ITEM
1A. RISK FACTORS
In
analyzing our company, you should consider carefully the following risk factors, together with all of the other information included
in this Quarterly Report on Form 10-Q. Factors that could cause or contribute to differences in our actual results include those
discussed in the following subsection, as well as those discussed above in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and in our Annual Report filed on Form 10-K for the year ended December 31, 2020. Each of
the following risk factors, either alone or taken together, could adversely affect our business, operating results and financial condition,
as well as adversely affect the value of an investment in our company. The risks and uncertainties described below are not the only ones
we face. Additional risks not currently known to us or other factors not perceived by us to present significant risks to our business
at this time also may impair our business operations.
Summary
of Risk Factors
We
are providing the following summary of the risk factors contained in this Quarterly Report on Form 10-Q to enhance the readability and
accessibility of our risk factor disclosures. We encourage you to carefully review the full risk factors contained in our Annual Report
on Form 10-K for the year ended December 31, 2020 in their entirety for additional information regarding the material factors that make
an investment in our securities speculative or risky. These risks and uncertainties include, but are not limited to, the following:
|
●
|
We
are a clinical-stage company and have generated no revenue from commercial sales to date;
|
|
|
|
|
●
|
We
have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future;
|
|
|
|
|
●
|
If
we fail to obtain additional financing, we will be unable to continue or complete our product development and you will likely lose
your entire investment;
|
|
|
|
|
●
|
We
are highly dependent on the success of Iomab-B and the SIERRA trial and we many not able to complete the necessary clinical development
or our development efforts may not result in the data necessary to receive regulatory approval;
|
|
|
|
|
●
|
Our
business could be adversely affected by the effects of health epidemics, including the global COVID-19 pandemic;
|
|
|
|
|
●
|
We
have not demonstrated that any of our products are safe and effective for any indication and will continue to expend substantial
time and resources on clinical development before any of our current or future product candidates will be eligible for FDA approval,
if ever;
|
|
|
|
|
●
|
Our
clinical trials may fail to demonstrate adequately the efficacy and safety of our product candidates, which would prevent or delay
regulatory approval and commercialization;
|
|
|
|
|
●
|
Healthcare
legislative reform measures intended to increase pressure to reduce prices of pharmaceutical products paid for by Medicare or, otherwise,
affect the federal regulation of the U.S. healthcare system could have a material adverse effect our business, future revenue, if
any, and results of operations;
|
|
|
|
|
●
|
We
rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties
or meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize
our product candidates;
|
|
●
|
We
currently depend on a single third-party manufacturer to produce our pre-clinical and clinical trial drug supplies. Any disruption
in the operations of our current third-party manufacturer, or other third-party manufacturers we may engage in the future, could
adversely affect our business and results of operations;
|
|
●
|
Our
product candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent
their regulatory approval, limit their commercial potential, or result in significant negative consequences;
|
|
|
|
|
●
|
Our
patent position is highly uncertain and involves complex legal and factual questions;
|
|
|
|
|
●
|
The
use of hazardous materials, including radioactive and biological materials, in our research and development efforts imposes certain
compliance costs on us and may subject us to liability for claims arising from the use or misuse of these materials;
|
|
|
|
|
●
|
We
are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we
may not be able to successfully implement our business strategy;
|
|
|
|
|
●
|
Certain
provisions of our Certificate of Incorporation and Bylaws and Delaware law make it more difficult for a third party to acquire us
and make a takeover more difficult to complete, even if such a transaction were in our stockholders’ interest; and
|
|
|
|
|
●
|
Our
ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
|
Risks
Related to Our Business
We
are a clinical-stage company and have generated no revenue from commercial sales to date.
We
are a clinical-stage biopharmaceutical company with a limited operating history. We have no products approved for commercial sale and
have not generated any revenue from product sales to date. We will encounter risks and difficulties frequently experienced by early-stage
companies in rapidly evolving fields. If we do not address these risks successfully, our business will suffer.
We
have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future.
We
are not profitable and have incurred losses in each period since our inception. As of June 30, 2021 and December 31, 2020, we had an
accumulated deficit of $241.3 million and $231.0 million, respectively. We reported a net loss of $10.3 million for the six months ended
June 30, 2021 and $10.3 million for the six months ended June 30, 2020. We expect to continue to operate at a net loss as we continue
our research and development efforts, continue to conduct clinical trials and develop manufacturing, sales, marketing and distribution
capabilities. There can be no assurance that the products under development by us will be approved for sale in the United States or elsewhere.
Furthermore, there can be no assurance that if such products are approved, they will be successfully commercialized, which would have
an adverse effect on our business prospects, financial condition and results of operation.
If
we fail to obtain additional financing, we will be unable to continue or complete our product development and you will likely lose your
entire investment.
In August 2020, we entered
into the Capital on Demand™ Sales Agreement with JonesTrading, pursuant to which we may sell, from time to time, through or to JonesTrading,
up to an aggregate of $200 million of our common stock. Shares of common stock are offered pursuant to our shelf registration statement
filed with the SEC on August 7, 2020. For the six months ended June 30, 2021, we sold 3.5 million shares of common stock, resulting in
net proceeds of $28.7 million. As of the date of filing this report, we expect that our existing resources will be more than sufficient
to fund our planned operations for more than 12 months following the date of this report.
Our
business or operations may change in a manner that would consume available funds more rapidly than anticipated and substantial additional
funding may be required to maintain operations, fund expansion, develop new or enhanced products, acquire complementary products, business
or technologies or otherwise respond to competitive pressures and opportunities, such as a change in the regulatory environment or a
change in preferred cancer treatment modalities. However, we may not be able to secure funding when we need it or on favorable terms
or indeed on any terms. In addition, from time to time, we may not be able to secure enough capital in a timely enough manner which may
cause the generation of a going-concern opinion from our auditors which can and may impair our stock market valuation and also our ability
to finance on favorable terms or indeed on any terms.
To
raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable
for our common stock. We cannot assure you that we will be able to sell shares or other securities in any other offering at a price per
share that is equal to or greater than the price per share paid by investors, and investors purchasing shares or other securities in
the future could have rights superior to existing stockholders.
If
we cannot raise adequate funds to satisfy our capital requirements, we will have to delay, scale back or eliminate our research and development
activities, clinical studies or future operations. We may also be required to obtain funds through arrangements with collaborators, which
arrangements may require us to relinquish rights to certain technologies or products that we otherwise would not consider relinquishing,
including rights to future product candidates or certain major geographic markets. We may further have to license our technology to others.
This could result in sharing revenues which we might otherwise have retained for ourselves. Any of these actions may harm our business,
financial condition and results of operations.
The
amount of funding we will need depends on many factors, including the progress, timing and scope of our product development programs;
the progress, timing and scope of our preclinical studies and clinical trials; the time and cost necessary to obtain regulatory approvals;
the time and cost necessary to further develop manufacturing processes and arrange for contract manufacturing; our ability to enter into
and maintain collaborative, licensing and other commercial relationships; and our partners’ commitment of time and resources to
the development and commercialization of our products.
We
have limited access to the capital markets and even if we can raise additional funding, we may be required to do so on terms that are
dilutive to you.
We
have limited access to the capital markets to raise funds. The capital markets have been unpredictable in the recent past for radioisotope
and other oncology companies and unprofitable companies such as ours. In addition, it is generally difficult for development-stage companies
to raise capital under current market conditions. The amount of capital that a company such as ours is able to raise often depends on
variables that are beyond our control. As a result, we may not be able to secure financing on terms attractive to us, or at all. If we
are able to consummate a financing arrangement, the amount raised may not be sufficient to meet our future needs. If adequate funds are
not available on acceptable terms, or at all, our business, including our technology licenses, results of operations, financial condition
and our continued viability will be materially adversely affected.
We are highly dependent on the success of
Iomab-B and the SIERRA trial and we may not be able to complete the necessary clinical development or our development efforts may not
result in the data necessary to receive regulatory approval.
Iomab-B,
which we licensed from the Fred Hutchinson Cancer Research Center (“FHCRC”) in June 2012 is our lead program to which we
allocate a significant portion of our resources. We are currently enrolling patients in the pivotal Phase 3 SIERRA trial (Study of Iomab-B
in Elderly Relapsed or Refractory AML), a 150-patient multi-center randomized trial that will compare outcomes of patients who receive
Iomab-B and a BMT to those patients receiving physician’s choice of salvage chemotherapy, defined as conventional care, as no standard
of care exists for this patient population. The SIERRA trial may be unsuccessful and fail to demonstrate a safety and efficacy profile
that is necessary to receive favorable regulatory approval. The DMC may recommend that the trial be stopped early for safety or
efficacy concerns, which could prevent us from completing the SIERRA trial. Even if Iomab-B receives favorable regulatory approval, we
may not be successful in securing adequate reimbursement or establishing successful commercial operations. Any or all of these factors
could have a material adverse impact on our business and ability to continue operations.
We
may be unable to establish sales, marketing and commercial supply capabilities.
We
do not currently have, nor have we ever had, commercial sales and marketing capabilities. If any of our product candidates become approved,
we would have to build and establish these capabilities in order to commercialize our approved product candidates. The process of establishing
commercial capabilities will be expensive and time consuming. Even if we are successful in building sales and marketing capabilities,
we may not be successful in commercializing any of our product candidates. Any delays in commercialization or failure to successfully
commercialize any product candidate may have material adverse impacts on our business and ability to continue operations.
Our
business could be adversely affected by the effects of health epidemics, including the global COVID-19 pandemic.
The global health crisis caused by the novel coronavirus COVID-19 pandemic
and its resurgences has and may continue to negatively impact global economic activity, which, despite progress in vaccination efforts,
remains uncertain and cannot be predicted with confidence. In addition, a new Delta variant of COVID-19, which appears to be the most
transmissible variant to date, has begun to spread globally. The impact of the Delta variant cannot be predicted at this time, and could
depend on numerous factors, including vaccination rates among the population, the effectiveness of COVID-19 vaccines against the Delta
variant and the response by governmental bodies and regulators. Given the ongoing and dynamic nature of the circumstances, it is difficult
to predict the impact of the COVID-19 pandemic on our business.
Accordingly, our ability to
continue to operate our business may also be limited. These restrictions may result in a period of business, supply and drug product manufacturing
disruption, and in reduced operations, any of which could materially affect our business, financial condition and results of operations.
To date, we have not experienced a significant disruption or delay in our operations as it relates to the clinical development of our
drug candidates. Such government-imposed precautionary measures may have been relaxed in certain countries or states, but there is no
assurance that more strict measures will be put in place again due to a resurgence in COVID-19 cases, including those involving new variants
of the coronavirus, which may be more contagious and deadly than prior strains. Therefore, the COVID-19 pandemic may continue to affect
our operation, may further divert the attention and efforts of the medical community to coping with COVID-19 and disrupt the marketplace
in which we operate and may have a material adverse effect on our operations.
The
spread of COVID-19, which has caused a broad impact globally, may materially affect us economically. While the ultimate economic impact
brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, including new information which may emerge
concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others, the pandemic has resulted
in significant disruptions in the general commercial activity and the global economy and caused financial market volatility and uncertainty
in significant and unforeseen ways in the recent months. A continuation or worsening of the levels of market disruption and volatility
seen in the recent past could have an adverse effect on our ability to access capital, which could in the future negatively affect our
liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and
the value of our common stock.
Currently,
the Phase 3 SIERRA trial for our lead program, Iomab-B, remains active at a majority of our clinical trial sites, with investigators
providing feedback that recruitment and enrollment will remain active because of the acute nature of the disease, the high unmet needs
of patients with relapsed or refractory AML, the potentially curative nature of BMT and the differentiated profile of Iomab-B. Certain
sites that had not been actively enrolling due to COVID-19 at the initial outbreak of the pandemic resumed recruitment and enrollment
in mid-2020, and we currently do not have any sites that are not recruiting and enrolling due to COVID-19. We also believe our earlier
stage CD33 clinical trials will continue to recruit and enroll patients given the acute nature of relapsed or refractory AML. The continuation
of the pandemic globally could adversely affect our planned clinical trial operations, including our ability to conduct the trials on
the expected timelines and recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have
heightened exposure to COVID-19 if their geography is impacted by the pandemic. Further, the continuation and/or resurgence of the COVID-19
pandemic could result in delays in our clinical trials due to prioritization of hospital resources toward the pandemic, restrictions
in travel, potential unwillingness of patients to enroll in trials at this time, or the inability of patients to comply with clinical
trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services. In addition, we rely
on independent clinical investigators, contract research organizations and other third-party service providers to assist us in managing,
monitoring and otherwise carrying out our preclinical studies and clinical trials, and the pandemic may affect their ability to devote
sufficient time and resources to our programs or to travel to sites to perform work for us.
Additionally,
COVID-19 may result in delays in receiving approvals from domestic and foreign regulatory authorities, delays in necessary interactions
with Institutional Review Boards (“IRBs”), domestic and foreign regulators, ethics committees and other important agencies
and contractors due to limitations in employee resources or forced furlough of government employees.
We
continue to monitor the impacts of COVID-19 on the global economy and on our business operations. However, the ultimate impact from
COVID-19 on our business operations and financial results during 2021 will depend on, among other things, the ultimate severity and
scope of the pandemic, including the new variants of the virus, the pace at which governmental and private travel restrictions and
public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will
decrease, if at all, and whether, and the speed with which the economy recovers. We are not able to fully quantify the impact that
these factors will have on our financial results during 2021 and beyond, but developments related to COVID-19 may materially affect
us in 2021.
Our
business is subject to cybersecurity risks.
Our
operations are increasingly dependent on information technologies and services. Threats to information technology systems associated
with cybersecurity risks and cyber incidents or attacks continue to grow, and include, among other things, storms and natural disasters,
terrorist attacks, utility outages, theft, viruses, phishing, malware, design defects, human error, and complications encountered as
existing systems are maintained, repaired, replaced, or upgraded. Risks associated with these threats include, among other things:
|
●
|
theft
or misappropriation of funds;
|
|
●
|
loss,
corruption, or misappropriation of intellectual property, or other proprietary, confidential or personally identifiable information
(including supplier, clinical data or employee data);
|
|
|
|
|
●
|
disruption
or impairment of our and our business operations and safety procedures;
|
|
|
|
|
●
|
damage
to our reputation with our potential partners, patients and the market;
|
|
|
|
|
●
|
exposure
to litigation;
|
|
|
|
|
●
|
increased
costs to prevent, respond to or mitigate cybersecurity events.
|
Although
we utilize various procedures and controls to mitigate our exposure to such risk, cybersecurity attacks and other cyber events are evolving
and unpredictable. Moreover, we have no control over the information technology systems of third parties conducting our clinical trials,
our suppliers, and others with which our systems may connect and communicate. As a result, the occurrence of a cyber incident could go
unnoticed for a period time.
We
have cybersecurity insurance coverage in the event we become subject to various cybersecurity attacks, however, we cannot ensure that
it will be sufficient to cover any particular losses we may experience as a result of such cyberattacks. Any cyber incident could have
a material adverse effect on our business, financial condition and results of operations.
Risks
Related to Regulation
The
FDA or comparable foreign regulatory authorities may disagree with our regulatory plans and we may fail to obtain regulatory approval
of our product candidates.
Our
products are subject to rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities. The process
of seeking regulatory approval to market an antibody radiation-conjugate product is expensive and time-consuming, and, notwithstanding
the effort and expense incurred, approval is never guaranteed. If we are not successful in obtaining timely approval of our products
from the FDA, we may never be able to generate significant revenue and may be forced to cease operations. In particular, the FDA permits
commercial distribution of a new antibody radiation-conjugate product only after a BLA for the product has received FDA approval. The
BLA process is costly, lengthy and inherently uncertain. Any BLA filed by us will have to be supported by extensive data, including,
but not limited to, technical, preclinical, clinical trial, chemistry, manufacturing and controls (“CMC”) and labeling data,
to demonstrate to the FDA’s satisfaction the safety and efficacy of the product for its intended use. The lengthy approval process
as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our
product candidates, which would significantly harm our business, results of operations and prospects. In addition, even if we were to
obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request,
may not approve the price we intend to charge for our products, may grant approval contingent on the performance of costly post-marketing
clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for
the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects
for our product candidates.
The
approval process in the United States and in other countries could result in unexpected and significant costs for us and consume management’s
time and other resources. The FDA and other foreign regulatory 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 approval to market our products in the United States or 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 or other regulatory authorities will act. If we are unable to obtain the necessary regulatory approvals, our financial
condition and cash flow may be materially adversely affected, and our ability to grow domestically and internationally may be limited.
Additionally, even if we obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited
indications that we request. The Company’s products may not be approved for the specific indications that are most necessary or
desirable for successful commercialization or profitability.
We
have not demonstrated that any of our products are safe and effective for any indication and will continue to expend substantial time
and resources on clinical development before any of our current or future product candidates will be eligible for FDA approval, if ever.
We
expect that a substantial portion of our efforts and expenditures over the next few years will be devoted to development of our existing
and contemplated biological product candidates. Accordingly, our business currently depends heavily on the successful development, FDA
approval, and commercialization of such candidates, which may never receive FDA approval or be successfully commercialized even if FDA
approval is received. The research, testing, manufacturing, labeling, approval, sale, marketing, and distribution of our biological product
candidates are, and will remain, subject to extensive regulation by the FDA and other regulatory authorities in the United States and
other countries, as applicable. We are currently not permitted to market any of our current or future product candidates in the United
States until we receive FDA approval (of each) via the BLA process. To date, we have two product candidates in clinical development and
have not-yet submitted a BLA for any of our candidates and, for many such candidates, do not expect to be in a position to do so for
the foreseeable future, as there are numerous developmental steps that must be completed before we can prepare and submit a BLA.
In
the United States, the FDA regulates pharmaceutical and biological product candidates under the FDCA and the Public Health Service Act
(“PHSA”), as well as their respective implementing regulations. Such products and product candidates 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. The process required by the FDA before a drug or biological product may be marketed in the United States generally involves
the following:
|
●
|
completion
of preclinical laboratory tests and animal studies in accordance with FDA’s good laboratory practices (“GLPs”)
and applicable requirements for the humane use of laboratory animals or other applicable regulations;
|
|
|
|
|
●
|
submission
to the FDA of an Investigational New Drug (“IND”), which must become effective before human clinical trials in the United
States may begin;
|
|
●
|
performance
of adequate and well-controlled human clinical trials in accordance with FDA’s IND regulations, GCPs, and any additional requirements
for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed
biological product for its intended use;
|
|
|
|
|
●
|
submission
to the FDA of a BLA for marketing approval that meets applicable requirements to ensure the continued safety, purity, and potency
of the product that is the subject of the BLA based on results of preclinical testing and clinical trials;
|
|
|
|
|
●
|
satisfactory
completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced, to assess compliance
with cGMPs and assure that the facilities, methods and controls are adequate to preserve the biological product’s identity,
strength, quality and purity;
|
|
|
|
|
●
|
potential
FDA audit of the nonclinical study and clinical trial sites that generated the data in support of the BLA; and
|
|
|
|
|
●
|
FDA
review and approval, or denial, of the BLA.
|
Before
testing any biological product candidate in humans, the product candidate enters the preclinical testing stage. Preclinical tests include
laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity
of the product candidate. The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs.
The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data,
any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical 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 regarding the proposed clinical trials and places the trial on a clinical hold within that 30-day time period.
In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also
impose clinical holds on a biological product candidate at any time before or during clinical trials due to safety concerns or non-compliance.
If the FDA imposes a clinical hold, trials may not recommence without FDA authorization and then only under terms authorized by the FDA.
Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin or that, for those
that have already commenced under an active IND, that issues will not arise that suspend or terminate such trials.
Clinical
trials involve the administration of the biological product candidate to healthy volunteers or patients under the supervision of qualified
investigators, generally physicians not employed by or under the trial sponsor’s control. Clinical trials are conducted under protocols
detailing, 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, including stopping rules that assure a clinical trial will be stopped if certain
adverse events should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical
trials must be conducted and monitored in accordance with the FDA’s regulations composing the GCP requirements, including the requirement
that all research subjects provide informed consent. Further, each clinical trial must be reviewed and approved by an independent institutional
review board, or IRB, at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting
the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical
trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed
consent that must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trial until
completed. Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:
|
●
|
Phase
1. The biological product is initially introduced into healthy human subjects and tested for safety. In the case of some products
for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy
volunteers, the initial human testing is often conducted in subjects.
|
|
|
|
|
●
|
Phase
2. The biological product is evaluated 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, optimal dosage
and dosing schedule.
|
|
●
|
Phase
3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population
at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk to benefit ratio
of the product and provide an adequate basis for product labeling.
|
Post-approval
clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These clinical
trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for
long-term safety follow-up.
After
the completion of clinical trials of a biological product, FDA approval of a BLA must be obtained before commercial marketing of the
biological product. The BLA must include results of product development, laboratory and animal studies, human trials, information on
the manufacture and composition of the product, proposed labeling and other relevant information. The FDA may grant deferrals for submission
of data, or full or partial waivers. The testing and approval processes require substantial time and effort and there can be no assurance
that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all. Before
approving a BLA, the FDA will inspect the facilities at which the product is manufactured. 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. Additionally, before approving a BLA, the FDA will typically inspect one or
more clinical sites to assure that the clinical trials were conducted in compliance with IND trial requirements and GCP requirements.
To assure cGMP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training,
record keeping, production, and quality control.
Notwithstanding
the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria
for approval and deny approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently
than we interpret the same data. Our product candidates are in the earliest stages of clinical development and, therefore, a long way
from BLA submission. We cannot predict with any certainty if or when we might submit a BLA for regulatory approval for our product candidates
or whether any such BLA will be approved by the FDA. Human clinical trials are very expensive and difficult to design and implement,
in part because they are subject to rigorous regulatory requirements. For example, the FDA may not agree with our proposed endpoints
for any clinical trial we propose, which may delay the commencement of our clinical trials. The clinical trial process is also lengthy
and requires substantial time and effort.
In
December 2015, the FDA cleared our IND filing for Iomab-B (for acute myeloid leukemia or AML), and we are currently enrolling patients
in a randomized, controlled, pivotal Phase 3 clinical trial under such IND to study Iomab-B in patients 55 years of age or older with
relapsed or refractory AML. Assuming the Phase 3 trial meets its endpoints and there are no unexpected issues or delays, it will form
the basis for a BLA in the reasonably near future for Iomab-B for use in preparing and conditioning AML patients for BMTs. Additionally,
there are physician IND trials at the FHCRC that have been conducted or are currently ongoing at FHCRC with Iomab-B (for other target
indications) and the BC8 antibody we licensed. And, we have multiple Phase 1 and Phase 2 clinical trials ongoing and others that we have
planned but not-yet commenced, for our other drug candidates under our own sponsorship and multiple investigator-initiated trials ongoing.
Except for Iomab-B (for patients with AML), we expect that the clinical trials we need to conduct to be in a position to submit BLAs
for our product candidates currently in-development will take, at least, several years to complete. Moreover, failure can occur at any
stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials. Also, the results of early preclinical
and clinical testing may not be predictive of the results of subsequent clinical trials. A number of companies in the biopharmaceutical
industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding
promising results in earlier studies. And, preclinical and clinical data are often susceptible to multiple interpretations and analyses.
Many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have,
nonetheless, failed to obtain marketing approval of their products. Success in preclinical testing and early clinical trials does not
ensure that later clinical trials, which involve many more subjects, and the results of later clinical trials may not replicate the results
of prior clinical trials and preclinical testing. Any failure or substantial delay in our product development plans may have a material
adverse effect on our business.
We
may encounter substantial delays in our clinical trials or may not be able to conduct our trials on the timelines we expect.
We
cannot predict whether we will encounter problems with any of our ongoing or planned clinical trials that will cause us or regulatory
authorities to delay, suspend, or discontinue clinical trials or to delay the analysis of data from ongoing clinical trials. Any of the
following could delay or disrupt the clinical development of our product candidates and potentially cause our product candidates to fail
to receive regulatory approval:
|
●
|
conditions
imposed on us by the FDA or comparable foreign authorities regarding the scope or design of our clinical trials;
|
|
|
|
|
●
|
delays
in receiving, or the inability to obtain, required approvals from IRBs or other reviewing entities at clinical sites selected for
participation in our clinical trials;
|
|
|
|
|
●
|
delays
in enrolling patients into clinical trials;
|
|
|
|
|
●
|
a
lower than anticipated retention rate of patients in clinical trials;
|
|
|
|
|
●
|
the
need to repeat or discontinue clinical trials as a result of inconclusive or negative results or unforeseen complications in testing
or because the results of later trials may not confirm positive results from earlier preclinical studies or clinical trials;
|
|
|
|
|
●
|
inadequate
supply, delays in distribution, deficient quality of, or inability to purchase or manufacture drug product, comparator drugs or other
materials necessary to conduct our clinical trials;
|
|
|
|
|
●
|
unfavorable
FDA or other foreign regulatory inspection and review of a clinical trial site or records of any clinical or preclinical investigation;
|
|
|
|
|
●
|
serious
and unexpected drug-related side effects experienced by participants in our clinical trials, which may occur even if they were not
observed in earlier trials or only observed in a limited number of participants;
|
|
|
|
|
●
|
a
finding that the trial participants are being exposed to unacceptable health risks;
|
|
|
|
|
●
|
the
placement by the FDA or a foreign regulatory authority of a clinical hold on a trial; or
|
|
|
|
|
●
|
delays
in obtaining regulatory agency authorization for the conduct of our clinical trials.
|
We
may suspend, or the FDA or other applicable regulatory authorities may require us to suspend, clinical trials of a product candidate
at any time if we or they believe the patients participating in such clinical trials, or in independent third-party clinical trials for
drugs based on similar technologies, are being exposed to unacceptable health risks including but not limited to unacceptable or suboptimal
factors related to toxicity, clinical efficacy, imbalances in safety and efficacy profiles or for other reasons.
Further,
individuals involved with our clinical trials may serve as consultants to us from time to time and receive stock options or cash compensation
in connection with such services. If these relationships and any related compensation to the clinical investigator carrying out the study
result in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected interpretation
of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical
trial itself may be jeopardized. The delay, suspension or discontinuation of any of our clinical trials, or a delay in the analysis of
clinical data for our product candidates, for any of the foregoing reasons, could adversely affect our efforts to obtain regulatory approval
for and to commercialize our product candidates, increase our operating expenses and have a material adverse effect on our financial
results.
Clinical
trials may also be delayed or terminated as a result of ambiguous or negative interim results. In addition, a clinical trial may be suspended
or terminated by us, the FDA, the IRBs at the sites where the IRBs are overseeing a trial, or a data safety monitoring board, or DSMB
(Data Safety Monitoring Board)/DMC (Data Monitoring Committee), overseeing the clinical trial at issue, or other regulatory authorities
due to a number of factors, including:
|
●
|
failure
to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;
|
|
|
|
|
●
|
inspection
of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical
hold;
|
|
|
|
|
●
|
varying
interpretation of data by the FDA or similar foreign regulatory authorities;
|
|
|
|
|
●
|
failure
to achieve primary or secondary endpoints or other failure to demonstrate efficacy;
|
|
|
|
|
●
|
unforeseen
safety issues; or
|
|
|
|
|
●
|
lack
of adequate funding to continue the clinical trial.
|
Modifications
to our product candidates may require federal approvals.
The
BLA application is the vehicle through which the company may formally propose that the FDA approve a new pharmaceutical for sale and
marketing in the United States. Once a particular product candidate receives FDA approval, expanded uses or uses in new indications of
our products may require additional human clinical trials and new regulatory approvals, including additional IND and BLA submissions
and premarket approvals before we can begin clinical development, and/or prior to marketing and sales. If the FDA requires new 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 approvals is a time-consuming process, and delays in obtaining required future approvals could adversely
affect our ability to introduce new or enhanced products in a timely manner, which in turn would have an adverse effect on our business
prospects, financial condition and results of operation.
The
FDA or comparable foreign regulatory authorities may disagree with our regulatory plans, and we may fail to obtain regulatory approval
of our product candidates.
In June 2012, we acquired
rights to BC8 (Iomab), a clinical stage monoclonal antibody with safety and efficacy data in more than 300 patients in need of a BMT.
Iomab-B is our product candidate that links I-131 to the BC8 antibody that is being studied in an ongoing Phase 3 pivotal trial. Product
candidates utilizing this antibody would require BLA approval before they can be marketed in the United States. We are also evaluating
a lower dose of the BC8 antibody and I-131 for lymphodepletion prior to CAR-T or adoptive cell therapy. We are currently evaluating clinical
trials that would use our construct for lymphodepletion. Our lintuzumab-Ac-225 product candidate is also being studied in several Phase
1 trials under our sponsorship and investigator-initiated trials in patients with AML and has been studied in other hematologic malignancies.
Product candidates utilizing the lintuzumab antibody would require BLA approval before they can be marketed in the United States. We are
in the early stages of evaluating other product candidates consisting of conjugates of Ac-225 with human or humanized antibodies for pre-clinical
and clinical development in other types of cancer. The FDA may not approve these products for the indications that are necessary or desirable
for successful commercialization. The FDA may fail to approve any BLA we submit for new product candidates or for new intended uses or
indications for approved products or future product candidates. Failure to obtain FDA approval for our products in the proposed indications
would have a material adverse effect on our business prospects, financial condition and results of operations.
Clinical
trials necessary to support approval of our product candidates are time-consuming and expensive.
Initiating
and completing clinical trials necessary to support FDA approval of a BLA for Iomab-B, CD33 program candidates, and other product candidates,
is a time-consuming and expensive process, and the outcome is inherently uncertain. Moreover, the results of early clinical trials are
not necessarily predictive of future results, and any product candidate we advance into clinical trials may not have favorable results
in later clinical trials. We have worked with the FDA to develop a clinical trial designed to test the safety and efficacy of Iomab-B
in patients with relapsed or refractory AML who are age 55 and above prior to a BMT. This trial is designed to support a BLA filing for
marketing approval by the FDA, pending results from the trial. In addition to clinical data, a BLA filing encompasses preclinical, CMC,
labeling and other information. Even if the clinical data from the SIERRA trial is positive, there can be no assurances that the BLA
filing we produce will meet all of the FDA’s requirements or that they will not request additional information or studies, which
may delay the FDA’s review or we may not be able to produce. We have also worked with the FDA to develop a regulatory pathway for
our Actimab-MDS trial that consists of a dose-confirming Phase 1 trial that can be followed by a randomized, controlled pivotal trial
that could support a BLA filing. There can be no assurance that the data generated during the trial will meet our chosen safety and effectiveness
endpoints or otherwise produce results that will eventually support the filing or approval of a BLA. Even if the data from this trial
are favorable, the data may not be predictive of the results of any future clinical trials.
Preliminary,
Interim, and “top-line” data from our clinical trials that we announce or publish from time to time may change as more patient
data become available and are subject to audit and verification procedures that could result in material changes in the final data.
From
time to time, we may publicly disclose preliminary, interim, and top-line data from our clinical trials, which is based on a
preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change as more
patient data become available or following a more comprehensive review of the data related to the particular study or trial. For
example, on February 10, 2021, interim safety, and feasibility data from 75% patient enrollment from the SIERRA trial was presented
at the TCT Annual Meeting. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and
we may not have received or had the opportunity to fully and carefully evaluate all data. Interim or preliminary results that we
report may differ from future results of the same studies, or different conclusions or considerations may qualify such results once
additional data have been received and fully evaluated. Preliminary, interim or top-line data also remain subject to audit and
verification procedures that may result in the final data being materially different from the top-line, interim or preliminary data
we previously published. As a result, top-line, interim and preliminary data should be viewed with caution until the final data are
available.
From
time to time, we may also disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that
we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues
and more patient data become available. Adverse differences between interim data and final data could significantly harm our business
prospects. Further, disclosure of interim data by us or by our competitors could result in volatility in the price of our common stock.
Further,
others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses
or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability
or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose
to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others
may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.
If
the interim, top-line or preliminary data that we report differ from actual results, or if others, including regulatory authorities,
disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which
could harm our business, operating results, prospects or financial condition.
Our
clinical trials may fail to demonstrate adequately the efficacy and safety of our product candidates, which would prevent or delay regulatory
approval and commercialization.
Even
if our clinical trials are completed as planned, we cannot be certain that their results will support our product candidate claims or
that the FDA or foreign authorities will agree with our conclusions regarding them. Success in pre-clinical 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 pre-clinical studies. The clinical trial process may fail to demonstrate that our product candidates are
safe and effective for the proposed indicated uses. If FDA concludes that the clinical trials for Iomab-B, lintzumab-Ac-225, or any other
product candidate for which we might seek approval, have failed to demonstrate safety and effectiveness, we would not receive FDA approval
to market that product candidate 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 or preclude the
filing of any 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 a product
candidate’s profile.
The
intellectual property related to antibodies we have licensed has expired or likely expired.
The
key patents related to the humanized antibody, lintuzumab, which we use in our CD33 program product candidates have expired. It is generally
possible that others may be eventually able to use an antibody with the same sequence, and we will then need to rely on additional patent
protection covering alpha particle drug products comprising Ac-225. Our final drug construct consists of the lintuzumab antibody labeled
with the isotope Ac-225. We have licensed issued patents that relate to the linker technology we use to conjugate the isotope to the
antibody. Further, we own issued and pending patents related to methods for drug conjugation and isotope labeling and for methods of
isotope production. In addition, we possess trade secrets and know how related to the manufacturing and use of isotopes. Any competing
product based on the lintuzumab antibody is likely to require several years of development before achieving our product candidate’s
current status and may be subject to significant regulatory hurdles but is nevertheless a possibility that could negatively impact our
business in the future. We own 2 issued patents in the US and 1 in Europe relating to composition of the Iomab-B product candidate. Five
related patents are also pending in the US and internationally. We have and may continue to file patents related to Iomab-B that can
provide barriers to entry but there is no certainty that these patents will be granted or such granting thereof will adequately prevent
others from seeking to replicate and use the BC8 antibody or the construct. We have pending patents related to radioimmunoconjugate composition,
formulation administration, and methods of use in solid or liquid cancers. This matter includes composition, administration, and methods
of treatment for our products Actimab-A and Iomab-B. Any competing product based on the antibody used in Iomab-B is likely to require
several years of development before achieving our product candidate’s current status and may be subject to significant regulatory
hurdles but is nevertheless a possibility that could negatively impact our business in the future.
Our
CD33 program clinical trials are testing the same drug construct.
Our
CD33 program is comprised of several clinical trials including investigator-initiated trials in AML that are studying the same drug construct
consisting of lintuzumab-Ac-225. Negative results from any of these trials could negatively impact our ability to enroll or complete
our other trials studying lintzumab-Ac-225. Additionally, negative outcomes including safety concerns, may result in the FDA discontinuing
other trials utilizing lintuzumab-Ac-225.
We
may be unable to obtain a sufficient supply of isotopes to support clinical development or at commercial scale.
Iodine-131
is a key component of our Iomab-B drug candidate. We currently source medical grade I-131 from three suppliers including two leading
global manufacturers. Currently, there is sufficient supply of I-131 to advance our ongoing SIERRA clinical trial, support additional
trials we may undertake utilizing I-131 and for commercialization of Iomab-B. We continually evaluate I-131 manufacturers and suppliers
and intend to have multiple qualified suppliers prior to the commercial launch of Iomab-B. While we consider I-131 to be commoditized
and obtainable through several suppliers, there can be no guarantee that we will be able to secure I-131 or obtain I-131 on terms that
are acceptable to us.
Actinium-225 is a key component
of our CD33 ARC program, AWE platform and other drug candidates that we might consider for development with the Ac-225 payload. There
are adequate quantities of Ac-225 available today to meet our current needs via our present supplier, the Department of Energy (“DOE”).
The current Ac-225 currently supplied to Actinium’s clinical trials from the DOE is derived from the natural decay of thorium-229
from so-called ‘thorium-cows’ and is able to produce sufficient quantities that are several multiples of the amount of Ac-225
we require to supply our clinical programs through to early commercialization phase. The DOE is also producing Ac-225 from a recently
developed alternative route for Ac-225 production via a linear accelerator that is currently being evaluated by Actinium. Initial preclinical
and modelling results have indicated that the linear accelerator sourced Ac-225 does not impact labelling efficiency and expected distribution.
Per representations made by the DOE, the capacity of Ac-225 from this route is expected to be sufficient to supply all of Actinium’s
pipeline and commercial Ac-225 needs and support new program expansion by not just Actinium but also other companies that are developing
Ac-225 based products. Additional routes of Ac-225 production are being pursued by the DOE including the generation of new thorium cows
and production via a cyclotron. The cyclotron production method for Ac-225 production leverages Actinium’s proprietary technology
and know-how and presents an additional path towards production of high-quality Ac-225 that would be able to satisfy commercial needs.
In addition, we are aware of at least six other government and non-government entities globally including the U.S., Canada, Russia, Belgium,
France and Japan that have, or expect to have ability to supply Ac-225 or equipment for its production within the timeframes relevant
to the potential first commercial approval of our Ac-225 ARC.
Our
contract for supply of this isotope from the DOE must be renewed yearly, and the current contract extends through the end of 2021. While
we expect this contract will be renewed at the end of its term as it has since 2009, there can be no assurance that the DOE will renew
the contract or that change its policies that allow for the sale of isotope to us. Failure to acquire sufficient quantities of medical
grade Ac-225 would make it impossible to effectively complete clinical trials and to commercialize any Ac-225 based drug candidates that
we may develop and would materially harm our business.
Our
ability to conduct clinical trials to advance our ARC drug candidates is dependent on our ability to obtain the radioisotopes I-131,
Ac-225 and other isotopes we may choose to utilize in the future. Currently, we are dependent on third party manufacturers and suppliers
for our isotopes. These suppliers may not perform their contracted services or may breach or terminate their agreements with us. Our
suppliers are subject to regulations and standards that are overseen by regulatory and government agencies and we have no control over
our suppliers’ compliance to these standards. Failure to comply with regulations and standards may result in their inability to
supply isotope could result in delays in our clinical trials, which could have a negative impact on our business. We have developed intellectual
property, know-how and trade secrets related to the manufacturing process of Ac-225. While we have manufactured medical grade Ac-225
of a purity compared to the cyclotron sourced material in the past, this activity was terminated due to operating cost reasons and we
currently do not have experience in manufacturing medical grade Ac-225 and may not obtain the resources necessary to establish our own
manufacturing capabilities in future. Our inability to build out and establish our own manufacturing facilities would require us to continue
to rely on third party suppliers as we currently do. However, based on our current third-party suppliers and potential future suppliers
of Ac-225 we expect to have adequate isotope supply to support our current ongoing clinical trials, current AWE program activities and
commercialization should our drug candidates receive approval.
If
we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise
adversely affected.
The
timely completion of clinical trials in accordance with their protocols depends on our ability to enroll a sufficient number of patients
who remain in the trial until its conclusion. We may experience difficulties in patient enrollment in our clinical trials for a variety
of reasons, including:
|
●
|
the
size and nature of the patient population;
|
|
|
|
|
●
|
the
patient eligibility criteria defined in the protocol;
|
|
|
|
|
●
|
the
size of the study population required for analysis of the trial’s primary endpoints;
|
|
|
|
|
●
|
the
proximity of patients to trial sites;
|
|
|
|
|
●
|
the
design of the trial;
|
|
|
|
|
●
|
our
ability to recruit clinical trial investigators with the appropriate competencies and expertise;
|
|
|
|
|
●
|
competing
clinical trials for similar or alternate therapeutic treatments;
|
|
|
|
|
●
|
clinician’s
and patients’ perceptions as to the potential advantages and side effects of the product candidate being studied in relation
to other available therapies;
|
|
|
|
|
●
|
our
ability to obtain and maintain patient consents; and
|
|
|
|
|
●
|
the
risk that patients enrolled in clinical trials will not complete a clinical trial.
|
In
addition, refractory patients, which several of our trials are enrolling, participating in clinical trials are seriously and often terminally
ill and therefore may not complete the clinical trial due to reasons including comorbid conditions or occurrence of adverse medical events
related or unrelated to the investigational products, or death. Even if we are able to enroll a sufficient number of patients in our
clinical trials, delays in patient enrollment will result in increased costs or affect the timing of our planned trials, which could
adversely affect our ability to advance the development of our product candidates.
FDA
may take actions that would prolong, delay, suspend, or terminate clinical trials of our product candidates, which may delay or prevent
us from commercializing our product candidates on a timely basis.
There
can be no assurance that the data generated in our clinical trials will be acceptable to FDA or that if future modifications during the
trial are necessary, that any such modifications will be acceptable to FDA. Certain modifications to a clinical trial protocol made during
the course of the clinical trial have 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, FDA could take the position that some
or all of the data generated by the clinical trial is not usable 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 approval
of a product candidate. 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.
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 submissions with the FDA, delay the approval and commercialization of our product
candidates or result in the failure of the clinical trial, which could adversely affect our business, operating results and prospects.
Lengthy delays in the completion of our Iomab-B clinical trials would adversely affect our business and prospects and could cause us
to cease operations.
We
have obtained orphan drug designation from FDA for two of our current product candidates and intend to pursue such designation for other
candidates and indications in the future, but we may be unable to obtain such designations or to maintain the benefits associated with
any orphan drug designations we have received or may receive in the future.
We
have received orphan drug designation for Iomab-B and lintuzumab-CD33 ARC for treatment of AML in both the United States and the EU.
Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition,
which is a disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000
individuals in the United States, there is no reasonable expectation that the cost of developing and making available a drug or biologic
for this type of disease or condition will be recovered from sales in the United States for that drug or biologic. Similarly, the EMA
grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention, or treatment of
a life-threatening or chronically debilitating condition affecting not more than five in 10,000 persons in the EU.
Orphan
drug designation neither shortens the development time or regulatory review time of a drug or biologic nor gives the drug or biologic
any advantage in the regulatory review or approval process. In the United States, orphan drug designation entitles a party to financial
incentives, such as opportunities for grant funding towards clinical trial costs, tax advantages, and application fee waivers. In addition,
if a product candidate receives the first FDA approval for the indication for which it has orphan designation, such product is entitled,
upon approval, to seven years of orphan-drug exclusivity, during which the FDA may not approve any other application to market the same
drug for the same indication, unless a subsequently approved product is clinically superior to orphan drug or where the manufacturer
is unable to assure sufficient product quantity in the applicable patient population. In the EU, orphan drug designation entitles a party
to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity following drug or biological product
approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown
that the product is sufficiently profitable not to justify maintenance of market exclusivity.
Even
if we obtain (or have obtained) orphan drug designation for certain product candidates, we may not be the first to obtain marketing approval
for such candidates for the applicable indications due to the uncertainties inherent in the development of novel biologic products. And,
an orphan drug candidate may not receive orphan-drug exclusivity upon approval if such candidate is approved for a use that is broader
than the indication for which it received orphan designation. In addition, exclusive marketing rights in the United States may be lost
if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient
quantities of the product to meet the needs of patients with the rare disease or condition.
Finally,
even if we successfully obtain orphan-drug exclusivity for an orphan drug candidate upon approval, such exclusivity may not effectively
protect the product from competition because (i) different drugs with different active moieties can be approved for the same condition;
and (ii) the FDA or EMA can also subsequently approve a subsequent product with the same active moiety and for the same indication as
the orphan drug if the later-approved drug if deemed clinically superior to the orphan drug.
Even
if we receive regulatory approval of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory
review.
Any
regulatory approvals that we receive for our product candidates will require surveillance to monitor the safety and efficacy of the product
candidate. The FDA may also require a REMS in order to approve our product candidates, which could entail requirements for a medication
guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries
and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves our product candidates,
the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export
and recordkeeping for our product candidates will be subject to extensive and ongoing regulatory requirements. These requirements include
submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and
GCPs for any clinical trials that we conduct post-approval. In addition, the FDA could require us to conduct another study to obtain
additional safety or biomarker information. Later discovery of previously unknown problems with our product candidates, including adverse
events of unanticipated severity or frequency, or with our third-party suppliers or manufacturing processes, or failure to comply with
regulatory requirements, may result in, among other things:
|
●
|
restrictions
on the marketing or manufacturing of our product candidates, withdrawal of the product from the market, or voluntary or mandatory
product recalls;
|
|
|
|
|
●
|
fines,
warning letters or holds on clinical trials;
|
|
|
|
|
●
|
refusal
by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation of license
approvals;
|
|
|
|
|
●
|
product
seizure or detention, or refusal to permit the import or export of our product candidates; and
|
|
|
|
|
●
|
injunctions
or the imposition of civil or criminal penalties.
|
The
FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could
prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government
regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or
unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain
regulatory compliance, we may lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability.
Coverage
and reimbursement may be limited or unavailable in certain market segments for our product candidates which could limit our sales of
our product candidates, if approved.
The
commercial success of our product candidates in both domestic and international markets will be substantially dependent on whether third-party
coverage and reimbursement is available for patients that use our products. However, the availability of insurance coverage and reimbursement
for newly approved cancer therapies is uncertain, and therefore, third-party coverage may be particularly difficult to obtain even if
our products are approved by the FDA as safe and efficacious. Patients using existing approved therapies are generally reimbursed all
or part of the product cost by Medicare or other third-party payors. Medicare, Medicaid, health maintenance organizations and other third-party
payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new drugs,
and, as a result, they may not cover or provide adequate payment for these products. Submission of applications for reimbursement approval
generally does not occur prior to the filing of a BLA for that product and may not be granted until many months after BLA approval. In
order to obtain coverage and reimbursement for these products, we or our commercialization partners may have to agree to a net sales
price lower than the net sales price we might charge in other sales channels. The continuing efforts of government and third-party payors
to contain or reduce the costs of healthcare may limit our revenue. Initial dependence on the commercial success of our products may
make our revenues particularly susceptible to any cost containment or reduction efforts.
Healthcare
legislative reform measures intended to increase pressure to reduce prices of pharmaceutical products paid for by Medicare or, otherwise,
affect the federal regulation of the U.S. healthcare system could have a material adverse effect our business, future revenue, if any,
and results of operations.
In
the United States, there have been a number of legislative and regulatory initiatives focused on containing the cost of healthcare. The
Affordable Care Act, for example, substantially changed the way healthcare is financed by both governmental and private insurers. The
Affordable Care Act contains a number of provisions that could impact our business and operations, primarily, once we obtain FDA approval
to commercialize one of our product candidates in the United States, if ever, and may also affect our operations in ways we cannot currently
predict. Affordable Care Act provisions that may affect our business include, among others, those governing enrollment in federal healthcare
programs, reimbursement changes, rules regarding prescription drug benefits under health insurance exchanges, expansion of the 340B program,
expansion of state Medicaid programs, fees and increased discount and rebate obligations, transparency and reporting requirements, and
fraud and abuse enforcement. Such changes may impact existing government healthcare programs, industry competition, formulary composition,
and may result in the development of new programs, including Medicare payment for performance initiatives, health technology assessments,
and improvements to the physician quality reporting system and feedback program.
There
have been significant ongoing judicial, administrative, executive, and legislative initiatives to modify, limit, replace, or repeal the
Affordable Care Act. For example, former President Trump issued several Executive Orders and other directives designed to delay the implementation
of certain provisions of the Affordable Care Act or otherwise circumvent some of the requirements for health insurance mandated by the
Affordable Care Act. Concurrently, Congress considered legislation that would repeal or replace all or part of the Affordable Care Act.
While Congress has not passed comprehensive repeal legislation, several bills affecting the implementation the Affordable Care Act have
been passed. For example, the Tax Cuts and Jobs Act of 2017 eliminated the Affordable Care Act provision requiring individuals to purchase
and maintain health coverage, or the “individual mandate,” by reducing the associated penalty to zero, beginning in 2019.
In December 2018, a district court in Texas held that the individual mandate is unconstitutional and that the rest of the Affordable
Care Act is, therefore, invalid. On appeal, the Fifth Circuit Court of Appeals affirmed the holding on the individual mandate but remanded
the case back to the lower court to reassess whether and how such holding affects the validity of the rest of the Affordable Care Act.
The U.S. Supreme Court is currently reviewing the case. Substantial uncertainty remains as to the future of the Affordable Care Act.
There is no way to predict whether, and to what extent, if any, the Affordable Care Act will remain in-effect in the future, and it is
unclear how these decisions, subsequent appeals, or other efforts to repeal and replace the Affordable Care Act will impact the United
States healthcare industry or our business.
Furthermore,
we cannot predict what reform measures the Biden administration will implement in connection with the Affordable Care Act or otherwise.
The adoption or implementation of new or amended legislation at the federal or state level could affect our ability to obtain regulatory
approval for any of our vaccine candidates and the commercial viability of our future approved products, if any. We cannot predict the
ultimate nature, timing, or effect of any changes to the Affordable Care Act or other federal and state reform efforts, and there is
no assurance that such efforts will not adversely affect our future business and financial results.
In
addition to the Affordable Care Act, there have been several recent Congressional inquiries and proposed and enacted federal and state
legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer
patient programs, and reform government program reimbursement methodologies for drug products. Pharmaceutical product prices have been
the focus of increased scrutiny by the government, including certain state attorneys general, members of Congress and the United States
Department of Justice. State or federal healthcare reform measures or other social or political pressure to lower the cost of pharmaceutical
products could have a material adverse impact on our business, results of operations and financial condition.
Our
relationships with customers, health care professionals and third-party payors may be subject to applicable healthcare laws, which could
expose us to penalties, including administrative, civil or criminal penalties, damages, fines, imprisonment, exclusion from participation
in federal healthcare programs such as Medicare and Medicaid, reputational harm, the curtailment or restructuring of our operations and
diminished future profits and earnings.
Healthcare
professionals and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which
we obtain marketing approval. Our current and future arrangements with customers, healthcare professionals and third-party payors may
expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial
arrangements and relationships through which we conduct research, market, sell and distribute any products for which we obtain marketing
approval. Federal and state healthcare laws and regulations that may affect our operations, directly or indirectly, include the following,
among others:
|
●
|
the
federal Anti-Kickback Statute, which prohibits persons and entities from, among other things, knowingly and willfully soliciting,
offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral
of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment
may be made under federal and state healthcare programs such as Medicare and Medicaid;
|
|
|
|
|
●
|
the
federal false claims laws, including civil whistleblower or qui tam actions under the federal False Claims Act, which impose criminal
and civil penalties against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to
the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal
an obligation to pay money to the federal government;
|
|
|
|
|
●
|
the
federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for
Economic and Clinical Health Act of 2009, or HITECH, which imposes criminal and civil liability for, among other things, executing
a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and also imposes obligations,
including mandatory contractual terms, on covered entities, including certain healthcare providers, health plans, and healthcare
clearinghouses, and their respective business associates that create, receive, maintain or transmit individually identifiable health
information for or on behalf of the covered entity as well as their covered subcontractors, with respect to safeguarding the privacy,
security and transmission of individually identifiable health information;
|
|
|
|
|
●
|
the
federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare
or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection
of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an
exception applies;
|
|
●
|
the
federal Physician Payments Sunshine Act, created under the Affordable Care Act, and its implementing regulations, which requires
certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid
or the Children’s Health Insurance Program (with certain exceptions) to report annually information related to certain payments
or other transfers of value provided to physicians and any ownership and investment interests held by physicians or their immediate
family members. Beginning in 2022, applicable manufacturers also will be required to report such information regarding payments and
other transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified
registered nurse anesthetists and certified nurse midwives during the previous year; and
|
|
|
|
|
●
|
analogous
state laws and regulations, including (among others) state anti-kickback and false claims laws, which may apply to our business practices,
including, but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or
services reimbursed by any third-party payor, including private insurers; state laws that require pharmaceutical companies to comply
with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the
United States federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral
sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information
and that require tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; state
and local laws that require the registration of pharmaceutical sales representatives; 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 law, thus complicating compliance efforts.
|
Efforts
to comply with applicable healthcare laws and regulations will involve substantial costs. Interpretations of standards of compliance
under these laws and regulations are rapidly changing and subject to varying interpretations and it is possible that governmental authorities
will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable
fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any
other laws that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion
from government funded healthcare programs, such as Medicare and Medicaid, reputational harm, imprisonment, additional reporting obligations
and oversight (if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with
these laws), and the curtailment or restructuring of our operations, any of which could diminish our future profits or earnings. If any
of the physicians or other providers or entities with whom we expect to do business are found to be not in compliance with applicable
laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
Third-party
payors may not adequately reimburse customers for any of our products that we may commercialize or promote, and may impose coverage restrictions
or limitations such as prior authorizations and step edits that affect their use.
Our
ability to commercialize any product candidates successfully also will depend in part on the extent to which coverage and adequate reimbursement
for these products and related treatments will be available from government health programs, private health insurers, integrated delivery
networks and other third-party payors. Third-party payors decide which medications they will pay for and establish reimbursement levels.
A significant trend in the United States 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 payment for particular medications. Increasingly, third-party
payors are requiring that drug companies provide 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, if reimbursement is available,
the level of reimbursement may not be sufficient for commercial success. Coverage and reimbursement may impact the demand for, or the
price of, any product candidate for which we obtain marketing approval. If coverage and reimbursement is not available or is available
only to limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval.
Obtaining
reimbursement approval for any product candidate for which we obtain marketing approval from any government or other third-party payor
is a time-consuming and costly process. There may be significant delays in obtaining coverage and adequate reimbursement for newly approved
products. Moreover, eligibility for coverage and reimbursement does not imply that any product will be paid for in all cases or at a
rate that covers our costs, including research, development, manufacture, sale and distribution. Even when a payor determines that a
product that we may commercialize or promote is eligible for reimbursement under its criteria, the payor may impose coverage limitations
that preclude payment for some uses that are approved by the FDA, or may impose restrictions, such as prior authorization requirements,
or may simply deny coverage altogether. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover
our costs and may not be made permanent. Coverage and reimbursement rates may vary according to the use of the drug and the medical circumstances
under which it is used may be based on reimbursement levels already set for lower cost products or procedures or 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 and by any future relaxation of laws that presently restrict imports of drugs from countries where
they may be sold at lower prices than in the United States. Furthermore, the Centers for Medicare and Medicaid Services frequently change
product descriptors, coverage policies, product and service codes, payment methodologies and reimbursement values. Commercial third-party
payors often rely upon Medicare coverage policies and payment limitations in setting their own reimbursement policies. Our inability
to promptly obtain and maintain coverage and profitable payment rates from both government-funded programs 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 our approved products and our overall financial condition.
Risks
Related to Third Parties
We
rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or
meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize
our product candidates.
We
do not have the ability to independently conduct our clinical trials for our product candidates and we must rely on third parties, such
as contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct such trials. Our
reliance on these third parties for clinical development activities results in reduced control over these activities. Moreover, the FDA
requires us to comply with regulations and standards, commonly referred to as GCPs (good clinical practices), for conducting, recording
and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the trial participants
are adequately protected. Our reliance on third parties does not relieve us of these responsibilities and requirements. If we or any
of our third-party contractors fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed
unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving
our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will
determine that any of our clinical trials complies with GCP regulations. In addition, our clinical trials must be conducted with product
produced under current good manufacturing practice, or cGMP, regulations. Our failure to comply with these regulations may require us
to repeat clinical trials, which would delay the regulatory approval process.
If
our consultants, contract research organizations and other similar entities with which we are working do not successfully carry out their
contractual duties, meet expected deadlines, or comply with applicable regulations, we may be required to replace them. Although we believe
that there are a number of other third-party contractors, we could engage to continue these activities, we may not be able to enter into
arrangements with alternative third-party contractors or to do so on commercially reasonable terms, which may result in a delay of our
planned clinical trials and delayed development of our product candidates.
In
addition, our third-party contractors are not our employees, and except for remedies available to us under our agreements with such third-party
contractors, we cannot control whether or not they devote sufficient time and resources to our programs. If these third parties do not
successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, or if the quality or accuracy of
the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons,
our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able
to obtain regulatory approval for, or successfully commercialize, our product candidates on a timely basis, if at all, and our business,
operating results and prospects would be adversely affected.
The
antibodies we use in our antibody radiation-conjugate product candidates may be subject to generic competition.
We
are not aware of any existing or pending regulations or legislation that pertains to generic radiopharmaceutical products such as our
antibody radiation-conjugate product candidates. Our product candidates are regulated by the FDA as biologic products and we intend to
seek approval for these products pursuant to the BLA pathway. The Biologics Price Competition and Innovation Act of 2009, or BPCIA, created
an abbreviated pathway for the approval of biosimilar and interchangeable biologic products. The abbreviated regulatory pathway establishes
legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable”
based on its similarity to an existing brand product. Under the BPCIA, an application for a biosimilar product cannot be approved by
the FDA until 12 years after the original branded product was approved under a BLA. The law is complex and is still being interpreted
and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. Even if a biosimilar
gets approved for one of the antibodies that we use, the final constructs of our drug candidates consist of an antibody, radioisotope
and in some cases a linker. Therefore, we do not believe that the final drug product of our candidates can be subject to competition
from a biosimilar as outlined in BPCIA.
Our
product candidates may never achieve market acceptance.
Iomab-B,
CD33 ARC program candidates and future product candidates that we may develop may never gain market acceptance among physicians, patients
and the medical community. The degree of market acceptance of any of our products will depend on a number of factors, including the actual
and perceived effectiveness and reliability of the product; the results of any long-term clinical trials relating to use of the product;
the availability, relative cost and perceived advantages and disadvantages of alternative technologies; the degree to which treatments
using the product are approved for reimbursement by public and private insurers; the strength of our marketing and distribution infrastructure;
and the level of education and awareness among physicians and hospitals concerning the product.
We
believe that oncologists and other physicians will not widely adopt a product candidate unless they determine, based on experience, clinical
data, and published peer-reviewed journal articles, that the use of that product candidate provides an effective alternative to other
means of treating specific cancers. Patient studies or clinical experience may indicate that treatment with our product candidates does
not provide patients with sufficient benefits in extension of life or quality of life. We believe that recommendations and support for
the use of each product candidate from influential physicians will be essential for widespread market acceptance. Our product candidates
are still in the development stage and it is premature to attempt to gain support from physicians at this time. We can provide no assurance
that such support will ever be obtained. If our product candidates do not receive such support from these physicians and from long-term
data, physicians may not use or continue to use, and hospitals may not purchase or continue to purchase, them.
Failure
of Iomab-B, CD33 ARC program candidates or any of our other product candidates to significantly penetrate current or new markets would
negatively impact our business financial condition and results of operations.
We
may be subject to claims that our third-party service providers, consultants or current or former employees have wrongfully used or disclosed
confidential information of third parties.
We
have received confidential and proprietary information from third parties. In addition, we employ individuals who were previously employed
at other biotechnology or pharmaceutical companies. We may be subject to claims that we or our employees, consultants or independent
contractors have inadvertently or otherwise used or disclosed confidential information of these third parties or our employees’
former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims,
litigation could result in substantial cost and be a distraction to our management and employees.
We
currently depend on single third-party manufacturers to produce our pre-clinical and clinical trial drug supplies. Any disruption in
the operations of our current third-party manufacturers, or other third-party manufacturers we may engage in the future, could adversely
affect our business and results of operations.
We
do not currently operate manufacturing facilities for pre-clinical or clinical production of any of our product candidates. We rely on
third-party manufacturers to supply, store, and distribute pre-clinical and clinical supply of the components of our drug product candidates
including monoclonal antibodies, linkers and radioisotopes, as well as the final construct which comprises our drug product candidates.
We expect to continue to depend on third-party manufacturers for the foreseeable future. Any performance failure on the part of our existing
or future manufacturers could delay clinical development, cause us to suspend or terminate development or delay or prohibit regulatory
approval of our product candidates or commercialization of any approved products. Further avenues of disruption to our clinical or eventual
commercial supply may also occur due to the sale, acquisition, business reprioritization, bankruptcy or other unforeseen circumstances
that might occur at any of our suppliers or contract manufacturing partners including an inability to come to terms on renewal of existing
contracts or new contracts.
We
currently rely on single manufacturers to manufacture our pre-clinical and clinical trial drug supplies. With a view to maintaining business
continuity we are evaluating alternatives and second and even third sources of supply or manufacturing for our core suppliers and manufacturing
partners, however there can be no assurances that we will be able to identify such suppliers or partners and assuming we did, that we
would be able to enter into contracts that are on favorable terms or on terms that will enable sufficient supply to ensure business continuity
and support our growth plans.
Our
product candidates require precise, high-quality manufacturing. Failure by our current contract manufacturer or other third-party manufacturers
we may engage in the future to achieve and maintain high manufacturing standards could result in patient injury or death, product recalls
or withdrawals, delays or failures in testing or delivery, cost overruns, or other problems that could seriously hurt our business. Contract
manufacturers may encounter difficulties involving production yields, quality control, and quality assurance. These manufacturers are
subject to ongoing periodic and unannounced inspections by the FDA and corresponding state and foreign agencies to ensure strict compliance
with cGMPs and other applicable government regulations and corresponding foreign standards; we do not have control over third-party manufacturers’
compliance with these regulations and standards.
We
depend on vendors with specialized operations, equipment and know-how to manufacture the respective components of our drug candidates.
We have entered into manufacturing and supply agreements with these third-parties, and in some instances, we have agreed that such vendor
be the exclusive manufacturer and supplier. If any of the third-parties we depend on encounter difficulties in their operations, fail
to comply with required regulations or breach their contractual obligations it may be difficult, or we may be unable to identify suitable
alternative third-party manufacturers. While we identify and evaluate third-party manufacturers from time to time, even if we do identify
suitable alternative third-parties, we may fail to reach agreement on contractual terms, it may be prohibitively expensive and there
can be no assurance that we can successfully complete technology transfer and development work necessary or complete the necessary work
in a timely manner. Any of which could prevent us from commencing manufacturing with third-parties which could cause delays or suspension
of our clinical trials and pre-clinical work that may have a negative impact on our business.
Furthermore,
these third-party contractors, whether foreign or domestic, may experience regulatory compliance difficulty, mechanical shut downs, employee
strikes, or any other unforeseeable acts that may delay or limit production. Our inability to adequately establish, supervise and conduct
(either ourselves or through third parties) all aspects of the formulation and manufacturing processes, and the inability of third-party
manufacturers to consistently supply quality product when required would have a material adverse effect on our ability to develop or
commercialize our products. We have faced delays and risks associated with reliance on key third party manufacturers in the past and
may be faced with such delays and risks in the future. Any future manufacturing interruptions or related supply issues could have an
adverse effect on our company, including delays in clinical trials.
If
we are successful in obtaining marketing approval from the FDA and/or other regulatory agencies for any of our product candidates, we
anticipate continued reliance on third-party manufacturers.
To
date, our product candidates have been manufactured in small quantities for preclinical and clinical testing by third-party manufacturers.
If the FDA or other regulatory agencies approve any of our product candidates for commercial sale, we expect that we would continue to
rely, at least initially, on third-party specialized manufacturers to produce commercial quantities of approved products. These manufacturers
may not be able to successfully increase the manufacturing capacity for any approved product in a timely or economic manner, or at all.
Significant scale-up of manufacturing may require additional validation studies, which the FDA must review and approve. Scale-up for
commercial product may require financial commitment or investment by us, which we may not have sufficient capital for or may elect not
to undertake. If third party manufacturers are unable to successfully increase the manufacturing capacity for a product candidate, or
we are unable to establish our own manufacturing capabilities, the commercial launch of any approved products may be delayed or there
may be a shortage in supply, which in turn could have a material adverse effect on our business.
In
addition, the facilities used by our contract manufacturers to manufacture our product candidates must be approved by the FDA pursuant
to inspections that will be conducted after we submit a BLA to the FDA. We do not control the manufacturing process of, and are completely
dependent on, our contract manufacturing partners for compliance with cGMPs. If our contract manufacturers cannot successfully manufacture
material that conforms to our specifications and the strict regulatory requirements of the FDA or other regulatory authorities, they
will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. If the FDA or a comparable foreign
regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval
in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain
regulatory approval for or market our product candidates, if approved.
We
may have conflicts with our partners that could delay or prevent the development or commercialization of our product candidates.
We
may have conflicts with our partners, such as conflicts concerning the interpretation of preclinical or clinical data, the achievement
of milestones, the interpretation of contractual obligations, payments for services, development obligations or the ownership of intellectual
property developed during our collaboration. If any conflicts arise with any of our partners, such partner may act in a manner that is
averse to our best interests. Any such disagreement could result in one or more of the following, each of which could delay or prevent
the development or commercialization of our product candidates, and in turn prevent us from generating revenues: unwillingness on the
part of a partner to pay us milestone payments or royalties we believe are due under a collaboration; uncertainty regarding ownership
of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations;
unwillingness by the partner to cooperate in the development or manufacture of the product, including providing us with product data
or materials; unwillingness on the part of a partner to keep us informed regarding the progress of its development and commercialization
activities or to permit public disclosure of the results of those activities; initiating litigation or alternative dispute resolution
options by either party to resolve the dispute; or attempts by either party to terminate the agreement.
We
face significant competition from other biotechnology and pharmaceutical companies.
Our
product candidates face, and will continue to face, intense competition from large pharmaceutical and biotechnology companies, as well
as academic and research institutions. We compete in an industry that is characterized by (i) rapid technological change, (ii) evolving
industry standards, (iii) emerging competition and (iv) new product introductions. Our competitors have existing products and technologies
that will compete with our product candidates and technologies and may develop and commercialize additional products and technologies
that will compete with our product candidates and technologies. Because several competing companies and institutions have greater financial
resources than us, they may be able to (i) provide broader services and product lines, (ii) make greater investments in research and
development, or R&D, and (iii) carry on broader R&D initiatives. Our competitors also have greater development capabilities than
we do and have substantially greater experience in undertaking preclinical and clinical testing of product candidates, obtaining regulatory
approvals, and manufacturing and marketing pharmaceutical products. They also have greater name recognition and better access to customers
than us.
Our
product candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their
regulatory approval, limit their commercial potential, or result in significant negative consequences.
Undesirable
side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and
could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities.
The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in
potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.
Even if any of our product candidates receives marketing approval, as greater numbers of patients use a product following its approval,
an increase in the incidence of side effects or the incidence of other post-approval problems that were not seen or anticipated during
pre-approval clinical trials could result in a number of potentially significant negative consequences, including:
|
●
|
regulatory
authorities may withdraw their approval of the product;
|
|
●
|
regulatory
authorities may require the addition of labeling statements, such as warnings or contraindications;
|
|
●
|
we
may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product;
|
|
●
|
we
may elect, or we may be required, to recall or withdraw product from the market;
|
|
●
|
we
could be sued and held liable for harm caused to patients; and
|
|
●
|
our
reputation may suffer.
|
Any
of these events could substantially increase the costs and expenses of developing, commercializing and marketing any such product candidates
or could harm or prevent sales of any approved products.
Risks
Related to Our Intellectual Property
We
depend upon securing and protecting critical intellectual property.
We
are dependent on obtaining and maintaining patents, trade secrets, copyright and trademark protection of our technologies in the United
States and other jurisdictions, as well as successfully enforcing this intellectual property and defending this intellectual property
against third-party challenges. The degree of future protection of our proprietary rights is uncertain for product candidates that are
currently in the early stages of development because we cannot predict which of these product candidates will ultimately reach the commercial
market or whether the commercial versions of these product candidates will incorporate proprietary technologies.
Our
patent position is highly uncertain and involves complex legal and factual questions.
Accordingly,
we cannot predict the breadth of claims that may be allowed or enforced under our patents or in third-party patents. For example, we
or our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;
we or our licensors might not have been the first to file patent applications for these inventions; others may independently develop
similar or alternative technologies or duplicate any of our technologies; it is possible that none of our pending patent applications
or the pending patent applications of our licensors will result in issued patents; our issued patents and issued patents of our licensors
may not provide a basis for commercially viable technologies, or may not provide us with any competitive advantages, or may be challenged
and invalidated by third parties; and, we may not develop additional proprietary technologies that are patentable.
As
a result, our owned and licensed patents may not be valid, and we may not be able to obtain and enforce patents and to maintain trade
secret protection for the full commercial extent of our technology. The extent to which we are unable to do so could materially harm
our business.
We
or our licensors have applied for and will continue to apply for patents for certain products. Such applications may not result in the
issuance of any patents, and any patents now held or that may be issued may not provide us with adequate protection from competition.
Furthermore, it is possible that patents issued or licensed to us may be challenged successfully. In that event, if we have a preferred
competitive position because of such patents, such preferred position would be lost. If we are unable to secure or to continue to maintain
a preferred position, we could become subject to competition from the sale of generic products. Failure to receive, inability to protect,
or expiration of our patents for medical use, manufacture, conjugation and labeling of Ac-225, the antibodies that we license from third
parties, or subsequent related filings, would adversely affect our business and operations.
Patents
issued or licensed to us may be infringed by the products or processes of others. The cost of enforcing our patent rights against infringers,
if such enforcement is required, could be significant, and we do not currently have the financial resources to fund such litigation.
Further, such litigation can go on for years and the time demands could interfere with our normal operations. There has been substantial
litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical industry. We may become
a party to patent litigation and other proceedings. The cost to us of any patent litigation, even if resolved in our favor, could be
substantial. Some of our competitors may be able to sustain the costs of such litigation more effectively than we can because of their
substantially greater financial resources. Litigation may also absorb significant management time.
Unpatented
trade secrets, improvements, confidential know-how and continuing technological innovation are important to our scientific and commercial
success. Although we attempt to and will continue to attempt to protect our proprietary information through reliance on trade secret
laws and the use of confidentiality agreements with our partners, collaborators, employees and consultants and other appropriate means,
these measures may not effectively prevent disclosure of our proprietary information, and, in any event, others may develop independently,
or obtain access to, the same or similar information.
Certain
of our patent rights are licensed to us by third parties. If we fail to comply with the terms of these license agreements, our rights
to those patents may be terminated, and we will be unable to conduct our business.
If
we are found to be infringing on patents or trade secrets owned by others, we may be forced to cease or alter our product development
efforts, obtain a license to continue the development or sale of our products, and/or pay damages.
Our
manufacturing processes and potential products may violate proprietary rights of patents that have been or may be granted to competitors,
universities or others, or the trade secrets of those persons and entities. As the pharmaceutical industry expands and more patents are
issued, the risk increases that our processes and potential products may give rise to claims that they infringe the patents or trade
secrets of others. These other persons could bring legal actions against us claiming damages and seeking to enjoin clinical testing,
manufacturing and marketing of the affected product or process. If any of these actions are successful, in addition to any potential
liability for damages, we could be required to obtain a license in order to continue to conduct clinical tests, manufacture or market
the affected product or use the affected process. Required licenses may not be available on acceptable terms, if at all, and the results
of litigation are uncertain. If we become involved in litigation or other proceedings, it could consume a substantial portion of our
financial resources and the efforts of our personnel.
Our
ability to protect and enforce our patents does not guarantee that we will secure the right to commercialize our patents.
A
patent is a limited monopoly right conferred upon an inventor, and his successors in title, in return for the making and disclosing of
a new and non-obvious invention. This monopoly is of limited duration but, while in force, allows the patent holder to prevent others
from making and/or using its invention. While a patent gives the holder this right to exclude others, it is not a license to commercialize
the invention where other permissions may be required for commercialization to occur. For example, a drug cannot be marketed without
the appropriate authorization from the FDA, regardless of the existence of a patent covering the product. Further, the invention, even
if patented itself, cannot be commercialized if it infringes the valid patent rights of another party.
We
rely on confidentiality agreements to protect our trade secrets. If these agreements are breached by our employees or other parties,
our trade secrets may become known to our competitors.
We
rely on trade secrets that we seek to protect through confidentiality agreements with our employees and other parties. If these agreements
are breached, our competitors may obtain and use our trade secrets to gain a competitive advantage over us. We may not have any remedies
against our competitors and any remedies that may be available to us may not be adequate to protect our business or compensate us for
the damaging disclosure. In addition, we may have to expend resources to protect our interests from possible infringement by others.
The
use of hazardous materials, including radioactive and biological materials, in our research and development efforts imposes certain compliance
costs on us and may subject us to liability for claims arising from the use or misuse of these materials.
Our
research, development and manufacturing activities involve the controlled use of hazardous materials, including chemicals, radioactive
and biological materials, such as radioactive isotopes. We are subject to federal, state, local and foreign environmental laws and regulations
governing, among other matters, the handling, storage, use and disposal of these materials and some waste products. We cannot completely
eliminate the risk of contamination or injury from these materials and we could be held liable for any damages that result, which could
exceed our financial resources. We currently maintain insurance coverage for injuries resulting from the hazardous materials we use;
however, future claims may exceed the amount of our coverage. Also, we do not have insurance coverage for pollution cleanup and removal.
Currently the costs of complying with such federal, state, local and foreign environmental regulations are not significant, and consist
primarily of waste disposal expenses. However, they could become expensive, and current or future environmental laws or regulations may
impair our research, development, production and commercialization efforts.
We
may undertake international operations, which will subject us to risks inherent with operations outside of the United States.
Although
we do not have any international operations at this time, we intend to seek market clearances in foreign markets that we believe will
generate significant opportunities. However, even with the cooperating of a commercialization partner, conducting drug development in
foreign countries involves inherent risks, including, but not limited to difficulties in staffing, funding and managing foreign operations;
unexpected changes in regulatory requirements; export restrictions; tariffs and other trade barriers; difficulties in protecting, acquiring,
enforcing and litigating intellectual property rights; fluctuations in currency exchange rates; and potentially adverse tax consequences.
If
we were to experience any of the difficulties listed above, or any other difficulties, any international development activities and our
overall financial condition may suffer and cause us to reduce or discontinue our international development and registration efforts.
We
are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may
not be able to successfully implement our business strategy.
Our
future operations and successes depend in large part upon the continued service of key members of our senior management team whom we
are highly dependent upon to manage our business. If any member of our current senior management terminates their employment with us
and we are unable to find a suitable replacement quickly, the departure could have a material adverse effect on our business.
Our
future success also depends on our ability to identify, attract, hire or engage, retain and motivate other well-qualified managerial,
technical, clinical and regulatory personnel. There can be no assurance that such professionals will be available in the market, or that
we will be able to retain existing professionals or meet or continue to meet their compensation requirements. Furthermore, the cost base
in relation to such compensation, which may include equity compensation, may increase significantly, which could have a material adverse
effect on us. Failure to establish and maintain an effective management team and workforce could adversely affect our ability to operate,
grow and manage our business.
Managing
our growth as we expand operations may strain our resources.
We expect to need to grow
rapidly in order to support additional, larger, and potentially international, pivotal clinical trials of our product candidates, potential
future commercialization of our product candidates and expanded research and development activity, which will place a significant strain
on our financial, managerial and operational resources. In order to achieve and manage growth effectively, we must continue to improve
and expand our operational and financial management capabilities. Moreover, we will need to increase staffing and to train, motivate and
manage our employees. All of these activities will increase our expenses and may require us to raise additional capital sooner than expected.
Failure to manage growth effectively could materially harm our business, financial condition or results of operations.
We
may expand our business through the acquisition of rights to new product candidates that could disrupt our business, harm our financial
condition and may also dilute current stockholders’ ownership interests in our company.
Our
business strategy includes expanding our products and capabilities, and we may seek acquisitions of product candidates, antibodies or
technologies to do so. Acquisitions involve numerous risks, including substantial cash expenditures; potentially dilutive issuance of
equity securities; incurrence of debt and contingent liabilities, some of which may be difficult or impossible to identify at the time
of acquisition; difficulties in assimilating acquired technologies or the operations of the acquired companies; diverting our management’s
attention away from other business concerns; risks of entering markets in which we have limited or no direct experience; and the potential
loss of our key employees or key employees of the acquired companies.
We
can make no assurances that any acquisition will result in short-term or long-term benefits to us. We may incorrectly judge the value
or worth of an acquired product, company or business. In addition, our future success would depend in part on our ability to manage the
rapid growth associated with some of these acquisitions. We cannot assure that we will be able to make the combination of our business
with that of acquired products, businesses or companies work or be successful. Furthermore, the development or expansion of our business
or any acquired products, business or companies may require a substantial capital investment by us. We may not have these necessary funds,
or they might not be available to us on acceptable terms or at all. We may also seek to raise funds by selling shares of our preferred
or common stock, which could dilute each current stockholder’s ownership interest in the Company.
Risks
Related to Ownership of Our Common Stock
The
sale of securities by us in any equity or debt financing could result in dilution to our existing stockholders and have a material adverse
effect on our earnings.
We
have financed our operations primarily through sales of stock and warrants. It is likely that during the next twelve months we will seek
to raise additional capital through the sales of stock and warrants in order to expand our level of operations to continue our research
and development efforts.
Any
sale of common stock by us in a future offering could result in dilution to our existing stockholders as a direct result of our issuance
of additional shares of our capital stock. In addition, our business strategy may include expansion through internal growth or by establishing
strategic relationships with targeted customers and vendors. In order to do so, or to finance the cost of our other activities, we may
issue additional equity securities that could dilute our stockholders’ stock ownership. We may also assume additional debt and
incur impairment losses related to goodwill and other tangible assets if we acquire another company and this could negatively impact
our earnings and results of operations.
Our
common stock is subject to price volatility which could lead to losses by stockholders and potential costly security litigation.
The
trading volume of our common stock has been and may continue to be extremely limited and sporadic. We expect the market price of our
common stock to fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned
growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions
in the economy and the financial markets or other developments affecting our competitors or us. This volatility has had a significant
effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have
the same effect on our common stock.
The
trading price of our common stock may be highly volatile and could fluctuate in response to factors such as:
|
●
|
actual
or anticipated variations in our operating results;
|
|
●
|
announcements
of developments by us or our competitors;
|
|
●
|
the
timing of IND and/or BLA approval, the completion and/or results of our clinical trials;
|
|
●
|
regulatory
actions regarding our products;
|
|
●
|
announcements
by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
|
|
●
|
adoption
of new accounting standards affecting our industry;
|
|
●
|
additions
or departures of key personnel;
|
|
●
|
introduction
of new products by us or our competitors;
|
|
●
|
sales
of our common stock or other securities in the open market; and
|
|
●
|
other
events or factors, many of which are beyond our control.
|
The
stock market is subject to significant price and volume fluctuations. Moreover, the COVID-19 pandemic has resulted in significant financial
market volatility and uncertainty in recent months. In the past, following periods of volatility in the market price of a company’s
securities, securities class action litigation has often been initiated against such a company. Litigation initiated against us, whether
or not successful, could result in substantial costs and diversion of our management’s attention and our resources, which could
harm our business and financial condition.
We
do not intend to pay dividends on our common stock, so any returns will be determined by the value of our common stock.
We
have never declared or paid any cash dividends on our common stock. For the foreseeable future, it is expected that earnings, if any,
generated from our operations will be used to finance the growth of our business, and that no dividends will be paid to holders of our
common stock. As a result, the success of an investment in our common stock will depend upon any future appreciation in its value. There
is no guarantee that our common stock will appreciate in value.
Certain
provisions of our Certificate of Incorporation and Bylaws and Delaware law make it more difficult for a third party to acquire us and
make a takeover more difficult to complete, even if such a transaction were in our stockholders’ interest.
Provisions
of our certificate of incorporation and bylaws may delay or discourage transactions involving an actual or potential change in our control
or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions
that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price
of our stock. Among other things, the certificate of incorporation and bylaws:
|
●
|
provide
that the authorized number of directors may be changed by resolution of the board of directors;
|
|
●
|
provide
that all vacancies, including newly-created directorships, may, except as otherwise required by law, be filled by the affirmative
vote of a majority of directors then in office, even if less than a quorum;
|
|
●
|
divide
the board of directors into three classes;
|
|
●
|
provide
that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors
at a meeting of stockholders must provide notice in writing in a timely manner, and meet specific requirements as to the form and
content of a stockholder’s notice;
|
In
addition, we are governed by Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a public Delaware
corporation from engaging in a “business combination” with an “interested stockholder” for a period of three
years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved
in a prescribed manner. A “business combination” includes mergers, asset sales or other transactions resulting in a financial
benefit to the stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or
within three years, did own, 15% or more of the corporation’s outstanding voting stock. These provisions may have the effect of
delaying, deferring or preventing a change in our control.
Compliance
with the reporting requirements of federal securities laws can be expensive.
We
are subject to the information and reporting requirements of the Exchange Act and other federal securities laws, and the compliance obligations
of the Sarbanes-Oxley Act. The costs of preparing and filing annual and quarterly reports and other information with the Securities and
Exchange Commission and furnishing audited reports to stockholders are substantial. In addition, we will incur substantial expenses in
connection with the preparation of registration statements and related documents with respect any offerings of our common stock.
Our
ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
Our
ability to utilize our federal net operating loss and tax credit carryforwards may be limited under Sections 382 and 383 of the Internal
Revenue Code of 1986, as amended, or the Code. The limitations apply if we experience an “ownership change”, generally
defined as a greater than 50 percentage point change in the ownership of our equity by certain stockholders over a rolling three-year
period. Similar provisions of state tax law may also apply. We have not assessed whether such an ownership change has previously
occurred. If we have experienced an ownership change at any time since our formation, we may already be subject to limitations on
our ability to utilize our existing net operating losses and other tax attributes to offset taxable income. In addition, future changes
in our stock ownership, which may be outside of our control, may trigger an ownership change and, consequently, the limitations under
Sections 382 and 383 of the Code. As a result, if or when we earn net taxable income, our ability to use our pre-change net operating
loss carryforwards and other tax attributes to offset such taxable income may be subject to limitations, which could adversely affect
our future cash flows.
Failure
to establish and maintain adequate finance infrastructure and accounting systems and controls could impair our ability to comply with
the financial reporting and internal controls requirements for publicly traded companies.
As
a public company, we operate in an increasingly demanding regulatory environment, including with respect to more complex accounting rules.
Company responsibilities required by the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, include establishing and
maintaining corporate oversight and adequate internal control over financial reporting and disclosure controls and procedures. Effective
internal controls are necessary for us to produce reliable financial reports and are important to help prevent financial fraud.
Our
compliance with Section 404 of the Sarbanes-Oxley Act requires that we incur substantial accounting expense and expend significant management
efforts. We complied with Section 404 at December 31, 2020 and 2019 and while our testing did not reveal any material weaknesses in our
internal controls, any material weaknesses in our internal controls in the future would be required us to remediate in a timely manner
so as to be able to comply with the requirements of Section 404 each year. If we are not able to comply with the requirements of Section
404 in a timely manner each year, we could be subject to sanctions or investigations by the SEC, NYSE American or other regulatory authorities
which would require additional financial and management resources and could adversely affect the market price of our common stock. Furthermore,
if we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed, and investors
could lose confidence in our reported financial information.
If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of
our common stock and trading volume could decline.
The
trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about
us or our business. Multiple securities and industry analysts currently cover us. If one or more of the analysts downgrade our common
stock or publish inaccurate or unfavorable research about our business, the price of our common stock would likely decline. If one or
more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which
could cause the price of our common stock and trading volume to decline.
Our
amended and restated bylaws, as amended, designate the U.S. federal district courts as the exclusive forum for
the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.
Our
amended and restated bylaws, as amended, provide that, unless we consent in writing to the selection of an alternative forum,
the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause
of action arising under the Securities Act of 1933, as amended. In addition, our amended and restated bylaws, as amended, state that
any person purchasing or otherwise acquiring any interest in our security shall be deemed to have notice of and to have consented to
such provision. Such choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds
favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits, if successful, might
benefit our stockholders. Stockholders who do bring a claim in the federal district courts of the United States of America could face
additional litigation costs in pursuing any such claim.