Hayes’ employment agreement, effective as of April
1, 2016, remain in full force and effect.
Director Compensation
The following table summarizes the compensation
paid to non-employee directors during the year ended December 31, 2019.
|
|
Fees
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Change
in
Pension
Value
and
Non-
Qualified
|
|
|
|
|
|
|
|
|
|
earned or
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
paid in
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
cash
($)
|
|
|
Awards
($)
|
|
|
Awards
($)
|
|
|
Compensation
($)
|
|
|
Earnings
($)
|
|
|
Compensation
($)
|
|
|
Total
($)
|
|
Robert J. Vander Zanden (2)
|
|
|
65,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
65,000
|
|
Tim Ledwick (3)
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
Gregory Blattner (4)
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
(1)
|
All stock options
were granted in accordance with ASC Topic 718.
|
|
|
(2)
|
Mr. Vander Zanden
was paid $65,000 in cash compensation for his service as a director in 2019.
|
|
|
(3)
|
Mr. Ledwick was
paid $60,000 in cash compensation for his service as a director in 2019.
|
|
|
(4)
|
Mr. Blattner was
paid $60,000 in cash compensation for his service as a director in 2019.
|
Non-employee directors received the following
annual compensation for service as a member of the Board for the fiscal year ended December 31, 2019:
Annual Retainer
|
|
$
|
60,000
|
|
|
To be paid in cash in four
equal quarterly installments.
|
Additional Retainer
|
|
$
|
5,000
|
|
|
To be paid to the Chairman of the Board upon
election annually.
|
CERTAIN RELATIONSHIPS
AND RELATED PERSON TRANSACTIONS
The current Board of Directors consists
of Mr. Tim S. Ledwick, Mr. Anthony Hayes, Dr. Robert J. Vander Zanden, Mr. Gregory James Blattner, Mr. Paul LeMire
and Mr. Robert Dudley. The Board of Directors has determined that Dr. Vander Zanden, Mr. Ledwick, Mr. Blattner,
Mr. LeMire and Mr. Dudley are independent directors within the meaning of the applicable Nasdaq rules. Our Audit, Compensation
and Nominating Committees consist solely of independent directors.
We have not adopted written policies and
procedures specifically for related person transactions. Our Board of Directors is responsible to approve all related party transactions.
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial Ownership of Common Stock
by Certain Beneficial Owners and Management
The following tables set forth certain
information concerning the number of shares of our common stock owned beneficially as of August 14, 2020 by (i) our officers and
directors as a group and (ii) each person (including any group) known to us to own more than 5% of our common stock, Series D Preferred
Stock (as defined herein) and Series D-1 Preferred Stock (as defined herein). As of August 14, 2020, there were 34,920,219 shares
of common stock outstanding, 4,725 shares of Series D Preferred Stock outstanding and 834 shares of Series D-1 Preferred Stock
outstanding. Unless otherwise indicated, it is our understanding and belief that the stockholders listed possess sole voting and
investment power with respect to the shares shown.
|
|
Common Stock Beneficially
Owned(2)
|
|
|
Series D Preferred
Stock(2)
|
|
|
Series D-1 Preferred
Stock(2)
|
|
Name of Beneficial Owner(1)
|
|
Shares
|
|
|
Percentage
|
|
|
Shares
|
|
|
Percentage
|
|
|
Shares
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Vander Zanden
|
|
|
19,499
|
(3)
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Anthony Hayes
|
|
|
23,430
|
(4)
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Tim S. Ledwick
|
|
|
20,685
|
(5)
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gregory James Blattner
|
|
|
11,766
|
(6)
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Paul LeMire
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Robert Dudley
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
All Directors and Officers as a Group (6 persons)
|
|
|
75,380
|
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel W. Armstrong
611 Loch Chalet
Ct Arlington, TX 76012-3470
|
|
|
—
|
|
|
|
—
|
|
|
|
1,350
|
|
|
|
28.57
|
%
|
|
|
—
|
|
|
|
—
|
|
R. Douglas Armstrong
570 Ocean Dr. Apt 201
Juno Beach, FL 33408-1953
|
|
|
—
|
|
|
|
—
|
|
|
|
450
|
|
|
|
9.52
|
%
|
|
|
—
|
|
|
|
—
|
|
Thomas Curtis
4280 10 Oaks Road
Dayton, MD 21036-1124
|
|
|
—
|
|
|
|
—
|
|
|
|
900
|
|
|
|
19.05
|
%
|
|
|
—
|
|
|
|
—
|
|
Francis Howard
376 Victoria Place
London, SW1 V1AA
United Kingdom
|
|
|
—
|
|
|
|
—
|
|
|
|
900
|
|
|
|
19.05
|
%
|
|
|
—
|
|
|
|
—
|
|
Charles Strogen
6 Winona Ln
Sea Ranch Lakes,
FL 33308-2913
|
|
|
—
|
|
|
|
—
|
|
|
|
1,125
|
|
|
|
23.81
|
%
|
|
|
—
|
|
|
|
—
|
|
Chai Lifeline Inc.
151 West 30th Street, Fl 3
New York, NY 10001-4027
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
834
|
|
|
|
100
|
%
|
CBM BioPharma, Inc.
One Rockefeller Plaza, 11th Floor
New York, NY 10020
|
|
|
1,939,058
|
|
|
|
40.2
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
*
|
Less
than 1% of the outstanding shares of the Company Common Stock.
|
(1)
|
Under
Rule 13d-3 of the Exchange Act a beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement, understanding, relationship
or otherwise has or shares: (i) voting power, which includes the power to vote or
to direct the voting of shares; and (ii) investment power, which includes the power
to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially
owned by more than one person (if, for example, persons share the power to vote or the
power to dispose of the shares). In addition, shares are deemed to be beneficially owned
by a person if the person has the right to acquire the shares (for example, upon exercise
of an option) within 60 days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount of shares outstanding is
deemed to include the amount of shares beneficially owned by such person (and only such
person) by reason of these acquisition rights.
|
(2)
|
Based on 34,920,219 shares of our common stock outstanding as of August 14, 2020 and takes into account the beneficial ownership limitations governing the Series D Preferred Stock and Series D-1 Preferred Stock. Beneficial ownership limitations on our Series D Preferred Stock prevent the conversion or voting of the stock if the number of shares of common stock to be issued pursuant to such conversion or to be voted would exceed, when aggregated with all other shares of common stock owned by the same holder at the time, the number of shares of common stock which would result in such holder beneficially owning more than 4.99% of all of the common stock outstanding at such time, subject to an increase in such limitation up to 9.99% of the issued and outstanding common stock on 61 days’ written notice to us. Beneficial ownership limitations on our Series D-1 Preferred Stock prevent the conversion or voting of the stock if the number of shares of common stock to be issued pursuant to such conversion or to be voted would exceed, when aggregated with all other shares of common stock owned by the same holder at the time, the number of shares of common stock which would result in such holder beneficially owning more than 9.99% of all of the common stock outstanding at such time.
|
(3)
|
Includes 4,944 shares of common stock and 14,555 options for purchase of common stock exercisable as of August 14, 2020.
|
(4)
|
Includes 12,280 shares of common stock and 11,150 options for purchase of common stock exercisable as of August 14, 2020.
|
(5)
|
Includes 7,059 shares of common stock and 13,626 options for purchase of common stock exercisable as of August 14, 2020.
|
(6)
|
Includes 11,766 options for purchase of common stock exercisable as of August 14, 2020.
|
Effective January 1, 2013, and as
amended and restated on June 9, 2017, the Company and Equity Stock Transfer, LLC entered into a Rights Agreement, which was subsequently
assigned to Transfer Online Inc. as Rights Agent on June 20, 2016. The Rights Agreement provides each stockholder of record a
dividend distribution of one “right” for each outstanding share of common stock. Rights become exercisable at the
earlier of ten days following: (1) a public announcement that an acquirer has purchased or has the right to acquire 10% or
more of our common stock, or (2) the commencement of a tender offer which would result in an offer or beneficially owning
10% or more of our outstanding common stock. All rights held by an acquirer or offer or expire on the announced acquisition
date, and all rights expire at the close of business on December 31, 2020, subject to further extension. Each right entitles
a stockholder to acquire, at a price of $7.46 per one nineteen-hundredths of a share of our Series A preferred stock, subject
to adjustments, which carries voting and dividend rights similar to one share of our common stock. Alternatively, a right holder
may elect to purchase for the stated price an equivalent number of shares of our common stock at a price per share equal to one-half
of the average market price for a specified period. In lieu of the stated purchase price, a right holder may elect
to acquire one-half of the common stock available under the second option. The purchase price of the preferred stock
fractional amount is subject to adjustment for certain events as described in the Rights Agreement. At the discretion of a majority
of the Board of Directors and within a specified time period, we may redeem all of the rights at a price of $0.001 per right. The
Board may also amend any provisions of the Rights Agreement prior to exercise.
DESCRIPTION OF CAPITAL
STOCK
General
The following description of common stock
summarizes the material terms and provisions of the common stock and is not complete. For the complete terms of our common stock,
please refer to our Amended and Restated Certificate of Incorporation, which may be further amended from time to time, any certificates
of designation for our preferred stock, and our Amended and Restated Bylaws, as amended from time to time. The DGCL may also affect
the terms of these securities.
On April 24, 2014, we filed an Amended
and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which was previously approved
by our stockholders at our annual meeting held on February 6, 2014.
The Amended and Restated Certificate of
Incorporation, among other things, increases our authorized number of shares of common stock to 200,000,000 shares from 50,000,000
shares. The Amended and Restated Certificate of Incorporation also requires us to indemnify our directors, officer and agents
and advance expenses to such persons to the fullest extent permitted by Delaware law.
Additionally, on April 23, 2014, we filed
a Certificate of Elimination with the Secretary of State of the State of Delaware eliminating our Series B Convertible Preferred
Stock, Series E Convertible Preferred Stock and Series F Convertible Preferred Stock and returning them to authorized but undesignated
shares of our preferred stock.
Amended and Restated Certificate of
Incorporation
On March 4, 2016, the Company implemented
a reverse stock split with a ratio of 1-for-19. The par value and other terms of the common stock were not affected by the reverse
stock split. In addition, the amendment to the Company’s certificate of incorporation that effected the reverse stock split
simultaneously reduced the number of authorized shares of common stock from 200,000,000 to 100,000,000.
Common Stock
Subject to the rights of the preferred
stock, holders of common stock are entitled to receive such dividends as are declared by our Board of Directors out of funds legally
available for the payment of dividends. We presently intend to retain any earnings to fund the development of our business. Accordingly,
we do not anticipate paying any dividends on our common stock for the foreseeable future. Any future determination as to declaration
and payment of dividends will be made at the discretion of our Board of Directors.
In the event of the liquidation, dissolution,
or winding up of the Company, each outstanding share of our common stock will be entitled to share equally in any of our assets
remaining after payment of or provision for our debts and other liabilities.
Holders of common stock are entitled to
one vote per share on matters to be voted upon by stockholders. There is no cumulative voting for the election of directors, which
means that the holders of shares entitled to exercise more than fifty percent (50%) of the voting rights in the election of directors
are able to elect all of the directors.
Holders of common stock have no preemptive
rights to subscribe for or to purchase any additional shares of common stock or other obligations convertible into shares of common
stock which we may issue after the date of this prospectus.
All of the outstanding shares of common
stock are fully paid and non-assessable. Holders of our common stock are not liable for further calls or assessments.
The rights, preferences and privileges
of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series
of preferred stock that we may designate in the future.
Preferred Stock
Our Amended and Restated Certificate of
Incorporation authorizes 50,000,000 shares of preferred stock. Our Board of Directors is authorized, without further stockholder
action, to establish various series of such preferred stock from time to time and to determine the rights, preferences and privileges
of any unissued series including, among other matters, any dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, liquidation preferences, sinking fund terms, the number of shares constituting any such series, and the description
thereof and to issue any such shares. Although there is no current intent to do so, our Board of Directors may, without stockholder
approval, issue shares of an additional class or series of preferred stock with voting and conversion rights which could adversely
affect the voting power of the holders of the common stock.
One of the effects of the preferred stock
may be to enable the Board of Directors to render more difficult or to discourage an attempt to obtain control of the Company
by means of a merger, tender offer, proxy contest or otherwise, and thereby to protect the continuity of the management.
The DGCL provides that the holders of
preferred stock will have the right to vote separately as a class on any proposal involving certain fundamental changes in the
rights of holders of that series of preferred stock. This right is in addition to any voting rights provided for in the applicable
certificate of designation.
Our Board of Directors may authorize the
issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the
holders of our common stock. Preferred stock could be issued quickly with terms designed to delay or prevent a change in control
of our Company or make removal of management more difficult. Additionally, the issuance of preferred stock could have the effect
of decreasing the market price of our common stock.
The Company had designated separate series
of its capital stock as of August 14, 2020 as summarized below:
|
|
Number
of
Shares Issued
and Outstanding
as of August 14,
2020
|
|
Par
Value
|
|
|
Conversio
Ratio
|
Series
“A”
|
|
|
—
|
|
$
|
0.0001
|
|
|
N/A
|
Series “C”
|
|
|
—
|
|
|
0.0001
|
|
|
0.05:1
|
Series “D”
|
|
|
4,725
|
|
|
0.0001
|
|
|
0.53:1
|
Series “D-1”
|
|
|
834
|
|
|
0.0001
|
|
|
0.53:1
|
Series “F-1”
|
|
|
—
|
|
|
0.0001
|
|
|
0.05:1
|
Series “H”
|
|
|
—
|
|
|
0.0001
|
|
|
0.53:1
|
Series “I”
|
|
|
—
|
|
|
0.0001
|
|
|
1.05:1
|
Series “J”
|
|
|
—
|
|
|
0.0001
|
|
|
0.05:1
|
Series “K”
|
|
|
—
|
|
|
0.0001
|
|
|
263.16:1
|
Series “L”
|
|
|
—
|
|
|
0.0001
|
|
|
1,000:1
|
On April 23, 2014, the Company filed a
Certificate of Elimination with the Secretary of State of the State of Delaware eliminating its Series B Convertible Preferred
Stock, Series E Convertible Preferred Stock and Series F Convertible Preferred Stock and returning them to authorized but undesignated
shares of preferred stock. No shares of the foregoing series of preferred stock were outstanding.
Series D Convertible Preferred Stock
In connection with the acquisition of
North South’s patent portfolio in September 2013, the Company issued 1,379,685 shares of its Series D Convertible Preferred
Stock (“Series D Preferred Stock”) to the stockholders of North South. Each share of Series D Preferred
Stock has a stated value of $0.0001 per share and is convertible into ten-nineteenths of a share of common stock. Upon
the liquidation, dissolution or winding up of the Company’s business, each holder of Series D Preferred Stock shall be entitled
to receive, for each share of Series D Preferred Stock held, a preferential amount in cash equal to the greater of (i) the stated
value or (ii) the amount the holder would receive as a holder of common stock on an “as converted” basis. Each
holder of Series D Preferred Stock shall be entitled to vote on all matters submitted to its stockholders and shall be entitled
to such number of votes equal to the number of shares of common stock such shares of Series D Preferred Stock are convertible
into at such time, taking into account the beneficial ownership limitations set forth in the governing Certificate of Designation
and the conversion limitations described below. At no time may shares of Series D Preferred Stock be converted if such
conversion would cause the holder to hold in excess of 4.99% of issued and outstanding common stock, subject to an increase in
such limitation up to 9.99% of the issued and outstanding common stock on 61 days’ written notice to the Company. The
conversion ratio of the Series D Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination
of shares and similar recapitalization transactions.
As of August 14, 2020, 4,725 shares of Series D Preferred Stock
remained issued and outstanding.
Series D-1 Convertible Preferred
Stock
The Company’s Series D-1 Convertible
Preferred Stock (“Series D-1 Preferred Stock”) was established on November 22, 2013. Each share of Series D-1
Preferred Stock has a stated value of $0.0001 per share and is convertible into ten- nineteenths of a share of common stock. Upon
the liquidation, dissolution or winding up of the Company’s business, each holder of Series D-1 Preferred Stock shall be
entitled to receive, for each share of Series D-1 Preferred Stock held, a preferential amount in cash equal to the greater of
(i) the stated value or (ii) the amount the holder would receive as a holder of common stock on an “as converted”
basis. Each holder of Series D-1 Preferred Stock shall be entitled to vote on all matters submitted to the Company’s
stockholders and shall be entitled to such number of votes equal to the number of shares of common stock such shares of Series
D-1 Preferred Stock are convertible into at such time, taking into account the beneficial ownership limitations set forth in the
governing Certificate of Designation. At no time may shares of Series D-1 Preferred Stock be converted if such conversion
would cause the holder to hold in excess of 9.99% of issued and outstanding common stock. The conversion ratio of the Series
D-1 Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar
recapitalization transactions. The Company commenced an exchange with holders of Series D Convertible Preferred Stock
pursuant to which the holders of the Company’s outstanding shares of Series D Preferred Stock acquired in the Merger could
exchange such shares for shares of the Company’s Series D-1 Preferred Stock on a one-for-one basis.
As of August 14, 2020, 834 shares of
Series D-1 Preferred Stock remained issued and outstanding.
Series L Convertible Preferred Stock
Effective March 23, 2020, the Company declared
a dividend of one right for each of the Company’s issued and outstanding shares of common stock. Each right entitles a holder
of record, as of the close of business on March 30, 2020, to purchase from the Company one one-thousandth of a share of the Company’s
Series L convertible preferred stock at a price of $5.00, subject to certain adjustments and subject to the terms of that certain
Rights Agreement, dated as of March 23, 2020, by and between the Company and VStock Transfer, LLC, as rights agent (the “VStock
Rights Agreement”). The purpose of the VStock Rights Agreement is to diminish the risk that the Company’s ability
to use its net operating losses and certain other tax assets (collectively, “Tax Benefits”) to reduce potential future
federal income tax obligations would become subject to limitations by reason of the Company experiencing an “ownership change,”
as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Tax Code”). A company generally experiences
such an ownership change if the percentage of its stock owned by its “5-percent shareholders,” as defined in Section
382 of the Tax Code, increases by more than 50 percentage points over a rolling three-year period. The VStock Rights Agreement
is designed to reduce the likelihood that the Company will experience an ownership change under Section 382 of the Tax Code by
(i) discouraging any person or group from becoming a shareholder of 4.99% or more of Common Stock and (ii) discouraging any existing
4.99% shareholder from acquiring any additional shares of the Company’s stock. On March 24, 2020, the Company filed a Certificate
of Designation of Series L Preferred Stock with the Secretary of State of the State of Delaware to designate the new Series L Convertible
Preferred Stock of the Company.
As of August 14, 2020, no rights have
been exercised and zero shares of Series L Preferred Stock are issued and outstanding.
Warrants
A summary of warrant activity for the
six months ended June 30, 2020 and the year ended December 31, 2019 is presented below:
|
|
Warrants
|
|
|
Weighted Average Exercise
Price
|
|
|
Total Intrinsic Value
|
|
|
Weighted Average Remaining Contractual Life
(in years)
|
|
Outstanding as of December 31, 2019
|
|
|
351,939
|
|
|
$
|
19.96
|
|
|
$
|
111,332
|
|
|
|
0.94
|
|
Issued
|
|
|
11,207,244
|
|
|
|
0.72
|
|
|
|
-
|
|
|
|
0.12
|
|
Exercised
|
|
|
(10,758,016
|
)
|
|
|
0.67
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding as of June 30, 2020
|
|
|
801,167
|
|
|
$
|
9.86
|
|
|
|
53,999
|
|
|
|
0.46
|
|
On May 29, 2019, the Company entered into
the Master Service Agreement (“MSA”) with a consultant, World Wide Holdings, LLC (“Consultant”). In consideration
for services provided by Consultant, the Company paid to Consultant three warrants (the “Consultant Warrant”), with
each warrant immediately exercisable for 33,333 shares of common stock with a $0.01 strike price. The Company issued each of the
three warrants on June 28, July 28 and August 27, 2019, respectively. The Company recorded $0.3 million in stock-based compensation
during the year ended December 31, 2019 related to this arrangement. On July 12, 2019, the Company issued 33,333 shares of common
stock upon exercise of one Consultant Warrant which resulted in gross proceeds of approximately $333.
During the six months ended June 30, 2020,
the Company issued 3,897,113 and 6,860,903 shares of common stock upon exercise of 3,897,113 pre-funded warrants (“Pre-Funded
Warrants”) to purchase shares of common stock with a purchase price of $1.0499 each Pre-Funded Warrant and common warrants
(“Common Warrants”) to purchase up to 7,142,858 shares of common stock at
a price of $1.05 per share of common stock and Common Warrant, respectively,
which resulted in gross proceeds of approximately $7.2 million.
Transfer Agent and Registrar
The transfer agent and registrar for our
common stock is VStock Transfer, LLC, with an address at 18 Lafayette Place, Woodmere, New York 11598.
Listing
Our common stock is listed on the Nasdaq
Capital Market under the symbol “AIKI”. We have not applied to list our common stock on any other exchange or quotation
system.
Limitations on Directors’ Liability
Our Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws contain provisions indemnifying our directors and officers to the fullest extent
permitted by Delaware law.
In addition, as permitted by Delaware
law, our Amended and Restated Certificate of Incorporation provides that no director will be liable to us or our stockholders
for monetary damages for breach of the director’s fiduciary duty as a director. The effect of this provision is to restrict
our rights and the rights of our stockholders in derivative suits to recover monetary damages against a director for breach of
the director’s fiduciary duty as a director, except that a director will be personally liable for:
|
●
|
any
breach of his or her duty of loyalty to us or our stockholders;
|
|
●
|
acts or omissions
not in good faith which involve intentional misconduct or a knowing violation of law;
|
|
●
|
the payment of dividends
or the redemption or purchase of stock in violation of Delaware law; or
|
|
●
|
any transaction
from which the director derived an improper personal benefit.
|
This provision does not affect a director’s
liability under the federal securities laws.
To the extent that our directors, officers
and controlling persons are indemnified under the provisions contained in our Amended and Restated Certificate of Incorporation
or Delaware law against liabilities arising under the Securities Act of 1933, we have been advised that in the opinion of the
SEC, such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.
Provisions of our Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws and DGCL that May Have an Anti-Takeover Effect
Certain provisions set forth in our Amended
and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware law could have the effect of discouraging
potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder
might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our
management.
Amended and Restated Certificate
of Incorporation and Amended and Restated Bylaws
In particular, our Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws, among other things:
|
●
|
authorize our Board
of Directors to issue, without further action by the stockholders, up to 50,000,000 shares of undesignated preferred stock;
|
|
|
|
|
●
|
provide that stockholders
must provide advance notice to nominate persons for election to our Board of Directors or submit proposals for consideration
at stockholder meetings;
|
|
|
|
|
●
|
specify that special
meetings of our stockholders can be called only by our Board of Directors or by any officer instructed by the Board of Directors
to a call a special meeting;
|
|
|
|
|
●
|
provide that vacancies
on the Board of Directors may be filled by a majority of directors in office, although less than a quorum, or by the sole
remaining director; and
|
|
|
|
|
●
|
provide the Board
of Directors with the ability to alter the bylaws without stockholder approval.
|
Delaware Takeover Statute
Section 203 of the DGCL prohibits a Delaware
corporation that is a public company from engaging in any “business combination” (as defined below) with any “interested
stockholder” (defined generally as an entity or person beneficially owning 15% or more of the outstanding voting stock of
the corporation and any entity or person affiliated with such entity or person) for a period of three years following the date
that such stockholder became an interested stockholder, unless:
|
●
|
before such date,
the Board of Directors of the corporation approved either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;
|
|
|
|
|
●
|
upon consummation
of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes
of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee
stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer; or
|
|
|
|
|
●
|
on or subsequent
to such date, the business combination is approved by the Board of Directors and authorized at an annual or special meeting
of stockholders, and not by written consent, by the affirmative vote of at least 66-2/3% of the outstanding voting stock that
is not owned by the interested stockholder.
|
Section 203 of the DGCL defines “business
combination” to include:
|
●
|
any merger or consolidation
involving the corporation and the interested stockholder;
|
|
|
|
|
●
|
any sale, transfer,
pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
|
|
|
|
|
●
|
subject to certain
exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to
the interested stockholder;
|
|
|
|
|
●
|
any transaction
involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of
the corporation beneficially owned by the interested stockholder; or
|
|
|
|
|
●
|
the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by
or through the corporation.
|
Disclosure of SEC Position on Indemnification
for Securities Act Liabilities
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted for directors, officers and persons controlling us, we understand that it is
the SEC’s opinion that such indemnification is against public policy as expressed in the Securities Act and may therefore
be unenforceable.
PLAN OF DISTRIBUTION
Pursuant to an engagement agreement, dated
January 24, 2020 (as amended on March 2, 2020), we have engaged H.C. Wainwright & Co., LLC (the “Placement Agent”)
to act as our exclusive placement agent in connection with this offering, on a reasonable best efforts basis, of our securities
pursuant to this prospectus. The terms of this offering are subject to market conditions and negotiations between us, the Placement
Agent, and prospective investors. The engagement agreement does not give rise to any commitment by the Placement Agent to purchase
any of our common stock, and the Placement Agent will have no authority to bind us by virtue of the engagement agreement. Further,
the Placement Agent does not guarantee that it will be able to raise new capital in any prospective offering. The Placement Agent
may engage sub-agents or selected dealers to assist with the offering.
We will enter into a securities purchase
agreement directly with certain investors in connection with this offering. Investors who do not enter into a securities purchase
agreement shall rely solely on this prospectus in connection with the purchase of our securities in this offering.
We will deliver the securities being issued
to the investors upon receipt of investor funds for the purchase of the securities offered pursuant to this prospectus. We expect
to deliver the shares of our common stock being offered pursuant to this prospectus on or about [____], 2020.
Fees and Expenses
The following table show the total placement agent fees we
will pay in connection with the sale of the securities in this offering, assuming the purchase of all of the securities we
are offering.
|
|
Per Share
|
Placement Agent Fees
|
|
$
|
|
Total
|
|
$
|
|
We have agreed to pay to the Placement
Agent a cash fee equal to 8.0% of the aggregate gross proceeds raised in this offering.
We estimate the total expenses payable
by us for this offering to be approximately $[_____], which amount includes (i) a Placement Agent’s fee of $[_____],
assuming the purchase of all of the securities we are offering; (ii) the management fee of $[____] (equal to 1.0% of the aggregate
gross proceeds raised in this offering); (iii) a $35,000 non-accountable expense allowance payable to the Placement Agent;
(iv) reimbursement of the accountable expenses of the Placement Agent equal to $100,000, including the legal fees of the Placement
Agent being paid by us (none of which has been paid in advance); (v) the Placement Agent’s clearing expenses in the
amount of $12,900 in connection with this offering; and (vi) other estimated expenses of approximately $[___] which include legal,
accounting, printing costs and various fees associated with the registration and listing of our shares. In addition, we have agreed
to issue the Placement Agent’s Warrants to the Placement Agent. See “Placement Agent’s Warrants” below
for additional detail.
Placement Agent’s Warrants
We have agreed to issue to the Placement
Agent Warrants to purchase shares of our common stock which represent 8.0% of the number of shares of common stock being sold in
this offering. The Placement Agent’s Warrants will have a term of five years from the effective date of this prospectus and
an exercise price per share equal to $ per share, which represents 125% of
the public offering price for the common stock sold in this offering. Pursuant to FINRA Rule 5110(g), the Placement Agent’s
Warrants and any shares issued upon exercise of the Placement Agent’s Warrants shall not be sold, transferred, assigned,
pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in
the effective economic disposition of the securities by any person for a period of 180 days immediately following the date
of effectiveness or commencement of sales of this offering, except the transfer of any security: (i) by operation of law or
by reason of our reorganization; (ii) to any FINRA member firm participating in the offering and the officers or partners
thereof, if all securities so transferred remain subject to the lock-up restriction set forth above for the remainder of the time
period; (iii) if the aggregate amount of our securities held by the Placement Agent or related persons does not exceed 1.0%
of the securities being offered; (iv) that is beneficially owned on a pro rata basis by all equity owners of an investment
fund, provided that no participating member manages or otherwise directs investments by the fund and the participating members
in the aggregate do not own more than 10% of the equity in the fund; or (v) the exercise or conversion of any security, if
all securities remain subject to the lock-up restriction set forth above for the remainder of the time period.
Tail Financing Payments
We have also agreed to pay the Placement
Agent, subject to certain exceptions, a tail fee equal to the cash and warrant compensation in this offering, if any investor,
who was contacted or introduced to us by the Placement Agent during the term of its engagement, provides us with capital in any
public or private offering or other financing or capital raising transaction during the 12-month period following expiration or
termination of our engagement of the Placement Agent.
Lock-Up Agreements
Our officers, directors and each of their
respective affiliates and associated persons have agreed with the representative to be subject to a lock-up period of 90 days after
the date of the securities purchase agreement. This means that, during the applicable lock-up period, such persons may not offer
for sale, contract to sell, sell, distribute, grant any option, right or warrant to purchase, pledge, hypothecate or otherwise
dispose of, directly or indirectly, any shares of our common stock or any securities convertible into, or exercisable or exchangeable
for, shares of our common stock. Certain limited transfers are permitted during the lock-up period if the transferee agrees to
these lock-up restrictions. We have also agreed, in the purchase agreement, to similar lock-up restrictions on the issuance and
sale of our securities for 90 days following the closing of this offering, subject to certain customary exceptions.
NASDAQ Capital Market Listing
Our stock is currently traded on the NASDAQ
Capital Market under the symbol “AIKI”. On August 14, 2020, the last reported sale price of our common stock was $0.886
per share.
Indemnification
We have agreed to indemnify the Placement
Agent and specified other persons against some civil liabilities, including liabilities under the Securities Act, and the Securities
Exchange Act of 1934, as amended, or the Exchange Act, and to contribute to payments that the Placement Agent may be required to
make in respect of such liabilities.
Regulation M
The Placement Agent may be deemed to be
an underwriter within the meaning of Section 2(a)(11) of the Securities Act and any fees received by it and any profit realized
on the sale of the securities by it while acting as principal might be deemed to be underwriting discounts or commissions under
the Securities Act. The Placement Agent will be required to comply with the requirements of the Securities Act and the Exchange
Act including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may
limit the timing of purchases and sales of our securities by the Placement Agent. Under these rules and regulations, the Placement
Agent may not (i) engage in any stabilization activity in connection with our securities; and (ii) bid for or purchase
any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange
Act, until they have completed their participation in the distribution.
Other Relationships
From time to time, the Placement Agent
may provide in the future, various advisory, investment and commercial banking and other services to us in the ordinary course
of business, for which it may receive customary fees and commissions. However, except as disclosed in this prospectus, and except
for the Placement Agent’s service as our sales agent under our at-the-market offering program, we have no present arrangements
with the Placement Agent for any services.
LEGAL MATTERS
Ellenoff Grossman & Schole LLP, New
York, New York, will pass upon the validity of the shares of our common stock offered hereby. Certain legal matters in connection
with this offer will be passed upon for the Placement Agent by Sheppard, Mullin, Richter & Hampton LLP, New York, New York.
EXPERTS
Marcum LLP, an independent registered public
accounting firm, has audited our consolidated financial statements included in our Annual Report on Form 10-K for the year ended
December 31, 2019, as set forth in their report dated January 31, 2020, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. Our consolidated financial statements are incorporated by reference in reliance on Marcum
LLP’s report (which report includes an explanatory paragraph relating to our ability to continue as a going concern), given
on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND
MORE INFORMATION
We have filed with the SEC a registration
statement on Form S-1 under the Securities Act with respect to the securities offered by this prospectus. This prospectus, which
constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement,
some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For
further information with respect to us and our securities, we refer you to the registration statement, including the exhibits
filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract
or any other document is not necessarily complete. If a contract or document has been filed as an exhibit to the registration
statement, please see the copy of the contract or document that has been filed. Each statement is this prospectus relating to
a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. We are subject to the informational
requirements of the Exchange Act and in accordance therewith file annual, quarterly and current reports, proxy statements and
other information with the SEC. The SEC maintains an Internet website that contains reports, proxy statements and other information
about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov. The registration
statement and the documents referred to below under “Incorporation of Documents By Reference” are also available on
our website, www.aikidopharma.com. We have not incorporated by reference into this prospectus the information on our website,
and you should not consider it to be a part of this prospectus.
INCORPORATION OF DOCUMENTS BY REFERENCE
This prospectus is part of the registration
statement but the registration statement includes and incorporates by reference additional information and exhibits. The SEC permits
us to “incorporate by reference” the information contained in documents we file with the SEC, which means that we can
disclose important information to you by referring you to those documents rather than by including them in this prospectus. Information
that is incorporated by reference is considered to be part of this prospectus and you should read it with the same care that you
read this prospectus. Information that we file later with the SEC will automatically update and supersede the information that
is either contained, or incorporated by reference, in this prospectus, and will be considered to be a part of this prospectus from
the date those documents are filed. We have filed with the SEC, and incorporate by reference in this prospectus:
|
●
|
Current Reports
on Form 8-K, filed with the SEC on February 24, 2020, March 9, 2020, March 10, 2020, March 25, 2020, March 26, 2020 (with
respect to two reports), March 30, 2020, April 15, 2020, April 20, 2020, May 1, 2020 and June 25, 2020;
|
|
|
|
|
●
|
Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2020, filed with the SEC on August 6, 2020; and
|
|
|
|
|
●
|
Annual Report on
Form 10-K for the year ended December 31, 2019, filed with the SEC on January 31, 2020.
|
In addition, all documents subsequently
filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, prior to the termination
of the offering (excluding any information furnished rather than filed) shall be deemed to be incorporated by reference into this
prospectus.
Notwithstanding the statements in the preceding
paragraphs, no document, report or exhibit (or portion of any of the foregoing) or any other information that we have “furnished”
to the SEC pursuant to the Securities Exchange Act of 1934, as amended shall be incorporated by reference into this prospectus.
We will furnish without charge to you,
on written or oral request, a copy of any or all of the documents incorporated by reference in this prospectus, including exhibits
to these documents. You should direct any requests for documents to:
AIkido Pharma Inc.
One Rockefeller Plaza, 11th Floor
New York, NY 10020
Phone: (703)
992-9325
You also may access these filings on our
website at http://www.aikidopharma.com. We do not incorporate the information on our website into this prospectus or any supplement
to this prospectus and you should not consider any information on, or that can be accessed through, our website as part of this
prospectus or any supplement to this prospectus (other than those filings with the SEC that we specifically incorporate by reference
into this prospectus or any supplement to this prospectus).
Any statement contained in a document incorporated or deemed
to be incorporated by reference in this prospectus will be deemed modified, superseded or replaced for purposes of this prospectus
to the extent that a statement contained in this prospectus modifies, supersedes or replaces such statement. Any statement contained
herein or in any document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded for
purposes of the registration statement of which this prospectus forms a part to the extent that a statement contained in any other
subsequently filed document which also is or is deemed to be incorporated by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed to constitute a part of the registration statement of which this prospectus
forms a part, except as so modified or superseded.
Shares of Common Stock
PRELIMINARY PROSPECTUS
H.C. Wainwright
& Co., LLC
[__], 2020
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
We
estimate that expenses in connection with the distribution described in this registration statement (other than brokerage commissions,
discounts or other expenses relating to the sale of the shares in this offering) will be as set forth below. We will pay all of
the expenses with respect to the distribution, and such amounts, with the exception of the SEC registration fee and FINRA fee,
are estimates.
SEC expenses
|
|
$
|
2,804
|
|
FINRA expenses
|
|
|
*
|
|
Legal fees and expenses
|
|
|
*
|
|
Printing and engraving expenses
|
|
|
*
|
|
Accounting fees and expenses
|
|
|
*
|
|
Miscellaneous expenses
|
|
|
*
|
|
Total offering expenses
|
|
|
*
|
|
* To be filed by amendment
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section
145 of the DGCL provides, in general, that a corporation incorporated under the laws of the State of Delaware, as we are, may
indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person
is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another enterprise, against expenses (including attorneys’ fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding
if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s
conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses
(including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter
as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably
entitled to indemnity for such expenses.
Our
Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide that we will indemnify our directors,
officers, employees and agents to the extent and in the manner permitted by the provisions of the DGCL, as amended from time to
time, subject to any permissible expansion or limitation of such indemnification, as may be set forth in any stockholders’
or directors’ resolution or by contract. Any repeal or modification of these provisions approved by our stockholders will
be prospective only and will not adversely affect any limitation on the liability of any of our directors or officers existing
as of the time of such repeal or modification.
We
have entered into indemnification agreements with all of our executive officers and directors. These agreements provide, subject
to limited exceptions and among other things, for the indemnification to the fullest extent permitted or required by Delaware
law, provided however, that no director or officer shall be entitled to indemnification in connection with (i) any “claim”
(as such term is defined in the agreement) initiated by him or her against the Company or the Company’s directors or officers
unless the Company joins or consent to the initiation of such claim, or (ii) the purchase and sale of securities by him or her
in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended. Our indemnification agreements also provide
for the advancement of expenses (including attorneys’ fees) incurred by the indemnitee in connection with any action, suit,
or proceeding (subject to the terms and conditions set forth therein). The indemnification agreements contain certain exclusions,
including proceedings initiated by the indemnitee unless the Company has joined in or consented to the initiation of such claim.
We
are also permitted to apply for insurance on behalf of any director, officer, employee or other agent for liability arising out
of his actions, whether or not the DGCL would permit indemnification.
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES
In
the three years preceding the filing of this registration statement, we have issued the following securities that were not registered
under the Securities Act:
On
May 15, 2019, the Company purchased substantially all of the assets, properties and rights (the “Acquisition”) of
CBM. On December 5, 2019, the Company completed the Acquisition of CBM, pursuant to that certain Asset Purchase Agreement, dated
as of May 15, 2019, by and between the Company and CBM, as amended by that certain Amendment No. 1 to Asset Purchase Agreement,
dated as of May 30, 2019, and Amendment No. 2 to Asset Purchase Agreement, dated as of December 5, 2019. As consideration for
the Acquisition, the Company agreed to pay to CBM consideration consisting of (i) $1,000,000 in cash and (ii) an aggregate of
1,939,058 shares (the “Stock Consideration”) of the Company’s common stock valued at a price per share of $3.61.
At closing, 7% or 135,734 shares of common stock of the Stock Consideration was deposited with VStock, the Company’s transfer
agent, to be held in escrow for six months post-closing to satisfy certain indemnification obligations pursuant to the terms and
conditions of the CBM Purchase Agreement, and 93% or 1,803,324 shares of the Stock Consideration was issued and delivered to CBM.
ITEM
16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
(a)
|
Exhibits.
The exhibits to the registration statement are listed in the Exhibit Index attached hereto and incorporated by reference herein.
|
|
(b)
|
Financial
Statements. Financial statement schedules have been omitted, as the information required to be set forth therein is included
in the Consolidated Financial Statements or Notes thereto appearing in the prospectus made part of this registration statement.
|
ITEM
17. UNDERTAKINGS.
The undersigned registrant hereby undertakes
to provide to the Placement Agent at the closing specified in the purchase agreement, certificates in such denominations and registered
in such names as required by the Placement Agent to permit prompt delivery to each purchaser.
|
(1)
|
To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:
|
|
(i)
|
To
include any prospectus required by Section 10(a)(3) of the Securities Act.
|
|
(ii)
|
To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
and
|
|
(iii)
|
To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
|
provided,
however, that paragraphs (1)(i), (ii) and (iii) do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement,
or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
|
(2)
|
That,
for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering thereof;
|
|
(3)
|
To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering;
|
|
(4)
|
That,
for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in any such document immediately prior to such
date of first use.
|
The
undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange
Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the 17th day of August, 2020.
|
AIKIDO
PHARMA INC.
|
|
|
|
|
By:
|
/s/
Anthony Hayes
|
|
|
Anthony
Hayes
|
|
|
Chief Executive Officer, Director,
Principal Financial Officer and
Principal Accounting Officer
|
POWER
OF ATTORNEY
KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Anthony Hayes their true and
lawful attorney-in-fact, with full power of substitution and resubstitution for them and in their name, place and stead, in any
and all capacities to sign any and all amendments including post-effective amendments to this registration statement, and to file
the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, hereby ratifying and confirming
all that said attorney-in-fact or their substitute, each acting alone, may lawfully do or cause to be done by virtue thereof.
Pursuant
to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
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|
|
|
/s/ Anthony Hayes
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|
Chief Executive Officer, Director, Principal Financial Officer and Principal Accounting Officer
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|
August 17, 2020
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Anthony Hayes
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|
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/s/ Robert J. Vander Zanden
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|
Director and Chairman of the Board
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|
August 17, 2020
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Robert J. Vander Zanden
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/s/ Tim S. Ledwick
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Director
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August 17, 2020
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Tim S. Ledwick
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/s/ Paul LeMire
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Director
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August 17, 2020
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Paul LeMire
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/s/ Gregory James Blattner
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Director
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August 17, 2020
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Gregory James Blattner
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/s/ Robert Dudley
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Director
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August 17, 2020
|
Robert Dudley
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INDEX
TO EXHIBITS
Exhibit
No.
|
|
Description
|
|
|
|
1.2
|
|
Placement Agency Agreement, dated July 15, 2015, between Spherix Incorporated and Chardan Capital Markets LLC (incorporated by reference to Form 8-K filed July 17, 2015)
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Spherix Incorporated, dated April 24, 2014 (incorporated by reference to Form 8-K filed April 25, 2014)
|
|
|
|
3.2
|
|
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Spherix Incorporated, dated March 2, 2016 (incorporated by reference to Form 8-K filed March 18, 2016)
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of Spherix Incorporated (incorporated by reference to Form 8-K filed October 15, 2013)
|
|
|
|
3.3
|
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Spherix Incorporated, effective March 4, 2016 (incorporated by reference to Form 10-K filed March 29, 2016)
|
|
|
|
4.1
|
|
Specimen Certificate for common stock, par value $0.0001 per share, of Spherix Incorporated (incorporated by reference to Form S-3/A filed April 17, 2014)
|
|
|
|
4.2
|
|
Rights Agreement dated as of January 24, 2013, between Spherix Incorporated and Equity Stock Transfer, LLC (incorporated by reference to Form 8-K filed January 30, 2013)
|
|
|
|
4.3
|
|
Certificate of Designation of Preferences, Rights and Limitations of Series J Convertible Preferred Stock (incorporated by reference to Form 8-K/A filed on June 2, 2014)
|
|
|
|
4.4
|
|
Certificate of Designation of Preferences, Rights and Limitations of Series K Convertible Preferred Stock (incorporated by reference to Form 8-K filed on December 3, 2015)
|
|
|
|
4.5
|
|
Form of Warrant (incorporated by reference to Form 8-K filed on March 26, 2014)
|
|
|
|
4.6
|
|
Form of Placement Agent Warrant (incorporated by reference to Form 8-K filed on March 26, 2014)
|
|
|
|
4.7
|
|
Form of Common Stock Purchase Warrant (incorporated by reference to Form 8-K filed July 17, 2015)
|
|
|
|
4.8
|
|
Form of Warrant (incorporated by reference to Form 8-K filed December 3, 2015)
|
|
|
|
5.1†
|
|
Opinion of Ellenoff
Grossman & Schole LLP
|
|
|
|
10.1
|
|
2012 Equity Incentive Plan (incorporated by reference from the Company’s Information Statement on Form DEF 14c filed November 26, 2012)
|
|
|
|
10.2
|
|
Warrant Exchange Agreement dated March 1, 2013 between the Company and certain investors (incorporated by reference to Form 8-K filed March 7, 2013)
|
|
|
|
10.3
|
|
Agreement and Plan of Merger dated April 2, 2013 (incorporated by reference to the Form 8-K filed on April 4, 2013)
|
|
|
|
10.4
|
|
First Amendment to Agreement and Plan of Merger dated August 30, 2013 (incorporated by reference to the Form 8-K filed on September 4, 2013)
|
|
|
|
10.5
|
|
Spherix Incorporated 2013 Equity Incentive Plan (incorporated by reference to the Form 8-K filed on April 4, 2013)
|
|
|
|
10.6
|
|
Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed December 20, 2013)
|
|
|
|
10.7
|
|
Amendment to Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed March 28, 2014)
|
|
|
|
10.8
|
|
Form of Indemnification Agreement (incorporated by reference to the Form 8-K filed on September 10, 2013)
|
|
|
|
10.9
|
|
Employment Agreement between Spherix Incorporated and Anthony Hayes (incorporated by reference to the Form 8-K filed on September 13, 2013)
|
10.10
|
|
Indemnification Agreement between Spherix Incorporated and Alexander Poltorak (incorporated by reference to the Form 8-K filed on October 29, 2013)
|
|
|
|
10.11
|
|
Indemnification Agreement between Spherix Incorporated and Richard Cohen (incorporated by reference to the Form 8-K filed on January 9, 2014)
|
|
|
|
10.12
|
|
Indemnification Agreement between Spherix Incorporated and Jeffrey Ballabon (incorporated by reference to the Form 8-K filed on June 13, 2014)
|
|
|
|
10.13**
|
|
Patent Purchase Agreement between Spherix Incorporated and Rockstar Consortium US LP, including Amendment No. 1 thereto (incorporated by reference to the Form 8-K/A filed on November 19, 2013)
|
|
|
|
10.14
|
|
Form of Series F Exchange Agreement (incorporated by reference to the Form 8-K filed on November 26, 2013)
|
|
|
|
10.15
|
|
Form of Series D Exchange Agreement (incorporated by reference to the Form 8-K filed on December 30, 2013)
|
|
|
|
10.16
|
|
Confidential Patent Purchase Agreement dated December 31, 2013 between Spherix Incorporated and Rockstar Consortium US LP (incorporated by reference to the Form S-1/A filed January 21, 2014)
|
|
|
|
10.17
|
|
Form of Subscription Agreement (incorporated by reference to the Form 8-K filed March 26, 2014)
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|
|
|
10.18
|
|
Form of Registration Rights Agreement (incorporated by reference to the Form 8-K filed March 26, 2014)
|
|
|
|
10.19
|
|
Form of Subscription Agreement (incorporated by reference to the Form 8-K filed on May 29, 2014)
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|
|
|
10.20
|
|
Letter of Agreement, dated January 6, 2014, between Spherix Incorporated and Chord Advisors, LLC (incorporated by reference to the Form 10-K filed on March 30, 2015)
|
|
|
|
10.21
|
|
Letter of Agreement, dated April 11, 2014, between Spherix Incorporated and Chord Advisors, LLC (incorporated by reference to the Form 10-K filed on March 30, 2015)
|
|
|
|
10.22
|
|
Placement Agency Agreement, dated July 15, 2015, between Spherix Incorporated and Chardan Capital Markets LLC (incorporated by reference to Form 8-K filed July 17, 2015)
|
|
|
|
10.23
|
|
Securities Purchase Agreement, dated July 15, 2015, between Spherix Incorporated and the purchasers party thereto (incorporated by reference to Form 8-K filed July 17, 2015)
|
|
|
|
10.24
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|
Employment Agreement, dated as of March 14, 2014, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 10-K filed March 29, 2016)
|
|
|
|
10.25
|
|
Amendment to Employment Agreement, dated as of June 30, 2015, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 10-K filed March 29, 2016)
|
|
|
|
10.26
|
|
Consulting Services Agreement, dated as of August 10, 2015, between Spherix Incorporated and Howard E. Goldberg d/b/a Forward Vision Associates (incorporated by reference to Form 8-K filed August 19, 2015)
|
|
|
|
10.27
|
|
Settlement and License Agreement, dated October 13, 2015, between Spherix Incorporated and Huawei Technologies Co., Ltd. (incorporated by reference to Form 10-K filed March 29, 2016)
|
|
|
|
10.28
|
|
Patent License Agreement, dated as of November 23, 2015, between Spherix Incorporated and RPX Corporation (incorporated by reference to Form 8-K filed November 30, 2015
|
|
|
|
10.29
|
|
Securities Purchase Agreement, dated as of December 2, 2015, between Spherix Incorporated and the investors party thereto (incorporated by reference to Form 8-K filed December 3, 2015)
|
|
|
|
10.30
|
|
Engagement Agreement, dated September 16, 2015, as amended, between Spherix Incorporated and H.C. Wainwright & Co., LLC (incorporated by reference to Form 8-K filed December 3, 2015)
|
|
|
|
10.31
|
|
Employment Agreement, effective as of April 1, 2016, between Spherix Incorporated and Anthony Hayes (incorporated by reference to Form 8-K filed May 26, 2016)
|
|
|
|
10.32
|
|
Separation Agreement and Release, dated March 10, 2017, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 8-K filed March 15, 2017)
|
|
|
|
10.33
|
|
Patent License Agreement, dated as of May 23, 2016, between Spherix Incorporated and RPX Corporation (incorporated by reference to Form 10-Q filed August 15, 2016)
|
10.34
|
|
Technology
Monetization Agreement, dated as of March 11, 2016, and amended as of April 22, 2016, April 27, 2016 and May 22, 2016, between
Spherix Incorporated and Equitable IP Corporation (incorporated by reference to Form 8-K filed August 2, 2016)
|
|
|
|
10.35
|
|
Underwriting
Agreement, dated as of August 2, 2016, by and among Spherix Incorporated and the underwriters named on Schedule I thereto
(incorporated by reference to Form 8-K filed August 3, 2016)
|
|
|
|
10.36
|
|
Assignment
and Assumption of Rights Agreement, dated as of June 16, 2016, by and between Spherix Incorporated and Transfer Online, Inc.
(incorporated by reference to Form 8-K filed June 21, 2016)
|
|
|
|
10.37
|
|
Securities
Purchase Agreement, dated as of June 30, 2017, by and between Spherix Incorporated and Hoth Therapeutics, Inc. (incorporated
by reference to Form 8-K filed July 3, 2017)
|
|
|
|
10.38
|
|
Registration
Rights Agreement, dated as of June 30, 2017, by and between Spherix Incorporated and Hoth Therapeutics, Inc. (incorporated
by reference to Form 8-K filed July 3, 2017)
|
|
|
|
10.39
|
|
Form
of Shareholders Agreement, dated as of June 30, 2017 (incorporated by reference to Form 8-K filed July 3, 2017)
|
|
|
|
10.40
|
|
Agreement
and Plan of Merger, dated as of March 12, 2018, by and among Spherix Incorporated, Spherix Merger Subsidiary Inc., DatChat,
Inc. and Darin Myman (incorporated by reference to Form 8-K filed March 14, 2018)
|
|
|
|
10.41
|
|
Placement
Agent Agreement, dated as of March 14, 2018, by and between Spherix Incorporated and Laidlaw & Company (UK) Ltd. (incorporated
by reference to Form 8-K filed March 19, 2018)
|
|
|
|
10.42
|
|
Assignment of Agreement, dated as of November 13, 2019, by and among The University of Texas in Austin, on behalf of the Board of Regents of the University of Texas, CBM BioPharma, Inc. and Spherix Incorporated. (incorporated by reference to Form 10-K filed February 3, 2020)
|
|
|
|
10.43
|
|
Assignment of Agreement, dated as of November 13, 2019, by and among Wake Forrest University Health Sciences, CBM BioPharma, Inc. and Spherix Incorporated. (incorporated by reference to Form 10-K filed February 3, 2020)
|
|
|
|
10.44
|
|
First
Amendment to Agreement and Plan of Merger, dated as of May 3, 2018, by and among Spherix Incorporated, Spherix Merger Subsidiary
Inc., DatChat, Inc. and Darin Myman (incorporated by reference to Form 8-K filed May 7, 2018)
|
|
|
|
10.45
|
|
Agreement
and Plan of Merger, dated as of October 10, 2018, by and among Spherix Incorporated, Spherix Delaware Merger Sub Inc., Scott
Wilfong and CBM Biopharma, Inc. (incorporated by reference to Form 8-K filed October 16, 2018)
|
|
|
|
10.46
|
|
Asset
Purchase Agreement, dated as of May 15, 2019, by and between Spherix Incorporated and CBM BioPharma, Inc. (incorporated herein
by reference to Form 10-Q filed on August 14, 2019)
|
|
|
|
10.47
|
|
Amendment
No. 1 to Asset Purchase Agreement, dated as of May 30, 2019, by and between Spherix Incorporated and CBM BioPharma, Inc. (incorporated
herein by reference to Form 10-Q filed on August 14, 2019)
|
|
|
|
10.48
|
|
Amendment
No. 2 to Asset Purchase Agreement, dated as of December 5, 2019, by and between Spherix Incorporated and CBM BioPharma, Inc.
(incorporated herein by reference to Form 8-K filed on December 10, 2019)
|
|
|
|
10.49**
|
|
Master
License Agreement, dated as of April 13, 2020, by and between AIkido Pharma, Inc. and the University of Maryland, Baltimore
(incorporated herein by reference to Form S-3/A filed on June 12, 2020)
|
|
|
|
10.50†
|
|
Form of Securities Purchase Agreement
|
|
|
|
21.1
|
|
List
of Subsidiaries (incorporated by reference to 10-K filed on February 3, 2020)
|
|
|
|
23.1*
|
|
Consent of Marcum LLP, independent registered public accounting firm
|
|
|
|
23.2†
|
|
Consent
of Ellenoff Grossman & Schole LLP (included in Exhibit 5.1)
|
|
|
|
23.4
|
|
Power
of Attorney (included on signature page)
|
|
**
|
Pursuant
to a Confidential Treatment Request under Rule 24b-2 filed with and approved by the SEC,
portions of this exhibit have been omitted.
|
|
†
|
To
be filed by amendment.
|
II-7
Alkido Pharma (NASDAQ:AIKI)
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From Mar 2024 to Apr 2024
Alkido Pharma (NASDAQ:AIKI)
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From Apr 2023 to Apr 2024