Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
As of February 27, 2020, there were 3,691,857
shares of the registrant’s common stock issued and outstanding. The aggregate market value of the voting stock held by non-affiliates
of the registrant was approximately $37,456,677.18 as of June 28, 2019, the last business day of the registrant’s most recently
completed second fiscal quarter, based on the last sales price of the registrant’s common stock as reported on The Nasdaq
Capital Market on such date. For purposes of the preceding sentence only, all directors, executive officers and beneficial owners
of 10% or more of the shares of the registrant’s common stock are assumed to be affiliates.
Unless the context requires otherwise, references
in this Annual Report on Form 10-K to “we,” “our,” “us,” “the Company” and “Bio-Path”
refer to Bio-Path Holdings, Inc. and its subsidiary. Bio-Path Holdings, Inc.’s wholly-owned subsidiary, Bio-Path, Inc., is
sometimes referred to herein as “Bio-Path Subsidiary.”
This Annual Report on Form 10-K contains
“forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Forward-looking statements can be identified by words such as “anticipate,” “expect,” “intend,”
“plan,” “believe,” “seek,” “estimate,” “project,” “goal,”
“strategy,” “future,” “likely,” “may,” “should,” “will”
and variations of these words and similar references to future periods, although not all forward-looking statements contain these
identifying words. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they
are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies,
projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate
to the future, they are subject to inherent risks, uncertainties and changes in circumstances, including those discussed in “Item
1A. Risk Factors” of this Annual Report on Form 10-K. As a result, our actual results may differ materially from those expressed
or forecasted in the forward-looking statements, and you should not rely on such forward-looking statements. You should carefully
read “Item 1A. Risk Factors” of this Annual Report on Form 10-K completely and with the understanding that our actual
future results may be materially different from those expressed or forecasted in this Annual Report on Form 10-K. We can give no
assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they
will have on our results of operations and financial condition. Forward-looking statements include, but are not limited to, statements
about:
Any forward-looking statement made by us
in this Annual Report on Form 10-K is based only on information currently available to us and speaks only as of the date on which
it is made. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information,
future developments or otherwise. However, you should carefully review the risk factors set forth in other reports or documents
we file from time to time with the U.S. Securities and Exchange Commission (“SEC”).
PART
I
ITEM 1. BUSINESS
Overview
We are a clinical and preclinical stage
oncology focused RNAi nanoparticle drug development company utilizing a novel technology that achieves systemic delivery for target
specific protein inhibition for any gene product that is over-expressed in disease. Our drug delivery and antisense technology,
called DNAbilize®, is a platform that uses P-ethoxy, which is a deoxyribonucleic acid (DNA) backbone modification that is intended
to protect the DNA from destruction by the body’s enzymes when circulating in vivo, incorporated inside of a lipid
bilayer having neutral charge. We believe this combination allows for high efficiency loading of antisense DNA into non-toxic,
cell-membrane-like structures for delivery of the antisense drug substance into cells. In vivo, the DNAbilize® delivered
antisense drug substances are systemically distributed throughout the body to allow for reduction or elimination of target proteins
in blood diseases and solid tumors. Through testing in numerous animal studies and treatment in over 70 patients, the Company’s
DNAbilize® drug candidates have demonstrated an excellent safety profile. DNAbilize® is a registered trademark of the Company.
Using DNAbilize® as a platform for drug
development and manufacturing, we currently have three drug candidates in development to treat at least five different cancer disease
indications. Our lead drug candidate, prexigebersen (pronounced prex” i je ber’ sen), is in the efficacy portion of
a Phase 2 clinical trial for acute myeloid leukemia (“AML”) in combination with low-dose cytarabine (“LDAC”)
and in combination with decitabine. On March 6, 2019, we announced intended amendments to this Phase 2 clinical trial to, among
other things, add prexigebersen in combination with decitabine for myelodysplastic syndrome (“MDS”) and close prexigebersen
in combination with LDAC. On November 26, 2019, we announced successful completion of safety testing in AML and MDS patients in
Stage 2 of this Phase 2 clinical trial. In addition, preclinical efficacy studies are underway for triple combination prexigebersen,
decitabine and venetoclax in AML. Prexigebersen is also being planned for a safety portion of a Phase 2a clinical trial for chronic
myeloid leukemia (“CML”) in combination with dasatinib. Prexigebersen was shown to enhance chemotherapy efficacy in
preclinical solid tumor models. In late 2019, we filed an Investigational New Drug (“IND”) application to initiate
a Phase 1 clinical trial of prexigebersen in patients with advanced solid tumors, including ovarian and uterine, pancreatic and
breast cancer. This trial is expected to commence after the IND has been cleared by the U.S. Food and Drug Administration (“FDA”),
which we currently anticipate being in 2020.
Our second drug candidate, Liposomal Bcl-2
(“BP1002”), targets the protein Bcl-2, which is responsible for driving cell survival in up to 60% of all cancers.
On November 21, 2019, we announced that the FDA cleared an IND application for BP1002. An initial Phase 1 clinical trial will evaluate
the ability of BP1002 to treat refractory/relapsed lymphoma and chronic lymphocytic leukemia (“CLL”) patients. The
Phase 1 clinical trial is expected to be conducted at several leading cancer centers, including The University of Texas MD Anderson
Cancer Center (“MD Anderson”) and the Georgia Cancer Center.
Our third drug candidate, Liposomal Stat3
(“BP1003”), targets the Stat3 protein and is currently in IND enabling studies as a potential treatment of pancreatic
cancer, non-small cell lung cancer (NSCLC) and AML. Preclinical models have shown BP1003 to inhibit cell viability and STAT3 protein
expression in NSCLC and AML cell lines. Further, BP1003 successfully penetrated pancreatic tumors and significantly enhanced the
efficacy of gemcitabine, a treatment for patients with advanced pancreatic cancer, in a pancreatic cancer patient derived tumor
model. Our lead indication for BP1003 is pancreatic cancer due to the severity of this disease and the lack of effective, life-extending
treatments. We expect to complete several IND enabling studies of BP1003 in 2020. If those studies are successful, we expect that
we would file an IND in late 2020 for the first-in-humans Phase 1 study of BP1003 in patients with refractory/metastatic solid
tumors, including pancreatic, NSCLC and colorectal cancers.
Our DNAbilize® technology-based products
are available for out-licensing or partnering. We intend to apply our drug delivery technology template to new disease-causing
protein targets to develop new nanoparticle antisense RNAi drug candidates. We have a new product identification template in place
to define a process of scientific, preclinical, commercial and intellectual property evaluation of potential new drug candidates
for inclusion into our drug product development pipeline. As we expand, we will look at indications where a systemic delivery is
needed and antisense RNAi nanoparticles can be used to slow, reverse or cure a disease, either alone or in combination with another
drug. On September 25, 2019, we announced that the United States Patent and Trademark Office (“USPTO”) issued a patent
for claims related to DNAbilize®, including its use in the treatment of cancers, autoimmune diseases and infectious diseases.
This is the second patent issued to the Company.
We have certain intellectual property as
the basis for our current drug products in clinical development, prexigebersen, BP1002 and BP1003. We are developing RNAi antisense
nanoparticle drug candidates based on our own patented technology to treat cancer and autoimmune disorders where targeting a single
protein may be advantageous and result in reduced patient adverse effects as compared to small molecule inhibitors with off-target
and non-specific effects. We have composition of matter and method of use intellectual property for the design and manufacture
of antisense RNAi nanoparticle drug products.
Our pipeline for development of antisense
therapeutics is set forth in the table below:
Figure 1. Bio-Path Pipeline for Development
of Therapeutics
* Received orphan drug designation
from the U.S. FDA for AML and CML and from the European Medicines Agency (EMA) for AML
Ribonucleic acid (RNA) is a biologically
significant type of molecule consisting of a chain of nucleotide units. Each nucleotide consists of a nitrogenous base, a ribose
sugar and a phosphate. Although similar in some ways to DNA, RNA differs from DNA in a few important structural details. RNA is
transcribed from DNA by enzymes called RNA polymerases and is generally further processed by other enzymes. RNA is central to protein
synthesis. DNA carries the genetic information of a cell and consists of thousands of genes. Each gene serves as a recipe on how
to build a protein molecule. Proteins perform important tasks for the cell functions or serve as building blocks. The flow of information
from the genes determines the protein composition and thereby the functions of the cell.
The DNA is situated in the nucleus of the
cell, organized into chromosomes. Every cell must contain the genetic information and the DNA is therefore duplicated before a
cell divides (replication). When proteins are needed, the corresponding genes are transcribed into RNA (transcription). The RNA
is first processed so that non-coding parts are removed (processing) and is then transported out of the nucleus (transport). Outside
the nucleus, the proteins are built based upon the code in the RNA (translation).
Our basic drug development concept is to
block expression of proteins that cause disease. RNA is essential in the process of creating proteins. We intend to develop drugs
and drug delivery systems that work by delivering short strands of DNA material (antisense DNA) that block the production of proteins
associated with disease (Figure 2).
Figure 2.
Antisense DNA therapeutics is the field
of designing short DNA sequences that are complementary to an RNA for a protein of interest with the intention of inhibiting the
production of the targeted protein. The DNA will find the matching RNA and form a complex. The complexed RNA will not have access
to the protein-making machinery, which prevents the cell from translating it into a protein. Thus, protein production is turned
off and levels of the targeted protein are reduced in the cell. This gene-specific process of controlling protein expression has
led to great interest in using antisense DNA to shut off the production of proteins involved in disease. Antisense therapeutics
have been in development for over 20 years; however, there have been many challenges to antisense therapeutics that have prevented
or reduced the successful distribution and transfer of DNA into cells. Of all delivery methods in use today, we believe only DNAbilize®
has the potential to overcome the most common challenges associated with antisense therapeutics.
Challenges associated with antisense therapeutics
generally fall into two categories: (i) maintaining the stability of the DNA inside of the body as it is transported to the target
cell and (ii) achieving efficient delivery and transfer of the DNA into the cell. DNA stability in the blood and lymphatic system
is a challenge because of the abundance of enzymes present in human body fluids. Enzymes called nucleases will digest DNA into
nonfunctional fragments making them too small to hybridize effectively to the correct RNA and block the protein machinery.
Efforts to overcome the stability challenges
led to the development of DNA structural backbone chemistries that block nuclease digestion so that DNA can remain in circulation
long enough to reach the target cell. The most popular modification employed is called phosphorothioate in which an oxygen atom
in the inter-bridging phosphate bond of the DNA is replaced with a sulfur atom. This switch alters the DNA’s structure so
that enzymes can no longer break down the DNA. However, DNA that contains sulfur has two major drawbacks. First, it has been shown
to cause liver toxicity because, as pure DNA that contains sulfur is circulated through the body, it is rapidly cleared by and
accumulates in the liver. Second, sulfur also induces significant toxicity in the form of life-threatening bleeding and clotting
complications.
While the development and use of phosphorothioate
was a step forward in allowing for progress of in vivo studies, the amount of antisense drug product that can be delivered
is severely limited. Consequently, doses at the level needed for true therapeutic success are not possible. Accordingly, stabilizing
the DNA backbone through the use of phosphorothioate has prevented the successful use of antisense therapeutics to treat patients
at a therapeutic level without causing significant amounts of toxicity. Alternative approaches have since been developed that reduce
the number of sulfur groups in the antisense molecule; however, these methods still contain sulfur, and toxicity will always remain
a concern. The P-ethoxy modification used in our DNAbilize® technology is completely sulfur free.
The second category of challenges to the
development of successful antisense therapeutics is achieving efficient delivery and transfer of a DNA molecule across a lipid-based
cell membrane. Cell membranes have a negative charge on the surface. DNA is also negatively charged. When the pure DNA is delivered
to the cell surface, the similar charges repel each other, and uptake of the DNA into the cell is very inefficient. Accordingly,
the DNA containing antisense drug products will not be delivered in an amount that will have a therapeutic effect.
Efforts to overcome the efficient delivery
and transfer challenges led to the exploration of lipid-based carriers for transfer of DNA containing antisense drug products through
the lipid bilayer to mimic the lipid cell membrane. Encapsulating the DNA inside a neutral charged lipid bilayer facilitates the
delivery and transfer of DNA into the cell to be fluid and gentle. Research initially focused on cationic lipids because they have
an overall positive charge, which would be attracted to the negative charge of the cell membrane. It was thought that this would
enhance uptake and delivery of DNA.
Research did, in fact, confirm that cationic
liposomes are capable of transferring DNA inside of cells at a higher efficiency than with no delivery liposomes; however, it was
found that cationic lipids have major drawbacks in therapeutics. These include adsorption of serum proteins while the complexes
are circulating in the blood. Adsorption of charged serum proteins leads to lipid reorganization, aggregation or disassociation,
resulting in poor efficiency of transfer of DNA into cells and non-specific toxicity to cell membranes. DNAbilize®
overcomes this challenge as well by encapsulating the DNA in a neutral lipid-based liposome, which is a lipid membrane without
surface charge. The lipid particles can circulate through the blood without interacting with charged serum proteins, reaching target
cells to transfer intact DNA without toxic effects.
We believe the DNAbilize®
technology is a first in class approach that overcomes the challenges associated with both DNA stabilization and lipid-based delivery.
We believe that the combination of the protected DNA using P-ethoxy to modify the DNA structure with the neutral lipid membrane
is the ideal approach for antisense DNA therapeutics. While many companies have focused research on either the DNA stabilization
problem or the lipid delivery problem, we are not aware of any company that has developed improvements in both areas. DNAbilize®
is truly a stand-alone platform because, based on our current research, it allows for high doses of drug products to be delivered
throughout the entire body while minimizing toxicity. This allows our research and development efforts to focus on drug targets
rather than on indications because the DNAbilize® system should not be limited in what types of indications it can
treat. As such, we believe that DNAbilize® represents the first ever antisense therapeutic approach that can successfully
treat hematological and systemic diseases of the blood and lymph.
Because of our unique ability to address
unmet needs in hematological malignancies, our lead drug candidates focus in this area. Our lead drug candidate, prexigebersen,
targets the protein Grb2, a bridging protein between activated and mutated cellular kinases and the proteins involved in cell proliferation,
and in particular, the Ras protein. When mutations occur that activate these kinases, the cell proliferates uncontrollably, via
Grb2, and this results in disease. Inhibition of Grb2 interrupts this pathway and shuts off growth signals.
Prexigebersen is in the efficacy portion
of a Phase 2 clinical trial for AML in combination with decitabine in elderly and induction therapy ineligible patients or patients
who have decided to forego intensive induction therapy because of their age or fragile health. The multi-site trial is being conducted
at leading cancer centers, among them are Weill Medical College of Cornell University, Baylor Scott &White Health, The University
of Kansas, New Jersey Hematology Oncology Associates, West Virginia University/Mary Babb Randolph Cancer Center and MD Anderson.
On April 3, 2018, we released the interim
data from Stage 1 of the Phase 2 clinical trial for AML in combination with LDAC. The prexigebersen and LDAC combination therapy
was well-tolerated and showed early anti-leukemic activity in nearly 50% of evaluable AML patients, including four patients with
complete remission (“CR”) and four with stable disease. On August 27, 2018, we announced that we commenced Stage 2
of the Phase 2 clinical trial for AML and added a cohort of patients to be treated with a combination of prexigebersen and decitabine,
another AML frontline therapy. On March 6, 2019, we announced updates to the interim analysis from Stage 1 of the Phase 2 clinical
trial. We announced that the efficacy profile improved to where 11 (65%) of the 17 evaluable patients had a response, including
five (29%) who achieved CR, including one complete remission with incomplete hematologic recovery (“CRi”)
and one morphologic leukemia free state, and six (35%) stable disease responses, including two patients who had greater than a
50% reduction in bone marrow blasts. The efficacy data from the 17 evaluable patients was very favorable compared to the reported
CR, CRp (complete remission with incomplete platelet recovery) and CRi rates of 7 to 13% with LDAC treatment alone. Importantly,
through investigation by the principal investigators, it was observed that 68% of patients were secondary AML patients, a difficult
class to treat. On March 6, 2019, we also announced intended amendments to this Phase 2 clinical trial to, among other things,
add prexigebersen in combination with decitabine for MDS and close prexigebersen in combination with LDAC. On November 26, 2019,
we announced successful completion of safety testing in AML and MDS patients in Stage 2 of this Phase 2 clinical trial. The safety
segment of Stage 2 of this Phase 2 clinical trial comprised six evaluable patients who were treated with a combination of prexigebersen
and decitabine.
In addition to the Phase 2 trial for AML,
on December 29, 2017, we announced the initiation of our Phase 1b/2a clinical trial, which is the safety portion of the Phase 2
clinical trial, of prexigebersen for the treatment of CML in accelerated and blast phase patients. Bio-Path’s current plans
envision enrolling patients in the trial in 2020. The trial is planned to be conducted at MD Anderson as a potential salvage therapy
for accelerated and blast phase CML patients and will expand to other sites if feasible. However, recent advances in the treatment
of chronic phase CML patients with tyrosine inhibitors have limited the availability of these patients for the trial. As a result,
the continuation of this study is being evaluated based on the potential for patient availability and clinical trial site expansion.
If this study is advanced, it will evaluate two cohorts of three evaluable patients at two doses (60 mg/m2 and 90 mg/m2)
of prexigebersen in combination with dasatinib.
Our second drug candidate, BP1002,
targets the protein Bcl-2. Bcl-2 is an anti-apoptotic member of the Bcl-2 family of proteins that regulate cell death.
Amplified expression of Bcl-2 protein is associated with numerous lymphomas. The chromosomal translocation
t(14;18) is the defining genetic hallmark of follicular lymphoma. The t(14;18) moves the Bcl-2 gene from chromosome 18 into
the heavy chain immunoglobin locus on chromosome 14, resulting in uncontrolled high level expression of Bcl-2 protein.
Overexpression of Bcl-2 results in deregulated cell survival in affected cells. On November 21, 2019 we announced that the
FDA cleared an IND application for BP1002. An initial Phase 1 clinical trial will evaluate the ability of BP1002 to treat
refractory/relapsed lymphoma and CLL patients. The Phase 1 clinical trial is expected to be conducted at several leading
cancer centers, including MD Anderson and the Georgia Cancer Center. Initially, a total of six evaluable patients are
scheduled to be treated with BP1002 monotherapy in a standard 3+3 design, with a starting dose of 20 mg/m2. The
approved treatment cycle is two doses per week over four weeks, resulting in eight doses administered over twenty-eight
days.
Our third drug candidate, BP1003, targets
the Stat3 protein and is currently in IND enabling studies. Preclinical models have shown BP1003 to successfully penetrate pancreatic
tumors and to significantly enhance the efficacy of standard frontline treatments. We expect to complete several IND enabling studies
of BP1003 in 2020. If those studies are successful, we expect that we would file an IND in late 2020 for the first-in-humans Phase
1 study of BP1003 in patients with refractory/metastatic solid tumors including pancreatic, NSCLC and colorectal cancers.
Strategy
Our strategy is to develop our lead candidates,
prexigebersen, BP1002 and BP1003, for multiple indications where the pathways involving Grb2, Bcl-2 and Stat3, respectively, are
utilized to promote cancer growth, survival, angiogenesis and tumor surveillance evasion. Using DNAbilize® technology,
we plan to develop therapeutics to a wide range of diseases and disorders independently and in partnership with others. The key
elements of our strategy include:
|
(1)
|
Develop prexigebersen for treatment of AML, MDS and CML in
combination with frontline therapies. The Phase 1 clinical trial demonstrated an excellent safety profile of prexigebersen
in patients with relapsed/refractory AML, CML or MDS. Moving forward with AML, the area of highest need, we announced in November
2016, the commencement of the Phase 2 trial of prexigebersen in combination with LDAC in AML patients. Eligible patients include
de novo elderly ineligible for induction therapy or patients who have decided to forego intensive induction therapy because of
their age or fragile health. We released the initial interim data analysis of Stage 1 of the Phase 2 AML study in April 2018, and
the updated data in March 2019. In August 2018, we announced the addition of a prexigebersen and decitabine combination cohort
to the Phase 2 AML study. On March 6, 2019, we announced a revised clinical program intended for prexigebersen in AML. Part of
this revised program includes the intended inclusion of high risk MDS patients in the prexigebersen and decitabine combination
cohort and the closure of the prexigebersen and LDAC combination cohort in the ongoing Phase 2 AML study. On November 26, 2019,
we announced successful completion of safety testing in AML and MDS patients in Stage 2 of this Phase 2 AML study. In addition,
preclinical efficacy studies are underway for triple combination prexigebersen, decitabine and venetoclax in AML. On December 29,
2017, we announced the initiation of the safety portion of the Phase 2a clinical trial for blast and accelerated phase CML patients
with prexigebersen in combination with dasatinib. We plan to enroll patients in the trial in 2020, however, continuation of this
trial is being evaluated based upon an assessment of the availability of blast and accelerated phase patients.
|
|
(2)
|
Develop prexigebersen for treatment of solid tumors.
Preclinical studies, in collaboration with leaders in the field of ovarian and breast cancer at MD Anderson, have been conducted
to assess the efficacy of prexigebersen in solid tumors. Research show that prexigebersen enhances the efficacy of frontline therapy
in ovarian cancer models. In late 2019, we filed an IND application to initiate a Phase 1 clinical trial of prexigebersen in patients
with advanced solid tumors, including ovarian and uterine, pancreatic and breast cancer. This trial is expected to commence after
the IND has been cleared by the FDA, which we currently anticipate being in 2020, at several leading cancer centers and will evaluate
the safety of prexigebersen in these patients. Assuming positive Phase 1 results, we expect that we would advance to a Phase 1b
clinical trial of prexigebersen in combination with frontline therapy in these same advanced solid tumor patients.
|
|
(3)
|
Develop BP1002 for lymphoma and CLL. On November 21,
2019 we announced that the FDA cleared an IND application for BP1002, our second drug candidate. An initial Phase 1 clinical trial
will evaluate the ability of BP1002 to treat refractory/relapsed lymphoma and CLL patients. The Phase 1 clinical trial is expected
to be conducted at several leading cancer centers, including MD Anderson and the Georgia Cancer Center. Initially, a total of six
evaluable patients are scheduled to be treated with BP1002 monotherapy in a standard 3+3 design, with a starting dose of 20 mg/m2.
The approved treatment cycle is two doses per week over four weeks, resulting in eight doses administered over twenty-eight days.
|
|
(4)
|
Develop BP1003 for pancreatic cancer and solid tumors.
Our third drug candidate, BP1003, targets the Stat3 protein and is currently in IND enabling studies for solid tumors, including
pancreatic cancer. Previous preclinical models have shown BP1003 to successfully penetrate pancreatic tumors and to significantly
enhance the efficacy of standard frontline treatments. Bio-Path expects to complete several IND enabling studies of BP1003 in 2020.
If those studies are successful, Bio-Path expects that it would file an IND in late 2020 for the first-in-humans Phase 1 study
of BP1003 in patients with refractory/metastatic solid tumors including pancreatic, NSCLC and colorectal cancers.
|
|
(5)
|
Expand DNAbilize® to evaluate targets beyond
cancer. We plan to apply the DNAbilize® delivery technology template to new protein targets that meet scientific,
preclinical and commercial criteria and file new patents on these targets. We expect that these efforts will include collaboration
with scientific key opinion leaders in the field of study and include developing drug candidates for diseases other than cancer.
On September 25, 2019, we announced that the USPTO issued a patent for claims related to DNAbilize®, including its use in the
treatment of cancers, autoimmune diseases and infectious diseases. This is the second patent issued to the Company.
|
|
(6)
|
Establish DNAbilize® as the antisense drug delivery method of choice by forming partnerships with pharmaceutical and academic clinical research labs. We plan to utilize our business and scientific expertise to identify potential partners and initiate a wide-ranging, proactive licensing program that will include co-development of specific liposomal antisense drug candidates, licensing the delivery template for outside development of one or more liposomal antisense drug candidates or an out-license of a partially developed drug for final development and marketing.
|
Overview of Drug Candidates and Delivery
Technology
The historical perspective of cancer treatments
has been the use of drugs that affect the entire body. Advances in the past decade have shifted to treating the tumor tissue itself.
One of the main strategies in these developments has been targeted therapy, involving drugs that are targeted to block the expression
of specific disease-causing proteins while having little or no effect on other healthy tissue. We believe that nucleic acid drug
products, specifically antisense, are a promising field of targeted therapy. Development of antisense, however, has been limited
by the lack of a suitable method to deliver antisense drugs to the diseased cells with high uptake into the cell without causing
toxicity. Our currently licensed DNAbilize® neutral-lipid based liposome technology is designed to overcome these
limitations. Studies conducted at MD Anderson have shown a 10-fold to 30-fold increase in tumor cell uptake with this technology
compared to other delivery methods. In addition, to date, no adverse effects attributed to the study drug have been observed in
our clinical trials for leukemia.
Antisense DNA therapeutics of the past have
not adequately addressed the issues of toxicity and poor distribution and uptake. Without a lipid carrier, the majority of antisense
DNA delivered intravenously is deposited in the liver and does not reach therapeutic levels in other organs in the body. Hence,
antisense therapeutics have predominantly focused on diseases of the liver for which delivery of drugs is easy. Below is a table
of antisense therapeutics we are aware of that are currently in clinical trials.
Table 1. Antisense or Anti-MiR drugs
FDA Approved or in Clinical Trials*
Nucleic Acid
Modification
|
|
Drug
|
|
Targeted Gene
|
|
Clinical
Status
|
|
Indications
|
Backbone Modifications
|
|
|
|
|
|
|
|
|
Phosphorothioate
|
|
Vitravene
|
|
Cytomegalovirus
|
|
Approved
|
|
CMV retinitis
|
P-ethoxy
|
|
Prexigebersen
|
|
Grb2
|
|
Phase 2
|
|
Leukemia
|
Morpholino
|
|
Eteplirsen
|
|
Dystrophin exon 51
|
|
Approved
|
|
Duchenne Myotonic dystrophy
|
|
|
Golodirsen
|
|
Dystrophin exon 53
|
|
Approved
|
|
Duchenne Myotonic dystrophy
|
|
|
Viltolarsen
|
|
Dystrophin exon 53
|
|
Phase 3
|
|
Duchenne Myotonic dystrophy
|
Sugar Modifications
|
|
|
|
|
|
|
|
|
2’- methoxy-O-ethyl
|
|
Mipomersen
|
|
Apolipoprotein B
|
|
Approved
|
|
Familial
hypercholesterolemia
|
|
|
Nusinersen
|
|
SMN1
|
|
Approved
|
|
Spinal muscular
atrophy
|
|
|
|
|
|
|
|
|
|
|
Lipid System
|
|
Natural
Components
|
|
Potential toxicity
|
|
|
|
|
|
|
|
|
|
SNALP
|
|
Cholesterol,
Phosphatidylcholine
|
|
Cationic lipid, PEG
|
|
|
Lipidoid
|
|
Cholesterol
|
|
PEG
|
|
|
LPH
|
|
Cholesterol,
hyaluronic acid
|
|
DOTAP, PEG
|
|
|
Neutral lipid particle
|
|
DOPC lipid
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*This table represents examples of antisense drugs and lipid
delivery systems. It is not meant to be exhaustive.
Lipid delivery approaches using cationic
lipids, which enhance the uptake of charged antisense DNA molecules into cells as compared to no lipid, still do not efficiently
transfer antisense DNA into cells due to serum protein interactions and subsequent cell toxicity. The antisense field has attempted
to work around these issues by either avoiding a delivery method completely, or by utilizing polyethylene glycol (PEG) as a carrier
of DNA into cells. PEG showed promise in extending the time of circulation of antisense DNA in vivo and avoiding clearance
by the liver. However, adverse effects have been demonstrated by PEG carriers, including hypersensitivity, activation of blood
clotting, embolism and anaphylaxis. To date, the only known lipid delivery method that has not shown any adverse effects in clinical
trials is the neutral lipid method utilized by DNAbilize®.
PREXIGEBERSEN
Prexigebersen is targeted at the protein
Grb2. Antisense inhibition of Grb2 interrupts the signals between mutated and activated receptors that connect to a well-known
cancer associated switch called Ras protein. Inhibition of Grb2 does not cause cell death and thus does not result in adverse events
typically observed with receptor inhibitors or Ras pathway inhibitors. We believe that prexigebersen has the potential to be an
ideal combination for any number of cancer therapeutics where the Ras pathway is aberrantly activated and patient fitness is a
major concern.
We have completed our Phase 1 clinical trials
for prexigebersen for indications of AML, CML, MDS and Acute Lymphoblastic Leukemia (“ALL”). We are currently prioritizing
our efforts on AML, MDS and CML and have begun the Phase 2/Phase 2a clinical trials for these indications. In addition, preclinical
efficacy studies are underway for triple combination prexigebersen, decitabine and venetoclax in AML. Priorities for additional
indications, including solid tumors, are expected to be addressed in the future as the results of our clinical and preclinical
work progress.
Indications for Acute Myeloid Leukemia (AML), Myelodysplastic
Syndrome (MDS) and Chronic Myelogenous Leukemia (CML)
AML – Background and Common Treatments.
AML is the rapid accumulation of immature myeloid cells in the blood, resulting in a drop of the other cell types such as red blood
cells and platelets. The expansion of immature monocytes leaves the patient unable to fight infection. If AML is left untreated,
it usually results in death within three months. AML incidence increases with age, with more than 50% of the cases in people age
60 or older. AML is the most common acute leukemia in adults, and the National Cancer Institute estimates that approximately 20,000
new cases occur each year (Figure 3). The cure rate is between 5 to 15% in older adults, and those who cannot receive the standard
course of chemotherapy have an average survival rate of five to ten months. The frontline low-intensity therapies for elderly AML
patients are LDAC, decitabine or azacytidine (the latter two drugs are DNA hypomethylating agents). In November of 2018, the FDA
approved venetoclax (a Bcl-2 inhibitor) for the newly diagnosed AML patients aged 75 years and older or adults who cannot be treated
with intensive induction chemotherapy. venetoclax is used in combination with LDAC, decitabine or azacytidine. Mutation in the
Bcl-2 binding domain, which reduces venetoclax’s ability to bind to Bcl-2, has been linked with venetoclax resistance in
CLL patients. Such venetoclax resistance may also occur in AML patients. AML remains an area of high unmet need for both the relapsed
and the de novo elderly population who are typically ineligible for induction therapy.
Figure 3. Basic Statistics for AML
MDS
– Background and Common Treatments. MDS is a bone marrow disease, characterized by a reduced number of mature blood cells.
MDS is diagnosed in about 15,000 people in the United States (“U.S.”) yearly. MDS patients are stratified into different
risk groups. Higher risk MDS patients have a survival of less than two years and, if untreated, can evolve into secondary AML.
Secondary AML patients are often older and treated with DNA hypomethylating agents. Higher risk MDS and secondary AML patients
who have progressed from DNA hypomethylating agents have very poor prognosis. Novel treatment strategies for these patients are
needed.
CML – Background and Common Treatments.
CML is characterized by expansion in the blood and bone marrow of mature myeloid cells and their precursors. It can show no symptoms
and is often detected during a routine blood test. If left untreated, after several years it will progress to an accelerated phase
and eventually blast crisis where it becomes an acute leukemia. With the introduction of drugs such as Gleevec, the life expectancy
of patients treated in the chronic phase has been significantly improved, and only 1 to 1.5% of patients ever go into blast crisis.
However, for those patients who do progress into blast crisis, there are currently few treatment options. Myeloid cells in blast
crisis have accumulated genetic abnormalities that resist traditional treatment methods that kill leukemic cells. Patients in blast
crisis have an average survival rate of seven to eleven months. New treatments for this critical population are necessary.
Figure 4. Basic Statistics for CML
Prexigebersen Development and Treatment
for AML, MDS and CML. Our lead liposome delivered antisense drug candidate, prexigebersen, has been clinically tested in patients
having AML, CML, MDS and ALL in a Phase 1 trial. During the Phase 1 trial, 80% of the evaluable patients had refractory/relapsed
AML, having failed at least 6 prior therapies. In our study, 83% of patients showed decreased circulating blasts and anti-leukemic
activity and eight patients stabilized for extended treatments.
Phase 1 Clinical Trials
The Phase 1 clinical trial was a dose-escalating
study to determine the safety and tolerance of escalating doses of prexigebersen. The study determined an optimal biologically
active dose for further development. The pharmacokinetics of prexigebersen in patients from the study was evaluated. In addition,
patient blood samples from the trial were tested using a new assay developed by us to measure down-regulation of the target protein,
the critical scientific data that demonstrated the delivery technology does in fact successfully deliver the antisense drug substance
to the cell and across the cell membrane into the interior of the cell where expression of the target protein is blocked. The clinical
trial was conducted at MD Anderson.
The original IND granted by the FDA in
March 2010 allowed us to proceed with a Phase 1 clinical trial having five cohorts culminating in a maximum dose of 50
mg/m2. However, in November 2012, we announced that since there had been no evidence of significant toxicity from
treatment of patients with prexigebersen, we requested the FDA to allow higher dosing in patients. The principal investigator
for the clinical trial, in consultation with our management team, advised us that with the absence of any real toxicity
barriers, we should continue to evaluate higher doses of prexigebersen. The absence of significant toxicity provided a
significant opportunity for us to test higher doses in patients in order to find a dose that provides maximum potential
benefit and duration of anti-leukemia effect. These actions were approved and a revised protocol was submitted allowing
higher dosing. We announced in October 2014 that we completed Cohort 6, successfully treating three patients at a dose 90
mg/m2. There has been no evidence of
significant toxicity from treatment of patients with prexigebersen in our Phase 1 clinical trial.
An important outcome for the Phase 1 clinical
trial is the ability to assess for the first time the performance of our delivery technology platform in human patients. We have
developed two new assays to be able to provide scientific proof of concept of the delivery technology. The first involves a novel
detection method for the drug substance in blood samples that will be used to assess the pharmacokinetics of the drug. The second
involves a method to measure down-regulation of the target protein in a patient blood sample that was achieved. The latter measurement
will provide critical proof that DNAbilize® neutral liposome delivery technology delivered the drug substance to the cell and
was able to transport it across the cell membrane into the interior to block cellular production of the Grb2 protein.
In this regard, in August 2013 we announced
that our DNAbilize® liposomal delivery technology achieved a major milestone in the development of antisense therapeutics based
on a scientific assay confirming that treating patients with our drug candidate prexigebersen inhibits the Grb2 disease-causing
target protein in patients with blood cancers (Figure 7). Inhibition of the disease-causing protein has the effect of down regulating
the disease. This will allow for prexigebersen to be used potentially in combination with current frontline treatments. This discovery
also points to the potential use of a liposomal antisense treatment as a standalone treatment to transform and manage a disease
that has a disease-causing protein as a chronic disorder. This accomplishment is a potentially significant breakthrough for antisense
therapeutics, whose development, to date, as a class of therapeutics has been severely limited by a lack of a systemic delivery
mechanism that can safely distribute the drug throughout the body and deliver the antisense drug substance across the cell membrane
into the interior of the cell. Further, we expect that scientific proof of principle for DNAbilize® may lead to licensing and
business development opportunities, supporting our business model.
The principal investigator for the Phase
1 clinical trial was a leading expert in the treatment of CML, AML, MDS and ALL. Because the results of the first trial produced
unexpected and clinically interesting results in some patients, the principal investigator prepared an abstract of the results
of the first cohort that was accepted for presentation at the ASH annual meeting in December 2011. Results that demonstrated potential
anti-leukemia benefits in treated patients were included in the presentation. Subsequently, in fall 2013 the principal investigator
prepared an abstract of updated information on the results of the clinical trial through Cohort 5, which was accepted for presentation
at the ASH annual meeting in December 2013. Highlights (which have been updated to include patients from Cohort 6) of the presentation
prepared by the principal investigator for the meeting included:
Data from the Phase 1 Clinical Trial
|
·
|
Among 20 evaluable patients, 15 demonstrated anti-leukemia activity with reduction in peripheral or bone marrow blasts from baseline.
|
|
·
|
Five patients demonstrated transient improvement and/or stable disease, three of whom received a total of five cycles each.
|
|
·
|
Two patients, in addition to achieving market blast percentage declines, also experienced transient improvements in leukemia cutis lesions.
|
Disease Stabilization in MDS and AML
|
·
|
Two patients with MDS, a 53-year-old male and a 72-year-old female, both achieved disease stabilization and continued therapy for five cycles before disease progression.
|
|
·
|
A 54-year-old HIV positive male with AML achieved stable disease and marked reduction in peripheral blasts, continuing therapy for five cycles before disease progression (Figure 5).
|
Figure 5. AML Patient with HIV Demonstrated
Reduction of
Peripheral Blasts and Sustained Improvement Over 5 Cycles of Treatment
|
End of C = end of the cycle of treatment
|
Experience in CML-Blast Phase
|
·
|
Patient with myeloid blast crisis of CML.
|
|
·
|
Prior therapies consisted of: imatinib, dasatinib, nilotinib, DCC-2036, cytarabine + fludarabine + dasatinib + gemtuzumab, PHA-739358, clofarabine + dasatinib.
|
|
·
|
Upon start of prexigebersen, patient showed a significant reduction in white blood cell (WBC) blasts from 81% to 5%, but due to leptomeningeal disease progression discontinued therapy before full cycle (Figure 6).
|
Figure 6. Prexigebersen Monotherapy Reversed
Blast Phase Crisis
in a Patient in the Phase 1 Clinical Trial for Prexigebersen
Inhibition of Target Grb2 Protein
|
·
|
Grb2 levels were compared to baseline prior to treatment.
|
|
·
|
By end of treatment, prexigebersen decreased Grb2 in 10 out of 12 samples (83%) tested (average reduction 50%).
|
|
·
|
Phosphorylated ERK (pERK, extracellular signal related kinase), a protein downstream of the Ras protein, was decreased in 58% of samples.
|
Figure 7. Grb2 Protein and Downstream
pERK are
Downregulated in Prexigebersen Treated
Patient’s Cells
Grb2 levels decreased in 10 out of 12
patient samples by end of treatment (EOT)
pErk levels decreased in 7 of 12 patient
samples by EOT
Subject
|
|
Prexigebersen
(mg/m2)
|
|
Cohort
|
|
Grb2
Decrease
(EOT)
|
|
|
pERK
Decrease
(EOT)
|
|
22
|
|
20
|
|
3
|
|
|
57
|
%
|
|
|
0
|
%
|
23
|
|
20
|
|
3
|
|
|
28
|
%
|
|
|
45
|
%
|
24
|
|
20
|
|
3
|
|
|
47
|
%
|
|
|
35
|
%
|
25
|
|
40
|
|
4
|
|
|
54
|
%
|
|
|
91
|
%
|
26
|
|
40
|
|
4
|
|
|
0
|
%
|
|
|
0
|
%
|
27
|
|
40
|
|
4
|
|
|
34
|
%
|
|
|
27
|
%
|
28
|
|
60
|
|
5
|
|
|
30
|
%
|
|
|
54
|
%
|
29
|
|
60
|
|
5
|
|
|
65
|
%
|
|
|
0
|
%
|
30
|
|
60
|
|
5
|
|
|
43
|
%
|
|
|
47
|
%
|
31
|
|
90
|
|
6
|
|
|
0
|
%
|
|
|
0
|
%
|
32
|
|
90
|
|
6
|
|
|
91
|
%
|
|
|
63
|
%
|
34
|
|
90
|
|
6
|
|
|
40
|
%
|
|
|
0
|
%
|
The Phase 1 clinical trial is typically
ended when a maximum tolerated dose (“MTD”) is encountered. However, due to the lack of toxicity of the drug, a MTD
was not observed. As a result, an optimal biological dose was determined and we completed Cohort 6 of our Phase 1 clinical trial.
It is noted, however, that the lack of toxicity is a major advantage for the drug candidate prexigebersen since it allows higher
levels of drug to be administered to the patient, increasing the potential therapeutic benefit.
In April 2015, we received orphan drug designation
by the FDA for prexigebersen in AML. Orphan drug status provides Bio-Path with seven years of exclusivity after receiving formal
marketing approval, as well as additional development incentives. The FDA grants this designation to certain drugs that target
diseases affecting fewer than 200,000 people in the U.S. In October 2016, prexigebersen received orphan drug designation for AML
in the European Union (“E.U.”) from the European Medicines Agency (“EMA”). To receive orphan drug designation
from the EMA, a therapy must be intended for the treatment of a life-threatening or chronically debilitating rare condition with
a prevalence of less than five in 10,000 in the E.U. Orphan drug designation provides incentives designed to facilitate development,
including fee reductions for protocol assistance, scientific advice and importantly, may provide up to ten years of market exclusivity
in the E.U. following product approval.
Phase 2 Clinical Trials
On February 9, 2015, we announced that we
began enrollment into the combination therapy Phase 1b clinical trial for prexigebersen in patients with AML. The combination therapy
Phase 1b clinical trial consisted of two dosing cohorts of prexigebersen (60 mg/m2 and 90 mg/m2) to test
the safety profile of treating AML patients with prexigebersen in combination with LDAC. Patients ineligible for intensive induction
therapy are currently treated only with LDAC.
On October 9, 2015, we announced the completion
of Cohort 7, the first dosing cohort of the Phase 1b clinical trial, consisting of a 60 mg/m2 dose of prexigebersen
in combination with LDAC. On March 3, 2016, we announced the completion of Cohort 8, the second dosing cohort of the Phase 1b clinical
trial, consisting of a 90 mg/m2 dose of prexigebersen in combination with LDAC. On June 6, 2016, we announced that data
from Cohort 7 and Cohort 8 of the Phase 1b clinical trial combination therapy of prexigebersen and LDAC showed no dose limiting
toxicities. Of the six evaluable patients from the Phase 1b clinical trial, four patients completed more than two cycles of treatment,
three patients achieved CR and two patients had over 50% decrease in bone marrow blast counts (Figure 8). Pharmacokinetics of prexigebersen
demonstrated a half-life at 60 mg/m2 of 30 hours, significantly better than the 90 mg/m2 dose. The final
analysis of these data, along with the demonstrated reductions in bone marrow blasts, suggested that 60 mg/m2 is the
appropriate dose for use in the Phase 2 trial. Administratively, this required Bio-Path to substantially revise documents for the
Phase 2 trial with the 60 mg/m2 dose and resubmit for approvals with the FDA and site Institutional Review Boards, which
delayed the commencement of the Phase 2 trial.
Figure 8. Five out of six patients in
cohorts 7 and 8 receiving the combination
prexigebersen + LDAC have greater than 50% decrease in bone marrow blasts
A summary of the clinical trial results
for the Phase 1 monotherapy for indications of AML, CML, MDS and ALL, and Phase 1b combination therapy for prexigebersen for indications
of AML is shown in Table 2 below. The first six cohorts, patients 001 to 034, were treated in the Phase 1 clinical trial using
prexigebersen as a monotherapy. The seventh cohort, patients 035, 037 and 038, were treated in our Phase 1b clinical trial evaluating
the combination therapy of 60 mg/m2 prexigebersen. The eighth cohort, patients 039, 040 and 041, were treated with combination
therapy of 90 mg/m2.
Table 2. Summary Cohorts 1-8 Prexigebersen
Clinical Trial Phase 1 and 1B
|
|
|
|
Peripheral or bone
marrow blast %
|
|
|
|
|
Patients
|
|
Diagnosis
|
|
Baseline
|
|
Nadir
|
|
Off-
Tx
|
|
Reason
Discontinued
|
|
Cycles
Completed
|
1
|
|
CML
|
|
51
|
|
No
|
|
97
|
|
DLT
|
|
<1
|
6
|
|
AML
|
|
15
|
|
2
|
|
5
|
|
PD
|
|
5
|
7
|
|
MDS
|
|
8
|
|
4
|
|
6
|
|
PD
|
|
5
|
10
|
|
AML
|
|
23
|
|
10
|
|
10
|
|
PD
|
|
1
|
11
|
|
CML
|
|
7
|
|
No
|
|
50
|
|
PD
|
|
1
|
14
|
|
AML
|
|
48
|
|
5
|
|
21
|
|
PD
|
|
1
|
15
|
|
AML
|
|
54
|
|
31
|
|
72
|
|
PD
|
|
1
|
20
|
|
AML
|
|
76
|
|
5
|
|
63
|
|
PD
|
|
1
|
21
|
|
AML
|
|
71
|
|
43
|
|
74
|
|
PD
|
|
2
|
22
|
|
AML
|
|
1
|
|
0
|
|
1
|
|
PD
|
|
2
|
23
|
|
MDS
|
|
NE
|
|
NE
|
|
NE
|
|
PD
|
|
1
|
24
|
|
MDS
|
|
0
|
|
0
|
|
0
|
|
PD
|
|
5
|
25
|
|
AML
|
|
10
|
|
3
|
|
19
|
|
PD
|
|
2
|
26
|
|
AML
|
|
11
|
|
No
|
|
80
|
|
PD
|
|
1
|
27
|
|
AML
|
|
93
|
|
No
|
|
97
|
|
PD
|
|
1
|
28
|
|
AML
|
|
96
|
|
93
|
|
98
|
|
PD
|
|
1
|
29
|
|
AML
|
|
35
|
|
7
|
|
24
|
|
PD
|
|
1
|
30
|
|
AML
|
|
51
|
|
17
|
|
82
|
|
PD
|
|
1
|
31
|
|
AML
|
|
17
|
|
No
|
|
17
|
|
PD
|
|
1
|
32
|
|
AML
|
|
24
|
|
22
|
|
22
|
|
PD
|
|
2
|
34
|
|
AML
|
|
66
|
|
ND
|
|
ND
|
|
PD
|
|
1
|
35
|
|
AML
|
|
17
|
|
2
|
|
2
|
|
CRi
|
|
1
|
37
|
|
AML
|
|
25
|
|
33
|
|
ND
|
|
PD
|
|
1
|
38
|
|
AML
|
|
23
|
|
2
|
|
3
|
|
CR
|
|
5
|
39
|
|
AML
|
|
36
|
|
16
|
|
58
|
|
SD
|
|
3
|
40
|
|
AML
|
|
31
|
|
2
|
|
2
|
|
CR
|
|
3
|
41
|
|
AML
|
|
18
|
|
9
|
|
14
|
|
SD
|
|
3
|
Nadir: the lowest point, Off-TX: off
treatment, No: no reduction in blasts, DLT: dose limiting toxicity, PD: progressive disease, NE: not enough sample to
evaluate, ND: not done, CR: complete remission with incomplete hematologic recovery,
CR: complete remission, SD: stable disease
With the completion of Cohort 8, the Phase
1b trial was completed. Results from the Phase 1b clinical trial demonstrated it is safe to add prexigebersen, which appears to
yield better response rates in this AML patient population. On November 2, 2016, we announced that the first patient in the efficacy
portion of the Phase 2 trial was dosed. The full trial design includes approximately 54 evaluable patients with an interim analysis
to be performed after 19 patients are treated with the combination. The multi-site trial was conducted at leading cancer centers,
among them are Weill Medical College of Cornell University, Baylor Scott & White Health, The University of Kansas, New Jersey
Hematology Oncology Associates, West Virginia University/Mary Babb Randolph Cancer Center, and MD Anderson. On August 27, 2018,
we announced that we added a cohort of patients to be treated with a combination of prexigebersen and decitabine, another AML frontline
therapy.
Thirty-three patients were pre-screened
for the efficacy portion of the Phase 2 prexigebersen + LDAC combination study. Thirty patients were enrolled and 17 patients were
deemed evaluable. We released the initial interim data analysis of 17 patients in April 2018 and updated data in March 2019. On
March 6, 2019, we announced that the updated data showed that 11 (65%) of the 17 evaluable patients had a response, including five
(29%) who achieved CR, including one CRi and one morphologic leukemia free state, and six (35%) stable disease responses,
including two patients who had greater than a 50% reduction in bone marrow blasts. The efficacy data from the 17 evaluable patients
was very favorable compared to the reported CR, CRp and CRi rates of 7 to 13% with LDAC treatment alone. Importantly, through investigation
by the principal investigators, it was observed that 68% of patients were secondary AML patients, a difficult class to treat.
Results to date have shown prexigebersen,
with its efficacy and excellent safety profile, to be an effective combination candidate with frontline therapy. We believe the
recent approval of the frontline therapy venetoclax provides an opportunity for combining prexigebersen with the venetoclax and
decitabine combination for the treatment of de novo AML patients. On March 6, 2019, we announced a revised clinical program
intended for prexigebersen in AML, which is generally summarized below:
|
·
|
Expand the existing prexigebersen and decitabine combination Phase 2 AML cohort to include untreated high risk MDS patients.
|
|
·
|
Add a new cohort of prexigebersen and decitabine combination in refractory/relapsed patients (AML and high risk MDS).
|
|
·
|
Close the prexigebersen and LDAC combination Phase 2 AML cohort.
|
|
·
|
Determine the safety of the triple combination prexigebersen, decitabine and venetoclax in refractory/relapsed AML and high risk MDS patients.
|
|
·
|
If we observe a successful safety assessment, we intend to initiate two AML registration-directed cohorts of the triple combination prexigebersen, decitabine and venetoclax in separate patient populations, including untreated patients (AML plus high risk MDS), and refractory/relapsed patients (AML plus high risk MDS).
|
In November 2019, we announced the successful
completion of the safety testing of prexigebersen in combination with decitabine in AML and MDS patients in Stage 2 of the Phase
2 clinical study. The safety segment of Stage 2 of the Phase 2 clinical trial comprised six evaluable patients who were treated
with the combination of prexigebersen and decitabine. Although the treatment combination of prexigebersen and decitabine is not
the treatment planned for the efficacy evaluation of Stage 2 of the Phase 2 clinical trial, the efficacy profile in this safety
segment of the study was encouraging with 50% of patients having a response, including two complete responses (33%) with incomplete
hematologic recovery and one patient (17%) showing partial response. For reference, in this class of AML patients, the complete
response rate to treatment with decitabine alone is approximately 20%.
In addition to the Phase 2 trial for AML,
on December 29, 2017, we announced the initiation of our Phase 1b/2a clinical trial, which is the safety portion of the Phase 2
clinical trial, of prexigebersen for the treatment of CML in accelerated and blast phase patients. Bio-Path’s current plans
envision enrolling patients in the trial in 2020. The trial is planned to be conducted at MD Anderson as a potential salvage therapy
for accelerated and blast phase CML patients and will expand to other sites if feasible. However, recent advances in the treatment
of chronic phase CML patients with tyrosine inhibitors have limited the availability of these patients for the trial. As a result,
the continuation of this study is being evaluated based on the potential for patient availability and clinical trial site expansion.
If this study is advanced, it will evaluate two cohorts of three evaluable patients at two doses (60 mg/m2 and 90 mg/m2)
of prexigebersen in combination with dasatinib.
Development of new therapeutics for AML,
high risk MDS and CML in blast crisis can meet currently unmet needs for patients who have very few treatment options due to age,
fitness or treatment-resistance of advanced genetically unstable cells. Elderly patients unfit to receive a stem cell transplant
or induction therapy face a likelihood of relapse to a more resistant leukemia. Prexigebersen and DNAbilize®
technology offer new hope for achieving remission for fragile populations. We believe that the combination of prexigebersen with
frontline chemotherapy can provide a way to treat cancer without added toxicity so that the patient can remain under treatment
long enough to reach complete remission.
Indications for Solid Tumors (e.g., Ovary,
Breast, Colon, Thyroid, and Head and Neck Cancers)
Cancers of ovary, breast, colon, thyroid,
and head and neck are solid tumors which utilize the same Grb2 signaling pathways as leukemias. It has been proposed that prexigebersen
may have clinical efficacy in these indications due to the overlapping similarity of the cancer mechanisms.
Ovarian cancer is one of the most common
type of gynecologic malignancies, with 50% of all cases occurring in women older than 65 years. It is the fifth most frequent cause
of cancer death in women. In the U.S., 21,750 new cases and 13,940 deaths from ovarian cancer are expected in 2020. Around 70%
of patients diagnosed with ovarian cancer will have a recurrence. Recurrent ovarian cancer is treatable but rarely curable. The
average duration of survival after recurrence of ovarian cancer is less than 2 years. The 5-year survival rate for patients with
recurrent ovarian cancer following standard salvage chemotherapy treatment is less than 10%. Given the poor outcomes of treatment
for ovarian cancer, novel drug treatments are urgently needed.
Prexigebersen Development
and Treatment for ovarian cancer. There have been reports demonstrating that Grb2 is overexpressed in ovarian tumors, and that
Grb2 is essential to transducing various oncogenic signals in ovarian tumors. Thus, Grb2 may be a novel potential therapeutic target
for ovarian cancer, and prexigebersen may provide clinical benefit against ovarian cancer. Preclinical experiments were conducted
in collaboration with leaders in the field of ovarian cancer at MD Anderson. An abstract of the preclinical study was presented
in the 2018 American Association for Cancer Research (AACR) Annual Meeting. Prexigebersen effectively penetrated ovarian tumors
and decreased target Grb2 protein level in preclinical ovarian tumor models. Prexigebersen was demonstrated to reduce ovarian tumor
burden both as a monotherapy and in combination with paclitaxel, a standard of care therapy for patients with advanced ovarian
cancer. In late 2019, we filed an IND application to initiate a Phase 1 clinical trial of prexigebersen in patients with advanced
solid tumors, including ovarian and uterine, pancreatic and breast cancer. This trial is expected to commence after the IND has
been cleared by the FDA, which we currently anticipate being in 2020, at several leading cancer centers and will evaluate the safety
of prexigebersen in these patients. Assuming positive Phase 1 results, we expect that we would advance to a Phase 1b clinical trial
of prexigebersen in combination with frontline therapy in these same advanced solid tumor patients.
Indications for Triple Negative Breast
Cancer (TNBC) and Inflammatory Breast Cancer (IBC)
TNBC and IBC – Background and Common
Treatments. Approximately 15 to 20% of breast cancers fall into the category of triple-negative. TNBC tumors do not express
estrogen receptors, progesterone receptors, and low human epidermal growth factor receptor 2 (HER2). These negative indicators
mean that the growth of the cancer is not supported by the hormones estrogen and progesterone, or by the presence of HER2 receptors.
Therefore, TNBC does not respond to hormonal therapy or therapies that target HER2 receptors. In addition, TNBC tumors are very
aggressive. IBC often presents as TNBC and is a rare and very aggressive disease in which cancer cells block lymph vessels in the
skin of the breast. This type of breast cancer is called “inflammatory” because the breast often looks swollen and
red, or “inflamed.” IBC accounts for 2 to 5% of all breast cancers. IBC tumors are very aggressive and are frequently
hormone receptor negative, which means hormone therapies may not be effective. The five-year survival rate for IBC is approximately
40% versus approximately 87% for all breast cancers combined, making IBC a priority area for development of new treatments. The
current treatment regimen includes radiation, chemotherapy and surgery. A lack of targeted treatments for these types of breast
cancer has led to development of new therapeutics currently in clinical trials. Because of the aggressiveness of these cancers,
a systemic treatment is needed. Prexigebersen represents a systemic treatment that targets an important pathway for TNBC and IBC
cell growth and has potential to be integral for the treatment of these diseases.
Prexigebersen Development and Treatment
for TNBC and IBC. In July 2013, we announced that we were initiating preclinical testing of prexigebersen for TNBC and IBC.
Our plan is to develop prexigebersen as a targeted therapy against TNBC and IBC. Our treatment goals are two-pronged: the first
is to develop prexigebersen as a tumor reduction agent in combination with other approved drugs in preoperative settings for TNBC
and IBC patients, and the second is to develop prexigebersen as a drug to treat and control or eliminate cancer metastasis in TNBC
and IBC patients. Both of these treatment goals address high need situations for patients.
BP1002
BP1002, also known by its scientific
name as Liposomal Bcl-2, is our second liposome delivered antisense drug candidate. BP1002 is intended to target the
lymphoma, CLL and certain solid tumor markets. Clinical targets for BP1002 include lymphoma, breast cancer, colon cancer,
prostate cancer and leukemia. We believe that BP1002 has the potential to treat 40 to 60% of solid tumors.
Bcl-2 is a protein that is involved in regulating
apoptosis, or programmed cell death. Apoptosis is a physiologic mechanism of cell turnover by which cells actively commit suicide
in response to aberrant external signals. Over-expression of Bcl-2 prevents the induction of apoptosis in response to cellular
insults such as treatment with chemotherapeutic agents. Bcl-2 is over-expressed in more than 90% of follicular lymphoma (FL) due
to a chromosomal rearrangement and is the key factor in the initiation of this malignancy. Bcl-2 is also overexpressed in a wide
variety of solid tumors. For example, Bcl-2 over-expression has been associated with the progression of prostate cancer from hormone
dependence to hormone independence and may contribute to the relative drug resistant phenotype typically observed in hormone independent
prostate cancer.
Non-Hodgkin’s Lymphomas –Background
and Common Treatments. In the U.S., approximately 77,240 new cases and 19,940 deaths from non-Hodgkin’s lymphoma (“NHL”)
are expected in 2020. Approximately 40% of NHLs are indolent lymphomas such as FL and approximately 60% are the more aggressive
lymphomas such as DLBCL. A consensus on front-line treatment for FL has not been established as many factors are taken into account
in the treatment approach (e.g., age, stage of disease, cell surface markers). Rituximab is a treatment of choice for the majority
of lymphomas and is typically used in combination with other chemotherapy agents or as a maintenance treatment.
BP1002 – Development and Treatment
for FL, and other sub-types of lymphoma. On December 22, 2014, we announced that we initiated development of BP1002 as a treatment
for refractory/relapsed patients with FL and other sub-types of NHL (including DLBCL, MCL, CLL, SLL, PTCL, CTCL, marginal zone
lymphoma), Hodgkin lymphoma, and Waldenströms macroglobulinemia (Figure 9).
Figure 9. Non-Hodgkin’s Lymphoma
Types and Prevalence
BL = Burkitt’s lymphoma; CLL = chronic lymphocytic
leukemia; DLBCL = diffuse large B-cell lymphoma; FL = follicular lymphoma; MALT = mucosa-associated lymphoid tissue; MCL = mantle
cell lymphoma; NK = natural killer; SLL = small lymphocytic lymphoma.
Source: http://www.medscape.org/viewarticle/725127
Treatments of varying efficacy exist
for FL and DLBCL; however, due to the wide variety of subtypes of this disease, a frontline approach is lacking. Bcl-2 is
over-expressed in 85% of FL patients due to a translocation between chromosomes 18 and 14, a hallmark of the disease.
Therapies that directly and specifically block or inhibit protein synthesis of Bcl-2 could be transformative in this
indication. Previous attempts at a Bcl-2 antisense by Genta Inc. and ProNAi failed to show an improvement in remission or
overall survival rates. The Genta antisense was a phosphorothioate DNA with dose-limiting toxicity and it also did not have a
lipid delivery mechanism to aid in prevention of clearance by the liver, reducing the levels of antisense reaching diseased
cells. The ProNAi antisense was administered with an anionic, pH-tunable liposome. The drug was tolerable but its low
response rate in DLBCL patients in a Phase 2 study prompted the company to discontinue further clinical development. We
believe that BP1002 overcomes the failures of previous antisense attempts at inhibiting Bcl-2. With BP1002, more drug
substance can reach the lymphoma cells so that the cancer cells can be treated with a safe and therapeutically relevant dose.
The small molecule Bcl-2 inhibitor venetoclax was approved by the FDA in June 2018 for the treatment of patients with CLL and
SLL who have received at least one prior therapy. In May 2019, FDA approved venetoclax in combination with obinutuzumab for
the treatment of adult CLL and SLL patients with previously untreated disease. However, treatment with venetoclax can lead to
the development of drug resistance, resulting in disease recurrence. One of the proposed mechanisms of venetoclax resistance
is an acquired mutation in Bcl-2, which reduces venetoclax’s ability to bind and inhibit Bcl-2. Because BP1002 activity
is based on blocking the Bcl-2 messenger RNA and BP1002 targets Bcl-2 at a site different from venetoclax, we expect BP1002
to overcome such venetoclax resistance mechanism and be an effective approach for patients who have relapsed from venetoclax.
We believe BP1002 provides a new tool for cancer treatment for not just lymphomas, but also many cancers for which Bcl-2
expression is driving cell survival. The introduction of a new, non-toxic, and specific Bcl-2 inhibitor could be a major
advance in cancer therapeutics.
On November 21, 2019 we announced that the
FDA cleared an IND application for BP1002. An initial Phase 1 clinical trial will evaluate the ability of BP1002 to treat refractory/relapsed
lymphoma and CLL patients. The Phase 1 clinical trial is expected to be conducted at several leading cancer centers, including
MD Anderson and the Georgia Cancer Center. Initially, a total of six evaluable patients are scheduled to be treated with BP1002
monotherapy in a standard 3+3 design, with a starting dose of 20 mg/m2. The approved treatment cycle is two doses per
week over four weeks, resulting in eight doses administered over twenty-eight days.
BP1003
BP1003 is our third liposome delivered antisense
drug candidate. BP1003 is a DNAbilize® RNAi nanoparticle containing antisense DNA targeting Stat3, whose constitutive
activity is associated with a poorer survival outcome for cancer patients, including those of pancreatic adenocarcinoma (PDAC).
We hypothesized that the natural lipid delivery vesicle would have unique characteristics that would allow for penetration of the
fibrotic stroma to reach the PDAC cells. An abstract of the preclinical study was presented in the 2019 AACR Annual Meeting. Our
preclinical work demonstrated that BP1003 was successful in crossing the scar tissue matrix and delivering antisense drug into
the tumor tissue. Subsequent studies evaluating the combination of BP1003 with gemcitabine, a frontline therapy for advanced PDAC
patients, suggest that the regimen has synergistic anti-tumor effects. We expect to complete several IND enabling studies of BP1003
in 2020. If those studies are successful, we expect that we would file an IND in late 2020 for the first-in-humans Phase 1 study
of BP1003 in patients with refractory/metastatic solid tumors including pancreatic, NSCLC and colorectal cancers
Stat3 expression has
been associated with increased severity of disease and poor survival in numerous cancers including approximately 82 to 100% of
pancreatic tumors, 80% of NSCLC, 82% of prostate tumors, 77% of cervical cancers, 50% of breast cancers, 57% of colon cancers and
97% of Stage 3 and 4 ovarian cancers. We believe that a therapeutic that shuts down the Stat3 protein can have significant clinical
impact for all solid tumors that express Stat3.
Our lead indication for BP1003 is pancreatic
cancer due to the severity of this disease and the lack of effective, life-extending treatments. PDAC is a cancer of the exocrine
cells of the pancreas. In the U.S. in 2020, approximately 57,600 people will be diagnosed with PDAC, and approximately 47,050 (82%)
will die from the disease. Less than 9% of PDAC patients would survive beyond 5 years. It is projected that in the next 10 to 15
years, PDAC will become the second most lethal cancer behind lung cancer. This is due to rapid advancements that have been made
in the treatment of other cancers, as well as the rise of type 2 diabetes, a risk factor for development of PDAC.
Because most people have advanced PDAC at
the time of diagnosis, survival rates are very low. Typical survival for a metastatic or advanced patient is only six to nine months
from diagnosis. Treatment of this disease is hampered by the location of the pancreas, which is difficult to reach with conventional
therapies and the fibrotic nature of the tumors, which protects them from penetration by chemotherapeutics. We believe a novel
and unconventional therapeutic is needed to overcome these barriers to treatment.
While competition for therapeutics that
target the Stat3 pathway exist, the competition for specific Stat3 inhibitors is very small. Most compounds under development target
the pathway upstream of Stat3 or inhibit Stat1 and Stat5 in addition to Stat3 and thus induce serious toxic side effects. For example,
Ionis Pharmaceuticals, Inc. has developed an antisense DNA-based Stat3 inhibitor called IONIS-STAT3-2.5Rx. It is being evaluated
in clinical trials by AstraZeneca under the name AZD9150 for solid tumors and NHL. However, due to the toxicity of the DNA chemistry,
thrombocytopenia continues to limit the systemic delivery and efficacy of such compounds for the treatment of cancer. We believe
BP1003 avoids these complications.
The competitive landscape for clinical
trials treating advanced and metastatic pancreatic cancer patients in the U.S. is slim (Figure 10). Most candidates are
fraught with serious side effects that can make completion of therapy a challenge for this fragile patient population. We
believe that the excellent safety profile of the DNAbilize® chemistry,
the novel lipid formula that allows for penetration of the tumor stroma, and the ability to target a single protein with
precision, makes BP1003 an ideal candidate for combination with the frontline treatments to extend survival while maintaining
quality of life for the patient.
Figure 10. Active U.S. Clinical Trials
for Advanced, Metastatic Pancreatic Cancer Patients
DNAbilize®
DNAbilize® technology is
available for out-licensing. We intend to apply our drug delivery technology template to new disease-causing protein targets as
a means to develop new liposomal antisense drug candidates. A new product identification template was recently approved that defines
a process of scientific, preclinical, commercial and intellectual property evaluation of potential new drug candidates for inclusion
into our drug product development pipeline. A significant amount of capital is expected to be allocated to in-license promising
protein targets that can be developed as new liposomal antisense drug candidates. As we expand, we will look at indications where
a systemic delivery is needed and antisense can be used to slow, reverse or cure a disease, either alone or in combination with
another drug. On September 25, 2019, we announced that the USPTO issued a patent for claims related to DNAbilize®, including
its use in the treatment of cancers, autoimmune diseases and infectious diseases. This is the second patent issued to the Company.
We are interested in pursuing a wide-ranging,
proactive licensing program to include co-development of specific liposomal antisense drug candidates, sub-licensing our delivery
template for outside development of liposomal antisense drug candidates or out-licensing a partially-developed drug candidate for
final development and marketing.
Research and Development
Our research and development expense primarily
consists of third-party clinical and preclinical development activities, salaries and benefits expense and stock-based compensation.
As we advance and expand our pipeline of drug candidates, we anticipate our research and development expenses will continue to
increase in conjunction with these activities. Research and development expenses incurred for each of the years ended December
31, 2019 and December 31, 2018, were $4.6 million.
Manufacturing
We do not own or operate, and
currently have no plans to establish, any manufacturing facilities. Accordingly, we have no ability to internally manufacture
the drug candidates that we need to conduct our clinical trials. For the foreseeable future, we expect to continue to rely on
third-party manufacturers and other third parties to produce, package and store sufficient quantities of our drug candidates
and any future drug candidates for use in our clinical trials. We have entered into agreements with third-party manufacturers
for the manufacture of our drug requirements, including agreements for the manufacture of prexigebersen for use in our Phase
2 clinical trials in AML and CML, a development agreement for BP1002 and an agreement for the manufacture of BP1002 for use
in our planned Phase 1 clinical trial. However, we may face various risks and uncertainties in connection with our reliance
on third-party manufacturers, as discussed in “Item 1A. Risk Factors” of this Annual Report on Form 10-K under
the heading “Risks Related to Manufacturing Our Drug Candidates.” If the FDA or other regulatory agencies approve
any of our drug candidates for commercial sale, we expect that we would continue to rely, at least initially, on third-party
manufacturers to produce commercial quantities of such approved drug candidates. However, we may in the future elect to
manufacture certain of our drug candidates in our own manufacturing facilities. If we do so, we will require substantial
additional funds and need to recruit qualified personnel in order to build or lease and operate any manufacturing
facilities.
Sales and Marketing
We currently do not have any commercial
drug products or an organization for the sales and marketing of pharmaceutical products. In order to successfully commercialize
any drug candidates that may be approved in the future by the FDA or comparable foreign regulatory authorities, we must build our
sales and marketing capabilities or make arrangements with third parties to perform these services. For certain drug candidates
in selected indications where we believe that an approved product could be commercialized by a specialty sales force that calls
on a limited but focused group of physicians, we may commercialize these products ourselves. However, in therapeutic indications
that require a large sales force selling to a large and diverse prescribing population, we may enter into arrangements with other
companies for commercialization. If we are unable to establish adequate sales, marketing and distribution capabilities, whether
independently or with third parties, we may not be able to generate product revenue and may not become profitable.
Intellectual Property
Patents, trademarks, trade secrets, technology,
know-how and other proprietary rights are important to our business. Our success depends in large part on our ability to obtain
and maintain patent protection both in the U.S. and in other countries for our drug candidates and on our ability to operate without
infringing the proprietary rights of third parties. Our ability to protect our drug candidates from unauthorized or infringing
use by third parties depends in substantial part on our ability to obtain and maintain valid and enforceable patents.
We rely on trade secrets to protect our
technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult
to protect. In order to protect our proprietary technology and processes, we also rely in part on confidentiality and intellectual
property assignment agreements with our corporate partners, employees, consultants, outside scientific collaborators, sponsored
researchers and other advisors. These agreements may not effectively prevent disclosure of confidential information nor result
in the effective assignment to us of intellectual property, and may not provide an adequate remedy in the event of unauthorized
disclosure of confidential information or other breaches of the agreements. In addition, others may independently discover our
trade secrets and proprietary information, and in such case we could not assert any trade secret rights against such party. To
the extent that we enter into out-license and in-license agreements in the future, our success will depend in part on the ability
of our licensors to obtain, maintain and enforce patent protection for their intellectual property, in particular, any patents
to which we secure exclusive rights.
We have expanded our intellectual property
portfolio by filing patent applications that are applicable to our technology and business strategy. We announced on September
25, 2019 that the USPTO issued a patent for claims related to DNAbilize®, including its use in the treatment of
cancers, autoimmune diseases and infectious diseases. Our patent portfolio currently includes two issued patents (No. 9,744,187
and No. 10,335,428) in the U.S. for claims related to DNAbilize®, as well as four additional pending patents for
composition and methods of use of specific drug targets. There can be no assurances that patents related to our existing patent
applications or applications we may file in the future will be issued or that any issued patents will provide meaningful protection
for our drug candidates, which could materially and adversely affect our competitive business position, business prospects and
financial condition.
In the U.S., individual patents extend for
varying periods of time depending on the date of filing of the patent application or the date of patent issuance. Generally, patents
issued in the U.S. are effective for 20 years from the earliest non-provisional filing date. In addition, a patent term can sometimes
be extended to recapture a portion of the term effectively lost during the FDA’s regulatory review period; however, the restoration
period cannot be longer than five years, and the total patent term cannot exceed 14 years following FDA approval.
Employees
We currently employ nine full-time
employees. We also have contractual relationships with additional professionals who perform certain medical officer,
regulatory and drug development duties. We believe relations with such professionals and employees are good.
Competition
We are engaged in segments of the pharmaceutical
and biotechnology industry that are highly competitive and characterized by rapid and significant technological change. Many large
pharmaceutical and biotechnology companies, academic and research institutions, governmental agencies and other public and private
research organizations are pursuing the development of novel drugs that target AML, MDS, CML, lymphoma, ovarian and breast cancer,
solid tumors, and other cancers generally. We face, and expect to continue to face, intense and increasing competition as new products
enter the market and advanced technologies become available. Our competitors may discover, develop or commercialize products or
other novel technologies that are more effective, safer or less costly than our drug candidates. Our competitors may also obtain
FDA or other regulatory approval for their products more rapidly than we may obtain approval for our drug candidates.
Many of our competitors have:
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significantly greater capital, technical and human resources than we have and may be better equipped to discover, develop, manufacture and commercialize drug candidates;
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more experience in drug discovery, development and commercialization, obtaining regulatory approvals and manufacturing and marketing pharmaceutical products;
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drug candidates that have been approved or are in late-stage clinical development; and/or
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collaboration arrangements in our target markets with leading companies and research institutions.
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Mergers and acquisitions in the pharmaceutical
and biotechnology industry may result in even more resources being concentrated among a smaller number of our competitors. Smaller
or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large
and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management
personnel, establishing clinical trial sites and patent registration for clinical trials, and acquiring technologies complementary
to, or necessary for, our drug candidates and programs.
Competitive products and technological developments
may render our drug candidates noncompetitive or obsolete before we can recover the expenses of developing and commercializing
our drug candidates. Furthermore, the development of new treatment methods and/or the widespread adoption or increased utilization
of any vaccine for the diseases we are targeting could render our drug candidates noncompetitive, obsolete or uneconomical. If
we successfully develop and obtain approval for any of our drug candidates, we will face competition based on the safety and effectiveness
of our drug candidates, the timing of their entry into the market in relation to competitive products in development, the availability
and cost of supply, marketing and sales capabilities, reimbursement coverage, price, patent position and other factors. If we successfully
develop drug candidates but those drug candidates do not achieve and maintain market acceptance, our business will not be successful.
Government Regulation
Overview
Government authorities in the U.S., at the
federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing,
manufacture, labeling, record keeping, packaging, promotion, storage, advertising, distribution, marketing and export and import
of products such as those we are developing. The nature and extent to which such regulations will apply to us will vary depending
on the nature of any drug candidates we develop. We anticipate that all of our drug candidates will require regulatory approval
by governmental agencies prior to commercialization. This process and subsequent compliance with appropriate federal, state, local,
and foreign statutes and regulations will require the expenditure of substantial time and financial resources.
U.S. Drug Development Process
In the U.S., drugs are subject to
rigorous regulation by the FDA under the Federal Food, Drug and Cosmetic Act (the “FDCA”), and implementing
regulations, as well as other federal and state statutes. Failure by us or our collaborators to comply with the applicable
U.S. requirements at any time during the drug candidate development process, approval process or after approval, may subject
us to administrative or judicial sanctions. These sanctions could include the FDA’s refusal to approve pending
applications, license suspension or revocation, withdrawal of an approval, a clinical hold, warning letters, product recalls,
product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal
prosecution. Any agency or judicial enforcement action could have a material adverse effect on us.
The process required by the FDA before a
new drug may be marketed in the U.S. generally involves the following:
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completion of preclinical laboratory tests, animal studies and formulation studies according to FDA’s Good Laboratory Practice regulations;
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submission of an IND, which must become effective before human clinical trials may begin and which must include approval by an institutional review board at each clinical site before the trials are initiated;
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performance of adequate and well-controlled human clinical trials according to FDA’s Good Clinical Practice (“GCP”) regulations to establish the safety and efficacy of the proposed drug for its intended use;
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submission to, and acceptance by, the FDA of a new drug application (an “NDA”);
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completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice (“cGMP”) regulations to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and
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FDA review and approval of the NDA.
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Pre-Approval Studies
Once a drug candidate is identified for
development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluations of drug candidate chemistry,
toxicity and formulation, as well as animal studies. Prior to beginning human clinical trials, an IND sponsor must submit an IND
to the FDA, which includes submitting the results of the preclinical tests, together with manufacturing information and analytical
data. Some preclinical or nonclinical testing may continue even after the IND is submitted. The IND automatically becomes effective
30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions about the conduct
of the trial. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
Even after the 30-day time period, the FDA may impose a clinical hold on ongoing clinical trials. If the FDA imposes a clinical
hold, clinical trials cannot commence or recommence without FDA authorization and then only under terms authorized by the FDA.
The IND application process may be extremely costly and substantially delay the development of our drug candidates for certain
indications. Moreover, positive results of preclinical tests will not necessarily indicate positive results in subsequent clinical
trials in humans. The FDA may require additional animal testing after an initial IND application is approved and prior to Phase
3 trials.
Clinical trials involve the administration
of the IND to volunteers or patients under the supervision of one or more qualified investigators in accordance with FDA’s
GCP regulations. Clinical trials must be conducted under protocols detailing the objectives of the trial and the safety and effectiveness
criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND. Further, an institutional review board
at each institution participating in the clinical trial must review and approve each protocol before any clinical trial commences
at that institution. All research subjects must provide informed consent, and informed consent information must be submitted to
the institutional review board for approval prior to initiation of the trial. Progress reports detailing the results of the clinical
trials must be submitted at least annually to the FDA and more frequently if adverse events or other certain types of other changes
occur.
Human clinical trials are typically conducted
in three sequential phases that may overlap or be combined:
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Phase 1: The drug candidate is initially introduced into human subjects or patients with the disease and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion. In the case of some drug candidates for severe or life-threatening diseases, the initial human testing is often conducted in patients.
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Phase 2: Involves studies in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the drug candidate for specific targeted diseases and to determine dosage tolerance and optimal dosage.
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Phase 3: Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population, typically at geographically dispersed clinical study sites. These studies are intended to establish the overall risk-benefit ratio of the drug candidate and provide, if appropriate, an adequate basis for product labeling.
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Phase 1, Phase 2 and Phase 3 testing may
not be completed successfully within any specified period, if at all. The FDA or an institutional review board or the sponsor may
suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed
to an unacceptable health risk.
Concurrent with clinical trials, companies
usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics
of the drug candidate and finalize a process for manufacturing the product in accordance with cGMP requirements. The manufacturing
process must be capable of consistently producing quality batches of the drug candidate and, among other requirements, the manufacturer
must develop methods for testing the identity, strength, quality and purity of the final drug. Additionally, appropriate packaging
must be selected and tested and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable
deterioration over its shelf life.
Our business model relies on developing
drug candidates through Phase 2a and either entering into out-license agreements with pharmaceutical licensee partners who will
be responsible for post-Phase 2 clinical testing and working with the FDA on necessary regulatory submissions resulting in approval
of new drug applications for commercialization, or internally developing a drug candidate through commercialization.
Approval Process
After successful completion of the required
clinical trials, an NDA is generally submitted, which is required before marketing of the product may begin in the U.S. The NDA
must include the results of drug development, preclinical studies and clinical studies, together with other detailed information,
including information on the chemistry, manufacture and composition of the drug. The FDA has 60 days from its receipt of the NDA
to review the application to ensure that it is sufficiently complete for substantive review before accepting it for filing and
may request additional information rather than accept an NDA for filing. If additional information is requested, the NDA must be
resubmitted. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is
accepted for filing, the FDA begins an in-depth substantive review. The submission of an NDA is also subject to the payment of
user fees, which may be waived under certain limited circumstances.
The FDA reviews an NDA that has been accepted
for filing to determine, among other things, whether a product is safe and effective for its intended use. The approval process
for an NDA is lengthy and the FDA may refuse to approve an NDA if the applicable regulatory criteria are not satisfied or may require
additional clinical or other data and information. Even if such data and information is submitted, the FDA may ultimately decide
that the NDA does not satisfy the criteria for approval. The FDA may also refer applications for drug candidates which present
difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts,
for review, evaluation and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation
of an advisory committee. Before approving an NDA, the FDA will also inspect the facility or facilities where the product is manufactured
to determine whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality,
purity and stability.
There are various programs that are intended
to expedite the development and review of drug candidates, and/or provide for approval on the basis of surrogate endpoints, including
Fast Track, breakthrough therapy, priority review and accelerated approval. Even if a drug candidate qualifies for one or more
of these programs, the FDA may later decide that the drug candidate no longer meets the conditions for qualification or that the
time period for FDA review or approval will not be shortened. Generally, drug candidates that may be eligible for these programs
are those for serious or life-threatening conditions, those with the potential to address unmet medical needs or those that offer
meaningful benefits over existing treatments.
Fast Track is a process designed to
facilitate the development, and expedite the review of drug candidates to treat serious diseases and fill an unmet medical
need. Breakthrough therapy requires preliminary clinical evidence that demonstrates the drug candidate may have substantial
improvement on at least one clinically significant endpoint over available therapy. A breakthrough therapy designation
conveys all of the Fast Track program features, as well as more intensive FDA guidance on an efficient drug development
program. Priority review is designed to give drug candidates that offer major advances in treatment or provide a treatment
where no adequate therapy exists an initial review within six months as compared to a standard review time of 10 months.
Although Fast Track, breakthrough therapy and priority review do not affect the standards for approval, the FDA will attempt
to facilitate early and frequent meetings with a sponsor of a Fast Track designated drug candidate and expedite review of the
application for a drug candidate designated for priority review. Accelerated approval provides an earlier approval of drugs
to treat serious diseases and that fill an unmet medical need based on a surrogate endpoint, which is a laboratory
measurement or physical sign used as an indirect or substitute measurement representing a clinically meaningful outcome. As a
condition of approval, the FDA may require that a sponsor of a product receiving accelerated approval perform post-marketing
clinical trials.
If the FDA evaluations of the application
and the manufacturing facilities are favorable, the FDA may issue an approval letter or an “approvable” letter. An
approvable letter will usually contain a number of conditions that must be met in order to secure final approval of the NDA and
authorization of commercial marketing of the drug for certain indications. An approval letter authorizes commercial marketing of
the drug with specific prescribing information for a specific indication. As a condition of NDA approval, the FDA may require post-approval
testing, including Phase 4 trials, and surveillance to monitor the drug’s safety or efficacy and may impose other conditions,
including labeling or distribution restrictions which can materially impact the potential market and profitability of the drug.
Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems occur after
the product reaches the market. The FDA may also refuse to approve the NDA or issue a “not approvable” letter outlining
the deficiencies in the submission and often requiring additional testing or information.
To date, we have not submitted a marketing
application for any drug candidate to the FDA or any foreign regulatory agency, and none of our drug candidates have been approved
for commercialization in any country. We have limited experience in conducting and managing the clinical trials necessary to obtain
regulatory approvals, including approval by the FDA. The time required to complete clinical trials and for the FDA’s review
processes is uncertain and typically takes many years. Our analysis of data obtained from preclinical and clinical activities is
subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval.
We may also encounter unanticipated delays or increased costs due to government regulation from future legislation or administrative
action or changes in FDA policy during the period of product development, clinical trials, and FDA regulatory review.
Timing to Approval
We estimate that it generally takes 10 to
15 years or possibly longer to discover, develop and bring to market a new pharmaceutical product in the U.S. as outlined below:
Phase:
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Objective:
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Estimated
Duration:
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Discovery
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Lead identification and target validation.
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2 to 4 years
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Preclinical
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Initial toxicology for preliminary identification of risks for humans; gather early pharmacokinetic data.
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1 to 2 years
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Phase 1
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Test for safety, dosage tolerance, absorption, metabolism, distribution and excretion.
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1 to 2 years
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Phase 2
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Identify possible adverse effects and safety risks; preliminarily evaluate the efficacy of the drug candidate for specific targeted diseases; determine dosage tolerance and optimal dosage.
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2 to 4 years
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Phase 3
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Further evaluate dosage, clinical efficacy and safety in an expanded patient population, typically at geographically dispersed clinical study sites; establish the overall risk-benefit ratio of the drug candidate and provide, if appropriate, an adequate basis for product labeling.
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2 to 4 years
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FDA approval
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Approval by the FDA to sell and market the drug for the approved indication.
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6 months to 2 years
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A drug candidate may fail at any point during
this process. Animal and other non-clinical studies typically are conducted during each phase of human clinical trials.
Our business model is primarily focused
on the preclinical to Phase 2a interval. This greatly reduces the time frame for us from in-license of a new, preclinical stage
drug candidate to be developed to out-licensing to a pharmaceutical partner.
Post-Approval Studies
Once an approval is granted, the FDA may
withdraw the approval if compliance with regulatory standards is not maintained or if problems occur after the product reaches
the market. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes
and additional labeling claims, are subject to further FDA review and approval. In addition, the FDA may require testing and surveillance
programs to monitor the effect of approved products that have been commercialized, and the FDA has the power to prevent or limit
further marketing of a product based on the results of these post-marketing programs.
Any drug products manufactured or distributed
by us pursuant to FDA approvals are subject to continuing regulation by the FDA, including, among other things:
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record-keeping requirements;
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reporting of adverse experiences with the drug;
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providing the FDA with updated safety and efficacy information;
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drug sampling and distribution requirements;
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notifying the FDA and gaining its approval of specified manufacturing or labeling changes;
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complying with certain electronic records and signature requirements; and
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complying with FDA promotion and advertising requirements.
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Drug manufacturers and their subcontractors
are required to register their establishments with the FDA and some state agencies, and are subject to periodic unannounced inspections
by the FDA and some state agencies for compliance with cGMP and other laws.
We rely, and expect to continue to rely,
on third parties for the production of clinical quantities of our drug candidates. Future FDA and state inspections may identify
compliance issues at the facilities of our contract manufacturers that may disrupt production or distribution, or require substantial
resources to correct.
From time to time, legislation is drafted,
introduced and passed in Congress that could significantly change the statutory provisions governing the approval, manufacturing
and marketing of products regulated by the FDA. In addition, FDA regulations and guidance are often revised or reinterpreted by
the agency in ways that may significantly affect our business and our drug candidates. It is impossible to predict whether legislative
changes will be enacted, or FDA regulations, guidance or interpretations changed or what the impact of such changes, if any, may
be.
Foreign Regulations
Whether or not we obtain FDA approval for
a drug candidate, we must obtain the requisite approvals from regulatory authorities in non-U.S. countries prior to the commencement
of clinical trials or marketing of our products in those countries. Certain countries outside of the U.S. have a process that requires
the submission of a clinical trial application (“CTA”), much like an IND, prior to the commencement of human clinical
trials. In the E.U., for example, a CTA must be submitted to the competent national health authority and to independent ethics
committees in each country in which a company intends to conduct clinical trials. Once the CTA is approved in accordance with a
country’s requirements, clinical trial development may proceed in that country.
The requirements and process governing the
conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country, but typically takes several
years and requires significant resources. In all cases, the clinical trials must be conducted in accordance with GCP and other
applicable regulatory requirements.
To obtain regulatory approval of an investigational
drug under E.U. regulatory systems, we must submit a marketing authorization application. This application is similar to the NDA
in the U.S., with the exception of, among other things, country-specific document requirements. Drugs can be authorized in the
E.U. by using (i) the centralized authorization procedure, (ii) the mutual recognition procedure, (iii) the decentralized procedure
or (iv) national authorization procedures.
The EMA implemented the centralized procedure
for the approval of human drugs to facilitate marketing authorizations that are valid throughout the E.U. This procedure results
in a single marketing authorization granted by the European Commission that is valid across the E.U., as well as in Iceland, Liechtenstein
and Norway. The centralized procedure is compulsory for certain human drugs including those that are: (i) derived from biotechnology
processes, such as genetic engineering, or (ii) contain a new active substance indicated for the treatment of certain diseases.
Reimbursement
Sales of pharmaceutical products depend
in significant part on the availability of third-party reimbursement, which is time consuming and expensive. Reimbursement may
not be available or sufficient to allow us to sell our future products, if any, on a competitive and profitable basis.
The passage of the Medicare Prescription
Drug and Modernization Act of 2003 (the “MMA”) imposed requirements for the distribution and pricing of prescription
drugs for Medicare beneficiaries, which may affect the marketing of our future products, if any. The MMA also introduced a reimbursement
methodology, part of which went into effect in 2004, and a prescription drug plan, which went into effect on January 1, 2006. While
the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment
limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction
in payments from non-governmental payors.
In addition, in some foreign countries,
the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary
widely from country to country. For example, the E.U. provides options for its member states to restrict the range of medicinal
products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products
for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct
or indirect controls on the profitability of the company placing the medicinal product on the market.
There have been and we expect that there
will continue to be frequent federal and state proposals to impose governmental pricing controls or cost containment measures for
prescription drugs. While we cannot predict whether such legislative or regulatory proposals will be adopted, the adoption of such
proposals could have a material adverse effect on our business, financial condition and profitability. For example, the Patient
Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, contains
provisions that may reduce the profitability of drugs, including, for example, increased rebates for drugs sold to Medicaid programs,
extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and
annual fees based on pharmaceutical companies’ share of sales to federal health care programs. Even if favorable coverage
and reimbursement status is attained for one or more of our drug candidates for which we receive regulatory approval, less favorable
coverage policies and reimbursement rates may be implemented in the future.
Other Regulations
Pursuant to the Drug Price Competition and
Patent Term Restoration Act of 1984, known as the Hatch-Waxman Act, under certain conditions a sponsor may be granted marketing
exclusivity for a period of five years following FDA approval. During this period, third parties would not be permitted to obtain
FDA approval for a similar or identical drug through an Abbreviated NDA, which is the application form typically used by manufacturers
seeking approval of a generic drug. The Hatch-Waxman Act also permits a patent extension term of up to five years as compensation
for patent term lost during product development and the FDA regulatory review process. However, patent extension cannot extend
the remaining term of a patent beyond a total of 14 years. The patent term restoration period is generally one-half the time between
the effective date of an IND and the submission date of an NDA, plus time of active FDA review between the submission date of an
NDA and the approval of that application. Only one patent applicable to an approved drug is eligible for the extension and it must
be applied for prior to expiration of the patent and within 60 days of the approval of the NDA.
Prexigebersen previously received orphan
drug designations for the treatment of CML in the U.S. Orphan designation is available to drugs intended to treat, diagnose or
prevent a rare disease or condition that affects fewer than 200,000 people in the U.S. at the time of application for orphan designation.
Orphan drug designation must be requested before submitting an application for marketing authorization. Orphan designation qualifies
the sponsor of the product for a tax credit and marketing incentives. The first sponsor to receive FDA marketing approval for a
drug with an orphan designation is entitled to a seven-year exclusive marketing period in the U.S. for that product for that indication
and, typically, a waiver of the prescription drug user fee for its marketing application. However, a drug that the FDA considers
to be clinically superior to, or different from, the approved orphan drug, even though for the same indication, may also obtain
approval in the U.S. during the seven-year exclusive marketing period. Orphan drug exclusive marketing rights may also be lost
if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure
sufficient quantity of the drug.
In October 2016, prexigebersen also
received orphan drug designation for AML in the E.U. from the EMA. To receive orphan drug designation from the EMA, a therapy
must be intended for the treatment of a life-threatening or chronically debilitating rare condition with a prevalence of less
than five in 10,000 in the E.U. Orphan drug designation provides incentives designed to facilitate development, including fee
reductions for protocol assistance, scientific advice and importantly, may provide up to ten years of market exclusivity in
the E.U. following product approval.
There is no guarantee that any of our other
drug candidates will receive orphan drug designation or that, even if such drug candidate is granted such status, the drug candidate’s
clinical development and regulatory approval process will not be delayed or will be successful.
Pharmaceutical companies are also subject
to various federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false
claims laws. Anti-kickback laws make it illegal for any entity or person to solicit, offer, receive, or pay any remuneration in
exchange for, or to induce, the referral of business, including the purchase or prescription of a particular drug. False claims
laws prohibit anyone from knowingly and willingly presenting, or causing to be presented, for payment to third party payors, including
Medicare and Medicaid, claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided
as claimed, or claims for medically unnecessary items or services.
Company History and Available Information
The Company was incorporated in May 2000
as a Utah corporation. In February 2008, Bio-Path Subsidiary completed a reverse merger with the Company, which at the time was
traded over the counter and had no current operations. The prior name of the Company was changed to Bio-Path Holdings, Inc. and
the directors and officers of Bio-Path Subsidiary became the directors and officers of Bio-Path Holdings, Inc. On March 10, 2014,
our common stock ceased trading on the OTCQX and commenced trading on the Nasdaq Capital Market under the ticker symbol “BPTH.”
Effective December 31, 2014, we changed our state of incorporation from Utah to Delaware through a statutory conversion pursuant
to the Utah Revised Business Corporation Act and the Delaware General Corporation Law.
On February 8, 2018, we effected a reverse
stock split of our outstanding shares of common stock at a ratio of 1-for-10, and our common stock began trading on the split-adjusted
basis on the Nasdaq Capital Market at the commencement of trading on February 9, 2018. In addition, on January 17, 2019, we effected
a reverse stock split of our outstanding shares of common stock at a ratio of 1-for-20, and our common stock began trading on the
split-adjusted basis on the Nasdaq Capital Market at the commencement of trading on January 18, 2019. All common stock share and
per share amounts in this Annual Report on Form 10-K have been adjusted to give effect to both the 1-for-10 reverse stock split
and the 1-for-20 reverse stock split, retrospectively.
Our principal executive offices are located
at 4710 Bellaire Boulevard, Suite 210, Bellaire, Texas 77401, and our telephone number is (832) 742-1357. Our Internet address
is www.biopathholdings.com. We are not including the information contained in our website as part of, or incorporating it
by reference into, this Annual Report on Form 10-K. We make available free of charge through our website our Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such materials with,
or furnish it to, the SEC. We also make available on our website our Corporate Governance Guidelines; the charters for our Audit
Committee, Nominating/Corporate Governance Committee and Compensation Committee; our Employee Code of Business Conduct and Ethics,
which applies to all of our employees, including our executive officers; and our Code of Business Conduct and Ethics for Members
of the Board of Directors. All such information is also available in print and free of charge to any of our stockholders who request
it. In addition, we intend to disclose on our website any amendments to, or waivers from, our codes of business conduct and ethics
that are required to be publicly disclosed pursuant to rules of the SEC.
ITEM 1A. RISK FACTORS
Risks Related to Our Business
We are a clinical stage biotechnology company with no
significant revenue. We have incurred significant operating losses since our inception, and we expect to incur losses for the foreseeable
future and may never achieve profitability.
We have incurred significant operating losses
since our inception. As of December 31, 2019, we had an accumulated deficit of $56.3 million. To date, we have not generated any
revenue from the sale of our drug candidates and we do not expect to generate any revenue from sales of our drug candidates for
the foreseeable future. We expect to continue to incur significant operating losses and we anticipate that our losses may increase
substantially as we expand our drug development programs and commercialization efforts.
To achieve profitability, we must
successfully develop and obtain regulatory approval for one or more of our drug candidates and effectively commercialize any
drug candidates we develop. Even if we succeed in developing and commercializing one or more of our drug candidates, we may
not be able to generate sufficient revenue and we may never be able to achieve or sustain profitability.
We will continue to require substantial additional capital
for the foreseeable future. If we are unable to raise additional capital when needed, we may be forced to delay, reduce or eliminate
our drug development programs and commercialization efforts.
We expect to continue to incur significant
operating expenses in connection with our ongoing activities, including conducting clinical trials, manufacturing and seeking regulatory
approval of our drug candidates, prexigebersen, BP1002 and BP1003. In addition, if we obtain regulatory approval of one or more
of our drug candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing
and distribution.
As of December 31, 2019, we had $20.4 million
in cash on hand, compared to $1.0 million as of December 31, 2018. Our ongoing future capital requirements will depend on numerous
factors, including:
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the rate of progress, results and costs of completion of ongoing clinical trials of our drug candidates;
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the rate of progress, results and costs of completion of the ongoing preclinical testing of prexigebersen, BP1002 and BP1003;
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the size, scope, rate of progress, results and costs of completion of any potential future clinical trials and preclinical tests of our drug candidates that we may initiate;
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the costs to obtain adequate supply of the compounds necessary for our drug candidates;
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the costs of obtaining regulatory approval of our drug candidates;
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the scope, prioritization and number of drug development programs we pursue;
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the costs for preparing, filing, prosecuting, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
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the extent to which we acquire or in-license other products and technologies and the costs to develop those products and technologies;
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the costs of future commercializing activities, including product sales, marketing, manufacturing and distribution, of any of our drug candidates or other products for which marketing approval has been obtained;
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our ability to establish strategic collaborations and licensing or other arrangements on terms favorable to us; and
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competing technological and market developments.
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Any additional fundraising efforts may divert
our management from their day to day activities, which may adversely affect our ability to develop and commercialize our drug candidates.
Our ability to raise additional funds will depend, in part, on the success of our product development activities and other factors
related to financial, economic and market conditions, many of which are beyond our control. There can be no assurance that we will
be able to raise additional capital when needed or on terms that are favorable to us, if at all. If adequate funds are not available
on a timely basis, we may be forced to:
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delay, reduce the scope of or eliminate one or more of our drug development programs;
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relinquish, license or otherwise dispose of rights to technologies, drug candidates or products that we would otherwise seek to develop or commercialize ourselves at an earlier stage or on terms that are less favorable than might otherwise be available; or
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liquidate and dissolve the Company.
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If our operating plans change, we may require
additional capital sooner than planned. Such additional financing may not be available when needed or on terms favorable to us.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe
we have sufficient funds for our current and future operating plan.
The pharmaceutical and biotechnology industry is highly
competitive. If we are unable to compete effectively, our drug candidates may be rendered noncompetitive or obsolete.
We are engaged in segments of the
pharmaceutical and biotechnology industry that are highly competitive and characterized by rapid and significant
technological change. Many large pharmaceutical and biotechnology companies, academic and research institutions, governmental
agencies and other public and private research organizations are pursuing the development of novel drugs that target AML,
CML, ALL, MDS, lymphoma, ovarian, breast cancer, solid tumors and other cancers generally. We face, and expect to continue to
face, intense and increasing competition as new products enter the market and advanced technologies become available. Our
competitors may discover, develop or commercialize products or other novel technologies that are more effective, safer or
less costly than our drug candidates. Our competitors may also obtain FDA or other regulatory approval for their products
more rapidly than we may obtain approval for our drug candidates.
Many of our competitors have:
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significantly greater capital, technical and human resources than we have and may be better equipped to discover, develop, manufacture and commercialize drug candidates;
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more experience in drug discovery, development and commercialization, obtaining regulatory approvals and manufacturing and marketing pharmaceutical products;
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drug candidates that have been approved or are in late-stage clinical development; and/or
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collaboration arrangements in our target markets with leading companies and research institutions.
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Mergers and acquisitions in the pharmaceutical
and biotechnology industry may result in even more resources being concentrated among a smaller number of our competitors. Smaller
or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large
and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management
personnel, establishing clinical trial sites and patent registration for clinical trials, and acquiring technologies complementary
to, or necessary for, our drug candidates and programs.
Competitive products and technological developments
may render our drug candidates noncompetitive or obsolete before we can recover the expenses of developing and commercializing
our drug candidates. Furthermore, the development of new treatment methods and/or the widespread adoption or increased utilization
of any vaccine for the diseases we are targeting could render our drug candidates noncompetitive, obsolete or uneconomical. If
we successfully develop and obtain approval for any of our drug candidates, we will face competition based on the safety and effectiveness
of our drug candidates, the timing of their entry into the market in relation to competitive products in development, the availability
and cost of supply, marketing and sales capabilities, reimbursement coverage, price, patent position and other factors. If we successfully
develop drug candidates but those drug candidates do not achieve and maintain market acceptance, our business will not be successful.
Future collaboration arrangements to leverage our capabilities
may not be successful.
As part of our business strategy, we may
enter into collaborative arrangements for the development and commercialization of our drug candidates. For our collaboration efforts
to be successful, we must identify partners whose competencies complement ours. We must also successfully enter into collaboration
agreements with them on terms attractive to us and integrate and coordinate their resources and capabilities with our own. We may
be unsuccessful in entering into collaboration agreements with acceptable partners or negotiating favorable terms in these agreements.
In addition, we may face a disadvantage in seeking to enter into or negotiating collaborations with potential partners because
other potential collaborators may have greater management and financial resources than we do.
If we do enter into collaborative arrangements,
the success of these collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Furthermore,
we may face risks and uncertainties in connection with collaborative arrangements, including:
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inability to integrate the resources or capabilities of collaborators;
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collaborators may prove difficult to work with or less skilled than we originally expected;
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disputes may arise with respect to the ownership of rights to technology developed with collaborators;
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disagreements with collaborators could delay or terminate the research, development or commercialization of products or result in litigation or arbitration;
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difficulty enforcing our arrangements if one of our collaborators fails to perform;
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termination of our collaboration arrangements by collaborators, which could make it difficult for us to attract new collaborators or adversely affect the perception of us in the business or financial communities;
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collaborators may have considerable discretion in electing whether to pursue the development of any additional drug candidates and may pursue technologies or products either on their own or in collaboration with our competitors that are similar to or competitive with our technologies; and
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collaborators may change the focus of their development and commercialization efforts.
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If we are unsuccessful in our collaborative
efforts, our ability to develop and market drug candidates could be severely limited.
If we are unable to attract and retain key management,
scientific personnel and advisors, we may not successfully develop our drug candidates or achieve our other business objectives.
Our success depends on the availability
and contributions of members of our senior management team, scientific team and other key personnel. The loss of services of any
of these individuals could delay, reduce or prevent our drug development and other business objectives. Furthermore, recruiting
and retaining qualified scientific personnel to perform drug development work will be critical to our success. We face intense
competition for qualified individuals from numerous pharmaceutical and biotechnology companies, universities, governmental entities
and other public and private research institutions. We may be unable to attract and retain these individuals, and our failure to
do so could materially adversely affect our business and financial condition.
Our employees, agents, consultants and commercial partners
may engage in misconduct or other improper activities, including non-compliance with applicable regulatory standards and requirements.
We are exposed to the risk of fraud or other
misconduct by our employees, principal investigators, consultants, advisors and commercial partners. Misconduct by these persons
could include intentional failures to comply with the regulations of the FDA and non-U.S. regulators, comply with healthcare fraud
and abuse laws and regulations in the U.S. and abroad, report financial information or data accurately or disclose unauthorized
activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive
laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations
may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs
and other business arrangements. Such misconduct could involve the improper use of information obtained in the course of clinical
studies, which could result in regulatory sanctions and cause serious harm to our business, financial condition and reputation.
We currently have codes of business conduct and ethics applicable to all of our employees, but it is not always possible to identify
and deter employee misconduct, and our codes of business conduct and ethics and the other precautions we take to detect and prevent
improper activities may not be effective in controlling unknown or unmanaged risks or losses, or in protecting us from governmental
investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions
are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could result
in the imposition of significant fines or other sanctions, which could materially adversely affect our business and financial condition.
Whether or not we are successful in defending against such actions or investigations, we could incur substantial costs, including
legal fees, and divert the attention of management in defending ourselves against any of these claims or investigations.
We expect to expand our operations, including clinical
trials, in the future and may face challenges in managing our growth, which may result in disruptions to our operations.
We expect to expand our operations, including
clinical trials for our drug candidates, over time. To successfully manage future growth, we may need to implement and improve
our managerial, operational and financial resources, and may need to expand our facilities and recruit and train additional qualified
personnel. Our expected growth may also require significant financial resources, which may not be available when needed or on terms
favorable to us. Our senior management may be required to devote substantial attention to managing growth activities and may be
unable to effectively manage the expansion of our operations due to our limited resources, which may result in disruptions to our
business operations and could harm our business and financial condition.
If we acquire or license technologies, resources or drug
candidates, we will incur a variety of costs and may never realize benefits from the transaction.
If appropriate opportunities become available,
we may license or acquire technologies, resources, drugs or drug candidates. We may never realize the anticipated benefits of such
a transaction. In particular, due to the risks inherent in drug development, we may not successfully develop or obtain marketing
approval for the drug candidates we acquire. Future licenses or acquisitions could result in potentially dilutive issuances of
our equity securities, the incurrence of debt, the creation of contingent liabilities, material impairment expenses related to
goodwill and impairment or amortization expenses related to other intangible assets, which could harm our business and financial
condition.
Our business has a substantial risk of product liability
claims. If we are unable to obtain or maintain appropriate levels of insurance, a product liability claim could adversely affect
our business.
Our business exposes us to significant potential
product liability risks that are inherent in the development, manufacturing and sales and marketing of human therapeutic products.
Although we do not currently commercialize any products, claims could be made against us based on the use of our drug candidates
in clinical trials. Product liability claims could delay or prevent completion of our clinical development programs. We
currently have product liability insurance, but we may not be able to maintain such insurance on acceptable terms. However, even
if we maintain or obtain other product liability insurance, our insurance may not provide adequate coverage against potential liabilities.
As a result, we may be unable to obtain or maintain insurance coverage at a reasonable cost to protect against losses that could
harm our business and financial condition. If any claims are brought against us, and we are not successful in defending ourselves,
those claims could result in damage awards against us, which could materially adversely affect our business and financial condition.
Whether or not we are successful in defending against such claims, we could incur substantial costs, including legal fees, and
divert the attention of management in defending ourselves against any of these claims.
We are increasingly dependent on information technology
systems to operate our business and a cyber-attack or other breach of our systems, or those of third parties on whom we may rely,
could subject us to liability or interrupt the operation of our business.
We are increasingly dependent on information
technology systems to operate our business. A breakdown, invasion, corruption, destruction or interruption of critical information
technology systems by employees, others with authorized access to our systems or unauthorized persons could negatively impact operations.
In the ordinary course of business, we collect, store and transmit confidential information and it is critical that we do so in
a secure manner to maintain the confidentiality and integrity of such information. Additionally, we outsource certain elements
of our information technology systems to third parties. As a result of this outsourcing, our third party vendors may or could have
access to our confidential information making such systems vulnerable. Data breaches of our information technology systems, or
those of our third party vendors, may pose a risk that sensitive data may be exposed to unauthorized persons or to the public.
For example, the loss of clinical trial data from completed or ongoing clinical trials or preclinical studies could result in delays
in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. While we believe that
we have taken appropriate security measures to protect our data and information technology systems, and have been informed by our
third party vendors that they have as well, there can be no assurance that our efforts will prevent breakdowns or breaches in our
systems, or those of our third party vendors, that could materially adversely affect our business and financial condition.
Our ability to use our net operating loss carryforwards
and certain other tax attributes may be limited.
Under Section 382 of the Internal Revenue
Code of 1986, as amended (the “Code”), if a corporation experiences an “ownership change,” generally defined
as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to utilize
its pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset its
post-change taxable income or taxes may be limited. Our prior and potential future equity offerings and other changes in our stock
ownership, some of which are outside of our control, may have resulted or could in the future result in an ownership change under
Section 382 of the Code. If a limitation were to apply, utilization of a portion of our domestic net operating loss and tax credit
carryforwards could be limited in future periods and a portion of the carryforwards could expire before being available to reduce
future income tax liabilities.
On December 22, 2017, the U.S. government
enacted legislation referred to as the Tax Cuts and Jobs Act (the “Tax Act”). Under the Tax Act, net operating losses
generated prior to 2018 will continue to be governed by the net operating loss tax rules as they existed prior to the adoption
of the new Tax Act, which means that generally they will expire 20 years after they were generated if not used prior thereto. Accordingly,
our net operating losses could expire unused and be unavailable to offset future income tax liabilities, if any. Under the Tax
Act, net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such
net operating losses is limited to 80% of current year taxable income. We continue to examine the impact that this provision of
the Tax Act, among other provisions, may have on our business.
Provisions of our charter documents or Delaware law could
delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders, and could make
it more difficult to change management.
Provisions of our certificate of incorporation
and bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders might otherwise
consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. In addition,
these provisions may frustrate or prevent any attempt by our stockholders to replace or remove our current management by making
it more difficult to replace or remove our board of directors. These provisions include:
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limitations on our stockholders’ ability to call special meetings of stockholders;
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an advance notice requirement for stockholder proposals and nominations for members of our Board;
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the authority of our Board to determine the number of director seats on our Board;
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the authority of our Board to fill vacancies occurring on the Board;
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the authority of our Board to issue preferred stock with such terms as our Board may determine.
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In addition, because we are governed by
Delaware law, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a publicly
held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person who, together
with its affiliates, owns or within the last three years has owned 15% of our voting stock, 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.
We face competition from entities that have developed
or may develop therapeutic candidates for our target disease indications, including companies developing novel treatments and technology
platforms based on modalities and technology that may be similar to ours. If these companies develop technologies, including delivery
technologies, or therapeutic candidates more rapidly than we do, or their technologies are more effective, our ability to develop
and successfully commercialize therapeutic candidates may be adversely affected.
While we believe that our DNAbilize®
technology is the only delivery method of its type, the area of cancer treatment research is rapidly progressing, with many stakeholders,
including for-profit and nonprofit institutions, conducting preclinical and clinical studies of various types of therapeutic products
for the same or similar indications for use as our drug candidates. We expect that such work by others will continue, which may
make it difficult for us to effectively recruit and enroll a satisfactory number of participants in clinical trials.
Our success will partially depend on our
ability to develop therapeutics that are safer and more effective than competing therapeutics. Our commercial opportunity and success
will be reduced or eliminated if competing therapeutics are safer, more effective, or less expensive than the therapeutics we develop,
or if any are granted exclusive marketing approval by the FDA that precludes the marketing of our drug candidates for a period
of time. If our lead drug candidates are approved for the indications we are currently pursuing, they will compete with a range
of therapeutic treatments that are either in development or currently marketed. For example, the FDA has recently approved a number
of drugs indicated for treatment of AML, some of which may have target patient populations similar to that of our drug candidates.
Many of our competitors may have significantly
greater financial, technical, manufacturing, marketing, sales and supply resources or experience than we do. If we successfully
obtain FDA approval for any drug candidate, we will face competition based on many different factors, including the safety and
effectiveness of our products, the ease with which our products can be administered, the timing and scope of regulatory approvals
(if we are able to obtain any) for these drug candidates, the availability and cost of manufacturing, marketing and sales capabilities,
price, reimbursement coverage and patent position. Competing therapeutics could present superior treatment alternatives, including
by being more effective, safer, less expensive or marketed and sold more effectively than any therapeutics we may develop. Competitive
alternatives may make any drugs that we develop obsolete or noncompetitive before we recover the expense of developing and commercializing
our drug candidates, if we are able to obtain regulatory approval to commercialize such drug candidates.
We may be subject, directly or indirectly, to certain
U.S. federal and state healthcare laws and regulations, such as anti-kickback, false claims laws, physician payment transparency
laws or similar fraud and abuse laws, which could expose us to potential criminal sanctions, civil penalties, contractual damages,
reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and others
will play a primary role in the recommendation, ordering and utilization of any products for which we obtain regulatory approval.
If we obtain FDA approval for any of our products and begin commercializing those products in the U.S., our operations may be subject
to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal
False Claims Act, and physician payment transparency laws and regulations. These laws may impact, among other things, our potential
sales, marketing and education programs and our relationships with physicians, patients, and other persons or entities in a position
to refer, use, or recommend our future products. The laws that may affect our ability to operate could include, but are not limited
to:
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the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs;
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federal civil and criminal false claims laws and civil monetary penalty laws, including the False Claims Act, which may be pursued through civil whistleblower or qui tam actions, impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval from Medicare, Medicaid or other third-party payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
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federal criminal statutes under the Health Insurance Portability and Accountability Act of 1996, which prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;
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the federal transparency requirements under The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (known collectively as the “Affordable Care Act”), including the provision commonly referred to as the Physician Payments Sunshine Act, which requires manufacturers of drugs, biologics, devices and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the Centers for Medicare and Medicaid Services information related to payments or other transfers of value made to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and
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State law equivalents of each of the healthcare laws described above, some of which may be broader in scope and apply regardless of the type of payor, such as state anti-kickback statutes and false claims acts, and state pricing, marketing, and transparency statutes that require us to adopt compliance programs, report pricing information, or disclose payments or other transfers of value to physicians or other covered recipients.
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Because of the breadth of these laws and
the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could
be subject to challenge under one or more of such laws once our products are commercialized. In addition, healthcare reform legislation
has strengthened these laws and additional laws or requirements may be implemented in the future. For example, the Affordable Care
Act, among other things, amended the intent requirement of the federal Anti-Kickback and criminal healthcare fraud statutes. As
a result of such amendment, a person or entity no longer needs to have actual knowledge of these statutes or specific intent to
violate them in order to have committed a violation. Moreover, the Affordable Care Act provides that the government may assert
that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or
fraudulent claim for purposes of the False Claims Act.
Efforts to ensure that our business arrangements
comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities
will conclude that our existing or future business practices do not comply with current or future statutes, regulations or case
law involving applicable fraud and abuse or other healthcare laws and regulations. Any such actions instituted against us could
have a significant adverse impact on our business, including the imposition of civil, criminal and administrative penalties, damages,
disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs,
contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which
could adversely affect our ability to operate our business and our results of operations. Even if we are successful in defending
against such actions, we may nonetheless be subject to substantial costs, reputational harm and adverse effects on our ability
to operate our business.
If any of our employees, agents, or the
physicians or other providers or entities with whom we expect to do business are found to have violated applicable laws, we may
be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs, or,
if we are not subject to such actions, we may suffer reputational harm for conducting business with persons or entities found,
or accused of being, in violation of such laws. Any such events could adversely affect our ability to operate our business and
our results of operations.
Inadequate funding for the FDA, the SEC and other
government agencies, or a work slowdown or stoppage at those agencies as part of a broader federal government shutdown, could
hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being
developed or commercialized in a timely manner, or otherwise prevent those agencies from performing normal business
functions on which the operation of our business may rely, which could negatively impact our business.
The ability of the FDA to review and approve
new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain
key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency
have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which
our operations may rely, including those that fund research and development activities, is subject to the political process, which
is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies
may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which could adversely
affect our business. For example, over the last several years, including December 22, 2018 to January 25, 2019, the U.S. government
has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough employees and stop
critical activities. If a prolonged government shutdown or a series of shutdowns occurs, it could significantly affect the ability
of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Further, future government shutdowns could impact our ability to gain access to the public markets and obtain necessary capital
in order to properly capitalize and continue our operations, which could have a material adverse effect on our our business and
financial condition.
Risks Related to the Development of
Our Drug Candidates
We must complete extensive clinical trials to demonstrate
the safety and efficacy of our drug candidates. If we are unable to demonstrate the safety and efficacy of our drug candidates,
we will not be successful.
To date, none of our drug candidates have
been approved for sale in the U.S. or any foreign country. While antisense therapeutics have been in development for over 20 years,
only five antisense drugs have been successfully developed to date. Further, the development of liposomal antisense therapeutics,
which comprise our drug therapeutics technology, has faced many challenges and generally remains unproven in the treatment of cancers.
The success of our business depends primarily on our ability to develop and commercialize our drug candidates successfully. Our
drug candidates must satisfy rigorous standards of safety and efficacy before they can be approved for sale. To satisfy these standards,
we must engage in expensive and lengthy testing of our drug candidates.
On February
9, 2015, we announced that we began enrollment into the combination therapy Phase 1b clinical trial for prexigebersen in patients
with AML. The combination therapy Phase 1b clinical trial consisted of two dosing cohorts of prexigebersen (60 mg/m2
and 90 mg/m2) to test the safety profile of treating AML patients with prexigebersen in combination with LDAC.
Patients ineligible for intensive induction therapy are currently treated only with LDAC. We also announced the completion of
the Phase 1b trial. Results from the Phase 1b clinical trial demonstrated it is safe to add prexigebersen, which appears to yield
better response rates in this AML patient population. On October 9, 2015, we announced the completion of Cohort 7, the first dosing
cohort of the Phase 1b clinical trial, and on March 3, 2016, we announced the completion of Cohort 8, the second dosing cohort
of the Phase 1b clinical trial. On June 6, 2016, we announced data from the safety segment of the Phase 2 combination therapy
of prexigebersen and LDAC showed no dose limiting toxicities. On November 2, 2016, we announced that the first patient in the
efficacy portion of the Phase 2 trial for AML was dosed. We released the initial interim data analysis of Stage 1 of the Phase
2 AML study in April 2018, and the updated data in March 2019. In August 2018, we announced the addition of a prexigebersen and
decitabine combination cohort to the Phase 2 AML study. On March 6, 2019, we announced a revised clinical program intended for
prexigebersen in AML. Part of this revised program includes the intended inclusion of high risk MDS patients in the prexigebersen
and decitabine combination cohort and the closure of the prexigebersen and LDAC combination cohort in the ongoing Phase 2 AML
study. On December 29, 2017, we announced the initiation of our Phase 1b/2a clinical study of prexigebersen for the treatment
of CML in accelerated blast phase patients. In addition, prexigebersen is in preclinical studies for solid tumors, including breast
cancer and ovarian cancer. On November 26, 2019, we announced successful completion of the safety testing of prexigebersen in
combination with decitabine in acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS) patients in Stage 2 of the Phase
2 clinical study.
We may not be able to obtain authority
from the FDA or other equivalent foreign regulatory agencies to move on to further efficacy segments of the Phase 2 or Phase
3 clinical trials or commence and complete any other clinical trials for any of our drug candidates. Positive results in
preclinical studies of a drug candidate may not be predictive of similar results in human clinical trials, and promising
results from early clinical trials of a drug candidate may not be replicated in later clinical trials. A number of companies
in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even
after achieving promising results in early-stage development. Accordingly, the results from the preclinical tests or
clinical trials for our drug candidates may not be predictive of the results we may obtain in later stage trials. The failure
of clinical trials to demonstrate safety and efficacy of one or more of our drug candidates will have a material adverse
effect on our business and financial condition.
Delays in the commencement of clinical trials of our drug
candidates could result in increased costs to us and delay our ability to generate revenues.
Our drug candidates will require continued
extensive clinical trials prior to the submission of a regulatory application for commercial sales. Because of the nature of clinical
trials, we do not know whether future planned clinical trials will begin on time, if at all. Delays in the commencement of clinical
trials could significantly increase our drug development costs and delay any commercialization of our drug candidates. In addition,
many of the factors that may cause, or lead to, a delay in the commencement of clinical trials may also ultimately lead to denial
of regulatory approval of a drug candidate.
The commencement of clinical trials can
be delayed for a variety of reasons, including delays in:
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demonstrating sufficient safety and efficacy in past clinical trials to obtain regulatory approval to commence a further clinical trial;
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convincing the FDA that we have selected valid endpoints for use in proposed clinical trials;
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reaching agreements on acceptable terms with prospective contract manufacturers for manufacturing sufficient quantities of our drug candidates; and
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obtaining institutional review board approval to conduct a clinical trial at a prospective site.
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In addition, the commencement of clinical
trials may be delayed due to insufficient patient enrollment, which is a function of many factors, including the size of the patient
population, the nature of the protocol, the proximity of patients to clinical sites, the availability of effective treatments for
the relevant disease and the eligibility criteria for the clinical trial.
Delays in the completion of, or the termination of, clinical
trials of our drug candidates could result in increased costs to us and could delay or prevent us from generating revenues.
Once a clinical trial has begun, it may
be delayed, suspended or terminated by us or the FDA or other regulatory authorities due to a number of factors, including:
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regulators or institutional review boards may not authorize us to commence or conduct a clinical trial at a prospective trial site;
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our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical testing or clinical trials or we may abandon projects that we expect may not be promising;
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we might have to suspend or terminate our clinical trials if the participating patients are being exposed to unacceptable health risks;
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regulators or institutional review boards may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements;
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the cost of our clinical trials may be greater than we currently anticipate and we may lack adequate funding to continue the clinical trial;
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the timing of our clinical trials may be longer than we currently anticipate;
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our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner (including delays or inability to manufacture or obtain sufficient quantities of materials for use in clinical trials);
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inadequacy of or changes in our manufacturing process or compound formulation;
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slower than expected rates of patient recruitment and enrollment or lower than expected patient retention rates;
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the effects of our drug candidates may not be the desired effects or may include undesirable side effects or our drug candidates may have other unexpected characteristics;
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changes in applicable regulatory policies and regulations;
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delays in identifying and reaching agreement on acceptable terms with prospective clinical trial sites;
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uncertainty regarding proper dosing;
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failure of our clinical research organizations to comply with all regulatory and contractual requirements or otherwise fail to perform their services in a timely or acceptable manner;
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scheduling conflicts with participating clinicians and clinical institutions;
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failure to construct appropriate clinical trial protocols;
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insufficient data to support regulatory approval;
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inability or unwillingness of medical investigators to follow our clinical protocols; and
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the timing of discussions and meetings with the FDA or other regulatory authorities regarding the scope or design of our clinical trials.
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Many of these factors that may lead to a
delay, suspension or termination of clinical trials of our drug candidates may also ultimately lead to denial of regulatory approval
of our drug candidates.
From time to time, we may publicly announce
our expected timing of completing certain milestones relating to various scientific, clinical, regulatory, development and other
objectives related to our business. For example, these milestones may include the commencement or completion of scientific studies
or clinical trials or the submission or approval of regulatory filings. Our estimates for completion of these milestones are based
on a variety of assumptions, some of which may be out of our control.
If we experience delays in the completion
of, or termination of, clinical trials of any drug candidates in the future, or if we do not meet our milestones within the estimated
timeframes that we have publicly announced, our business, financial condition and the commercial prospects for our drug candidates
could be materially adversely affected, and our ability to generate product revenues could be delayed or eliminated. In addition,
our stock price could decline.
If we are unable to obtain U.S. and/or foreign regulatory
approval, we will be unable to commercialize our drug candidates.
Our drug candidates are subject to extensive
governmental regulations relating to, among other things, research, testing, development, manufacturing, safety, efficacy, record
keeping, labeling, marketing and distribution of drugs. Rigorous preclinical testing and clinical trials and an extensive regulatory
approval process are required in the U.S. and in many foreign jurisdictions prior to the commercial sale of our drug candidates.
Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays.
It is possible that none of the drug candidates we are developing will obtain marketing approval. In connection with the clinical
trials for our drug candidates, we face risks that:
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the drug candidate may not prove to be efficacious;
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the drug candidate may not prove to be safe;
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the drug candidate may not be readily co-administered or combined with other drugs or drug candidates;
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the results may not confirm the positive results from earlier preclinical studies or clinical trials;
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the results may not meet the level of statistical significance required by the FDA or other regulatory agencies; and
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the FDA or other regulatory agencies may require us to carry out additional studies.
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We have limited experience in conducting
and managing later stage clinical trials necessary to obtain regulatory approvals, including approval by the FDA. However, this
risk would be mitigated in the event the Company is successful entering into a co-development agreement with a pharma partner for
late stage clinical development. The time required to complete clinical trials and for the FDA and other countries’ regulatory
review processes is uncertain and typically takes many years. Our analysis of data obtained from preclinical and clinical trials
is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval.
We may also encounter unanticipated delays or increased costs due to government regulation from future legislation or administrative
action or changes in FDA policy during the period of product development, clinical trials, and FDA regulatory review.
Any regulatory approval to market a product
may be subject to limitations on the indicated uses for which we may market the product and affect reimbursement by third-party
payors. These limitations may limit the size of the market for the product. We may also become subject to numerous foreign regulatory
requirements governing the conduct of clinical trials, manufacturing and marketing authorization, pricing and third-party reimbursement.
The foreign regulatory approval process includes all of the risks associated with FDA approval described above as well as risks
attributable to the satisfaction of foreign regulations. Approval by the FDA does not ensure approval by regulatory authorities
outside the U.S. Foreign jurisdictions may have different approval procedures than those required by the FDA and may impose additional
testing requirements for our drug candidates.
In addition to regulations in the U.S., we may be subject
to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and
distribution of our products, if approved.
Whether or not we obtain FDA approval for
a drug candidate, we must obtain the requisite approvals from regulatory authorities in non-U.S. countries prior to the commencement
of clinical trials or marketing of our products in those countries. Certain countries outside of the U.S. have a process that requires
the submission of a clinical trial application, much like an IND, prior to the commencement of human clinical trials. In the E.U.,
for example, a CTA must be submitted to the competent national health authority and to independent ethics committees in each country
in which a company intends to conduct clinical trials. Once the CTA is approved in accordance with a country’s requirements,
clinical trial development may proceed in that country.
The requirements and process governing the
conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, the clinical
trials must be conducted in accordance with GCP and other applicable regulatory requirements.
To obtain regulatory approval of an investigational
drug under E.U. regulatory systems, we must submit a marketing authorization application. This application is similar to the NDA
in the U.S., with the exception of, among other things, country-specific document requirements. Drugs can be authorized in the
E.U. by using (i) the centralized authorization procedure, (ii) the mutual recognition procedure, (iii) the decentralized procedure
or (iv) national authorization procedures.
The EMA implemented the centralized procedure
for the approval of human drugs to facilitate marketing authorizations that are valid throughout the E.U. This procedure results
in a single marketing authorization granted by the European Commission that is valid across the E.U., as well as in Iceland, Liechtenstein
and Norway. The centralized procedure is compulsory for certain human drugs including those that are: (i) derived from biotechnology
processes, such as genetic engineering, or (ii) contain a new active substance indicated for the treatment of certain diseases.
Changes in existing laws and regulations affecting the
healthcare industry could increase our costs and otherwise adversely affect our business.
Our research and development activities,
preclinical studies and clinical trials, and the manufacturing, marketing and labeling of any products we may develop, are subject
to extensive regulation by the FDA and other regulatory authorities in the U.S. and other countries. Changes in existing federal,
state and foreign laws and agency regulations may be established that could prevent or delay regulatory approval of our drug candidates
or materially increase our costs, including:
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changes in the FDA and foreign regulatory processes for new therapeutics that may delay or prevent the approval of any of our drug candidates;
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new laws, regulations, or judicial decisions related to healthcare availability or the payment for healthcare products and services, including prescription drugs, that would make it more difficult for us to market and sell products once they are approved by the FDA or foreign regulatory agencies;
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changes in FDA and foreign regulations that may require additional safety monitoring prior to or after the introduction of new products to market, which could materially increase our costs of doing business; and
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changes in FDA and foreign current cGMP that would make it more difficult for us to manufacture our drug candidates in accordance with cGMP.
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Delays in obtaining or preventing our obtaining
regulatory approval of our drug candidates could materially adversely affect our ability to commercialize any of our drug candidates
and our ability to receive product revenues or to receive milestone payments or royalties from any product rights we might license
to others.
We rely on third parties to conduct clinical trials for
our drug candidates, and their failure to timely and properly perform their obligations may result in costs and delays that prevent
us from obtaining regulatory approval or successfully commercializing our drug candidates.
We rely on independent contractors,
including clinical research organizations, in certain areas that are particularly relevant to our research and drug
development plans, such as for data management for the conduct of clinical trials. The competition for these relationships is
intense, and we may not be able to maintain our relationships with them on acceptable terms. Independent contractors
generally may terminate their engagements at any time, subject to notice. As a result, we can control their activities only
within certain limits, and they will devote only a certain amount of their time conducting research on and trials of our drug
candidates and assisting in developing them. If they do not successfully carry out their duties under their agreements with
us, fail to inform us if these trials fail to comply with clinical trial protocols or fail to meet expected deadlines, our
clinical trials may need to be extended, delayed or terminated. We may not be able to enter into replacement arrangements
without undue delays or excessive expenditures. If there are delays in testing or regulatory approvals as a result of the
failure to perform by our independent contractors or other outside parties, our drug candidate development costs will
increase and we may not be able to attain regulatory approval for or successfully commercialize our drug candidates.
In addition, we have no control over the
financial health of our independent contractors. Several of our independent contractors are in possession of valuable and sensitive
information relating to the safety and efficacy of our drug candidates, and several others provide services to a significant percentage
of the patients enrolled in our clinical trials in which such independent contractors participate. Should one or more of these
independent contractors become insolvent, or otherwise are not able to continue to provide services to us, the clinical trial in
which such contractor participates could become significantly delayed and we may be materially adversely affected as a result of
the delays and additional expenses associated with such event.
We may not be able to obtain or maintain orphan drug exclusivity
for our product candidates.
Prexigebersen has received orphan drug designations
for the treatment of CML in the U.S. Orphan designation is available to drugs intended to treat, diagnose or prevent a rare disease
or condition that affects fewer than 200,000 people in the U.S. at the time of application for orphan designation. Orphan drug
designation must be requested before submitting an application for marketing authorization. Orphan designation qualifies the sponsor
of the product for a tax credit and marketing incentives. The first sponsor to receive FDA marketing approval for a drug with an
orphan designation is entitled to a seven-year exclusive marketing period in the U.S. for that product for that indication and,
typically, a waiver of the prescription drug user fee for its marketing application. However, a drug that the FDA considers to
be clinically superior to, or different from, the approved orphan drug, even though for the same indication, may also obtain approval
in the U.S. during the seven-year exclusive marketing period. Orphan drug exclusive marketing rights may also be lost if the FDA
later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient
quantity of the drug.
In October 2016, prexigebersen also received
orphan drug designation for AML in the E.U. from the EMA. To receive orphan drug designation from the EMA, a therapy must be intended
for the treatment of a life-threatening or chronically debilitating rare condition with a prevalence of less than five in 10,000
in the E.U. Orphan drug designation provides incentives designed to facilitate development, including fee reductions for protocol
assistance, scientific advice and importantly, may provide up to ten years of market exclusivity in the E.U. following product
approval.
There is no guarantee that any of our other
drug candidates will receive orphan drug designation or that, even if such drug candidate is granted such status, the drug candidate’s
clinical development and regulatory approval process will not be delayed or will be successful.
Risks Related to Manufacturing Our Drug
Candidates
We rely on third parties for manufacturing of our clinical
drug supplies; our dependence on these manufacturers may impair the development of our drug candidates.
We have no ability to internally manufacture
the drug candidates that we need to conduct our clinical trials. For the foreseeable future, we expect to continue to rely on third-party
manufacturers and other third parties to produce, package and store sufficient quantities of our drug candidates and any future
drug candidates for use in our clinical trials. We have entered into agreements with our third-party manufacturer for the manufacture
of our drug requirements, including an agreement for the manufacture of prexigebersen for use in our Phase 2 clinical trial for
AML and CML and third-party manufacture of our drug requirements agreement for BP1002. To date, we have made steady progress with
our current third-party manufacturers, overcoming challenges associated with scaling up manufacturing to develop their capabilities
to supply us with our necessary quantities of drug supplies for our clinical trials. However, we may face various risks and uncertainties
in connection with our reliance on third-party manufacturers, including:
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reliance on third-party manufactures for regulatory compliance and quality assurance;
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the possibility of breach of the manufacturing agreement by the third-party manufacturer because of factors beyond our control;
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the possibility of termination or nonrenewal of our manufacturing agreement by the third-party manufacturer at a time that is costly or inconvenient for us;
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the potential that third-party manufacturers will develop know-how owned by such third-party manufacturer in connection with the production of our drug candidates that is necessary for the manufacture of our drug candidates; and
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reliance on third-party manufacturers to assist us in preventing inadvertent disclosure or theft of our proprietary knowledge.
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Our drug candidates are complicated and
expensive to manufacture. If our third-party manufacturers fail to deliver our drug candidates for clinical use on a timely basis,
with sufficient quality, and at commercially reasonable prices, we may be required to delay or suspend clinical trials or otherwise
discontinue development of our drug candidates. While we may be able to identify replacement third-party manufacturers or develop
our own manufacturing capabilities for these drug candidates, this process would likely cause a delay in the availability of our
drug candidates and an increase in costs. In addition, third-party manufacturers may have a limited number of facilities in which
our drug candidates can be manufactured, and any interruption of the operation of those facilities due to events such as equipment
malfunction or failure or damage to the facility by natural disasters could result in the cancellation of shipments, loss of product
in the manufacturing process or a shortfall in available drug candidates.
We may in the future elect to manufacture
certain of our drug candidates in our own manufacturing facilities. If we do so, we will require substantial additional funds and
need to recruit qualified personnel in order to build or lease and operate any manufacturing facilities.
There are underlying risks associated with the manufacture
of our drug candidates, which have never been manufactured in large scale. Furthermore, we anticipate continued reliance on third-party
manufacturers if we are successful in obtaining marketing approval from the FDA or other regulatory agencies for any of our drug
candidates.
To date, our drug candidates have been manufactured
in relatively small quantities for preclinical testing and clinical trials by third-party manufacturers, and have never been manufactured
in large scale. Additionally, as in the development of any new compound, there are underlying risks associated with their manufacture.
These risks include, but are not limited to, cost, process scale-up, process reproducibility, construction of a suitable process
plant, timely availability of raw materials, as well as regulatory issues associated with the manufacture of an active pharmaceutical
agent. Any of these risks may prevent us from successfully developing our drug candidates. Our failure, or the failure of our third-party
manufacturers to achieve and maintain these high manufacturing standards, including the incidence of manufacturing errors and reliable
product packaging for diverse environmental conditions, could result in patient injury or death, product recalls or withdrawals,
delays or failures in product testing or delivery, cost overruns or other problems that could materially adversely affect our business
and financial condition.
If the FDA or other regulatory agencies
approve any of our drug candidates for commercial sale, we expect that we would continue to rely, at least initially, on third-party
manufacturers to produce commercial quantities of such approved drug candidates. These manufacturers may not be able to successfully
increase the manufacturing capacity for any of our approved drug candidates in a timely or economic manner, or at all. Significant
scale-up of manufacturing may require additional validation studies, which the FDA or other regulatory authorities must review
and approve. If our third-party manufacturers are unable to successfully increase the manufacturing capacity for a drug 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.
Identification of previously unknown problems with respect
to a drug candidate, manufacturer or facility may result in restrictions on the drug candidate, manufacturer or facility.
The FDA stringently applies regulatory standards
for the manufacturing of our drug candidates. Identification of previously unknown problems with respect to a drug candidate, manufacturer
or facility may result in restrictions on the drug candidate, manufacturer or facility, including warning letters, suspensions
of regulatory approvals, operating restrictions, delays in obtaining new product approvals, withdrawal of the product from the
market, product recalls, fines, injunctions and criminal prosecution. Any of the foregoing could have a material adverse effect
on our business and financial condition.
We may experience delays in the development of our drug
candidates if the third-party manufacturers of our drug candidates cannot meet FDA requirements relating to current Good Manufacturing
Practices.
Our third-party manufacturers are
required to produce our drug candidates under FDA cGMP in order to meet acceptable standards for our preclinical testing and
clinical trials. If such standards change, the ability of third-party manufacturers to produce our drug candidates on the
schedule we require for our preclinical tests and clinical trials may be affected. In addition, third-party manufacturers may
not perform their obligations under their agreements with us or may discontinue their business before the time required by us
to gain approval for or commercialize our drug candidates. Any difficulties or delays in the manufacturing and supply of our
drug candidates could increase our costs or cause us to lose revenue or postpone or cancel clinical trials.
The FDA also requires that we demonstrate
structural and functional comparability of a drug candidate produced by different third-party manufacturers. Because we may use
multiple sources to manufacture our drug candidates, we may need to conduct comparability studies to assess whether manufacturing
changes have affected the safety, identity, purity or potency of any drug candidate compared to the drug candidate produced by
another manufacturer. If we are unable to demonstrate comparability, the FDA could require us to conduct additional clinical trials,
which would be expensive and significantly delay commercialization of our drug candidates.
Risks Related to Commercialization
If we are unable to establish sales and marketing capabilities
or enter into agreements with third parties to market and sell our drug candidates, we may not generate product revenue.
We have no commercial products, and we do
not currently have an organization for the sales and marketing of pharmaceutical products. In order to successfully commercialize
any drug candidates that may be approved in the future by the FDA or comparable foreign regulatory authorities, we must build our
sales and marketing capabilities or make arrangements with third parties to perform these services. For certain drug candidates
in selected indications where we believe that an approved product could be commercialized by a specialty sales force that calls
on a limited but focused group of physicians, we may commercialize these products ourselves. However, in therapeutic indications
that require a large sales force selling to a large and diverse prescribing population, we may enter into arrangements with other
companies for commercialization. If we are unable to establish adequate sales, marketing and distribution capabilities, whether
independently or with third parties, we may not be able to generate product revenue and may not become profitable.
If our future drugs do not achieve market acceptance,
we may be unable to generate significant revenue, if any.
Even if our drug candidates obtain regulatory
approval, they may not gain market acceptance among physicians, health care payors, patients and the medical community. Factors
that we believe could materially affect market acceptance of our drug candidates include:
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the timing of market introduction of competitive drugs;
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the demonstrated clinical safety and efficacy of our drug candidates compared to other drugs and other drug candidates;
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the suitability of our drug candidates to be co-administered or combined with other drugs or drug candidates;
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the durability of our drug candidates in their ability to prevent the emergence of drug-resistant viral mutants;
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the convenience and ease of administration of our drug candidates;
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the existence, prevalence and severity of adverse side effects;
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other potential advantages of alternative treatment methods;
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the effectiveness of marketing and distribution support;
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the cost-effectiveness of our drug candidates; and
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the availability of reimbursement from managed care plans, the government and other third-party payors.
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If our approved drug candidates fail to
achieve market acceptance, we would not be able to generate significant revenue. In addition, even if our approved drug candidates
achieve market acceptance, we may not be able to maintain that market acceptance over time if:
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new products or technologies are introduced that are more favorably received than our products, are more cost effective or render our products obsolete;
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unforeseen complications arise with respect to the use of our products; or
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sufficient third-party insurance coverage or reimbursement does not remain available.
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If third-party payors do not adequately reimburse patients
for any of our drug candidates that are approved for marketing, they might not be purchased or used, and our revenues and profits
will not develop or increase.
Our revenues and profits will depend
significantly upon the availability of adequate reimbursement for the use of any approved drug candidates from governmental
and other third-party payors, both in the U.S. and in foreign markets. Reimbursement by a third party may depend upon a
number of factors, including the third-party payor’s determination that use of an approved drug candidate is:
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a covered benefit under its health plan;
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safe, effective and medically necessary;
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appropriate for the specific patient;
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cost effective; and
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neither experimental nor investigational.
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The regulations that govern marketing approvals,
pricing and reimbursement for new therapeutic and diagnostic products vary widely from country to country. Some countries require
approval of the sale price of a drug candidate before it can be marketed. In many countries, the pricing review period begins after
marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject
to continuing governmental control even after initial approval is granted. As a result, we might obtain regulatory approval for
a drug candidate in a particular country, but then be subject to price regulations that delay our commercial launch of the approved
drug and negatively impact the revenues we are able to generate from the sale of the approved drug in that country. Adverse pricing
limitations may hinder our ability to recoup our investment in one or more drug candidates, even if our drug candidates obtain
regulatory approval.
Obtaining reimbursement approval for an
approved drug from each third-party and government payor is a time-consuming and costly process that could require us to provide
supporting scientific, clinical and cost-effectiveness data for the use of any approved drug candidates to each payor. We may not
be able to provide data sufficient to gain acceptance with respect to reimbursement. There also exists substantial uncertainty
concerning third-party reimbursement for the use of any approved drug incorporating new technology, and even if determined eligible,
coverage may be more limited than the purposes for which the drug is approved by the FDA. Moreover, eligibility for coverage does
not imply that any approved drug will be reimbursed in all cases or at a rate that allows us to make a profit or even cover our
costs. Interim payments for new products, if applicable, may also be insufficient to cover our costs and may not be made permanent.
Reimbursement rates may vary according to the use of the approved drugs and the clinical setting in which it is used, may be based
on payments allowed for lower-cost products or combinations of products that are already reimbursed, may be incorporated into existing
payments for other products or services, and may reflect budgetary constraints and/or imperfections in Medicare or Medicaid data
used to calculate these rates. Net prices for products may be reduced by mandatory discounts or rebates required by government
health care programs or by any future relaxation of laws that restrict imports of certain medical products from countries where
they may be sold at lower prices than in the U.S.
In the U.S., at both the federal and state
levels, the government regularly proposes legislation to reform health care and its cost, and such proposals have received increasing
political attention. While health care reform may increase the number of patients who have insurance coverage for the use of any
approved drug, it may also include changes that adversely affect reimbursement for approved drugs. In addition, there has been,
and we expect that there will continue to be, federal and state proposals to constrain expenditures for medical products and services,
which may affect payments for any of our drug candidates that obtain approval. The Centers for Medicare and Medicaid Services frequently
change product descriptors, coverage policies, product and service codes, payment methodologies and reimbursement values. Third-party
payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates and may have sufficient
market power to demand significant price reductions. As a result of actions by these third-party payors, the health care industry
is experiencing a trend toward containing or reducing costs through various means, including lowering reimbursement rates, limiting
therapeutic class coverage and negotiating reduced payment schedules with service providers for drug products.
Our inability to promptly obtain coverage
and profitable reimbursement rates from government-funded and private payors for any of our drug candidates that obtain approval
could have a material adverse effect on our business and financial condition.
Risks Related to Intellectual Property
If our patent position does not adequately protect our
drug candidates, others could compete against us more directly, which would harm our business.
We announced on September 25, 2019
that the USPTO issued a patent for claims related to DNAbilize®, including its use in the treatment of
cancers, autoimmune diseases and infectious diseases. Our patent portfolio currently includes two issued patents (No.
9,744,187 and No. 10,335,428) in the U.S. for claims related to DNAbilize®, as well as four additional pending
patents for composition and methods of use of specific drug targets. Our success depends in large part on our ability to
obtain and maintain patent protection both in the U.S. and in other countries for our drug candidates. Our ability to protect
our drug candidates from unauthorized or infringing use by third parties depends in substantial part on our ability to obtain
and maintain valid and enforceable patents. Due to evolving legal standards relating to the patentability, validity and
enforceability of patents covering pharmaceutical inventions and the scope of claims made under these patents, our ability to
maintain, obtain and enforce patents is uncertain and involves complex legal and factual questions. Accordingly, rights under
any issued patents may not provide us with sufficient protection for our drug candidates or provide sufficient protection to
afford us a commercial advantage against competitive products or processes. We cannot guarantee that any patents will issue
from any pending or future patent applications owned by or licensed to us.
Even if patents have issued or will issue,
we cannot guarantee that the claims of these patents are or will be valid or enforceable or will provide us with any significant
protection against competitive products or otherwise be commercially valuable to us. Patent applications in the U.S. are maintained
in confidence for up to 18 months after their filing. In some cases, however, patent applications remain confidential in the USPTO
for the entire time prior to issuance as a U.S. patent. Similarly, publication of discoveries in the scientific or patent literature
often lags behind actual discoveries. Consequently, we cannot be certain that we or our licensors were the first to invent, or
the first to file patent applications on, our drug candidates. The costs of these proceedings could be substantial and it is possible
that our efforts would be unsuccessful, resulting in a loss of our U.S. patent position. Furthermore, we may not have identified
all U.S. and foreign patents or published applications that affect our business either by blocking our ability to commercialize
our drugs or by covering similar technologies that affect our drug market.
The claims of the issued patents that are
licensed to us, and the claims of any patents which may issue in the future and be owned by or licensed to us, may not confer on
us significant commercial protection against competing products. Additionally, our patents may be challenged by third parties,
resulting in the patent being deemed invalid, unenforceable or narrowed in scope, or the third party may circumvent any such issued
patents. Our patents might not contain claims that are sufficiently broad to prevent others from utilizing our technologies. Consequently,
our competitors may independently develop competing products that do not infringe our patents or other intellectual property. To
the extent a competitor can develop similar products using a different molecule, our patents may not prevent others from directly
competing with us.
The laws of some foreign jurisdictions do
not protect intellectual property rights to the same extent as in the U.S. and many companies have encountered significant difficulties
in protecting and defending such rights in foreign jurisdictions. If we encounter such difficulties in protecting or are otherwise
precluded from effectively protecting our intellectual property rights in foreign jurisdictions, our business prospects could be
substantially harmed.
Because of the extensive time required for
development, testing and regulatory review of a drug candidate, it is possible that, before any of our drug candidates can be commercialized,
any related patent may expire or remain in force for only a short period following commercialization of our drug candidates, thereby
reducing any advantages of the patent. To the extent our drug candidates based on that technology are not commercialized significantly
ahead of the date of any applicable patent, or to the extent we have no other patent protection on such drug candidates, those
drug candidates would not be protected by patents, and we would then rely solely on other forms of exclusivity, such as regulatory
exclusivity provided by the FDCA or trade secret protection.
The Leahy-Smith America Invents Act (the
“America Invents Act”) was signed into law in September 2011, and many of the substantive changes became effective
in March 2013. The America Invents Act reforms U.S. patent law in part by changing the standard for patent approval from a “first
to invent” standard to a “first to file” standard and developing a post-grant review system. This legislation
changes U.S. patent law in a way that may weaken our ability to obtain patent protection in the U.S. for those applications filed
after March 2013.
If any third-party owners of intellectual property we
may license in the future do not properly maintain or enforce the patents underlying such licenses, our competitive position and
business prospects will be harmed.
We may enter into licenses for
third-party intellectual property in the future. Our success will depend in part on the ability of our licensors to obtain,
maintain and enforce patent protection for their intellectual property, in particular, those patents to which we have secured
exclusive rights. If applicable, our licensors may not successfully prosecute the patent applications to which we are
licensed. Even if patents issue in respect of any such patent applications, our licensors may fail to maintain these patents,
may determine not to pursue litigation against other companies that are infringing these patents, or may pursue such
litigation less aggressively than we would. In addition, our licensors may terminate their agreements with us in the event we
breach the applicable license agreement and fail to cure the breach within a specified period of time. Without protection for
the intellectual property we license, other companies might be able to offer substantially identical products for sale, which
could materially adversely affect our competitive business position, business prospects and financial condition.
Because our research and development of
drug candidates incorporates compounds and other information that is the intellectual property of third parties, we depend on continued
access to such intellectual property to conduct and complete our preclinical and clinical research and commercialize the drug candidates
that result from this research. We expect that future licenses would impose, numerous obligations on us. For example, under our
existing and future license agreements, we may be required to pay (i) annual maintenance fees until a drug candidate is sold for
the first time, (ii) running royalties on net sales of drug candidates, (iii) minimum annual royalties after a drug candidate is
sold for the first time, and (iv) one-time payments upon the achievement of specified milestones. We may also be required to reimburse
patent costs incurred by the licensor, or we may be obligated to pay additional royalties, at specified rates, based on net sales
of our drug candidates that incorporate the licensed intellectual property rights. We may also be obligated under some of these
agreements to pay a percentage of any future sublicensing revenues that we may receive. Future license agreements may also include
payment obligations such as milestone payments or minimum expenditures for research and development. We expect that any future
licenses would contain reporting, insurance and indemnification requirements.
We announced on September 25, 2019 that
the USPTO issued a patent for claims related to DNAbilize®, including its use in the treatment of cancers, autoimmune
diseases and infectious diseases. Our patent portfolio currently includes two issued patents (No. 9,744,187 and No. 10,335,428)
in the U.S. for claims related to DNAbilize®, as well as four additional pending patents for composition and methods
of use of specific drug targets. We are actively reviewing and preparing additional patent applications to expand our patent portfolio,
but there can be no assurances that patents related to our existing patent applications or any applications we may file in the
future will be issued or that any issued patents will provide meaningful protection for our drug candidates, which could materially
adversely affect our competitive business position, business prospects and financial condition.
If we infringe or are alleged to infringe intellectual
property rights of third parties, our business could be harmed.
Our research, development and commercialization
activities, including any drug candidates resulting from these activities, may infringe or be claimed to infringe patents or other
proprietary rights owned by third parties and to which we do not hold licenses or other rights. There may be applications that
have been filed but not published that, if issued, could be asserted against us. If a patent infringement suit were brought against
us, we could be forced to stop or delay research, development or manufacturing of drug candidate that is the subject of the suit.
Further, if we are found to have infringed a third- party patent, we could be obligated to pay royalties and/or other payments
to the third party related to our drug candidates, which may be substantial, or we could be enjoined from selling our drug candidates
that obtain approval.
There has been substantial litigation and
other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. In
addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference
proceedings declared by the USPTO and opposition proceedings in the European Patent Office, regarding intellectual property rights
with respect to our drug candidates and technology. Uncertainties resulting from the initiation and continuation of patent litigation
or other proceedings could have a material adverse effect on our business and financial condition.
Litigation regarding patents, intellectual property and
other proprietary rights may be expensive and time consuming. If we are involved in such litigation, it could cause delays in bringing
drug candidates to market and harm our ability to operate.
Our success will depend in part on our ability
to operate without infringing the proprietary rights of third parties. Although we are not currently aware of any litigation or
other proceedings or third-party claims of intellectual property infringement related to our drug candidates, the pharmaceutical
industry is characterized by extensive litigation regarding patents and other intellectual property rights. Other parties may obtain
patents in the future and allege that the use of our technologies infringes these patent claims or that we are employing their
proprietary technology without authorization. Likewise, third parties may challenge or infringe upon our existing or future patents.
Proceedings involving our patents or patent applications or those of others could result in adverse decisions regarding:
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the patentability of our inventions relating to our drug candidates; and/or
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the enforceability, validity or scope of protection offered by our patents relating to our drug candidates.
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Even if we are successful in these
proceedings, we may incur substantial costs and divert management time and attention in pursuing these proceedings, which
could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we may be
required to seek a license, defend an infringement action or challenge the validity of the patents in court. Patent
litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful
conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an
infringement action successfully or have infringed patents declared invalid, we may:
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incur substantial monetary damages;
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encounter significant delays in bringing our drug candidates to market; and/or
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be precluded from participating in the manufacture, use or sale of our drug candidates or methods of treatment requiring licenses.
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Furthermore, because of the substantial
amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential
information could be compromised by disclosure during this type of litigation. In addition, during the course of this kind of litigation,
there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If investors
perceive these results to be negative, the market price for our common stock could be significantly harmed.
Confidentiality agreements with employees and others may
not adequately prevent disclosure of trade secrets and other proprietary information and may not adequately protect our intellectual
property.
We rely on trade secrets to protect our
technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult
to protect. In order to protect our proprietary technology and processes, we also rely in part on confidentiality and intellectual
property assignment agreements with our corporate partners, employees, consultants, outside scientific collaborators and sponsored
researchers and other advisors. These agreements may not effectively prevent disclosure of confidential information nor result
in the effective assignment to us of intellectual property, and may not provide an adequate remedy in the event of unauthorized
disclosure of confidential information or other breaches of the agreements. In addition, others may independently discover our
trade secrets and proprietary information, and in such case we could not assert any trade secret rights against such party. Enforcing
a claim that a party illegally obtained and is using our trade secrets is difficult, expensive and time-consuming, and the outcome
is unpredictable. In addition, courts outside the U.S. may be less willing to protect trade secrets. Costly and time-consuming
litigation could be necessary to seek to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain
trade secret protection could materially adversely affect our business and financial condition.
Risks Related to Our Securities
Raising additional capital may cause dilution to existing
stockholders, restrict our operations or require us to relinquish rights. Additionally, sales of a substantial number of shares
of our common stock or other securities in the public market could cause our stock price to fall.
We expect to seek the additional capital
necessary to fund our operations through public or private equity offerings, collaboration agreements, debt financings or licensing
arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing
stockholders’ ownership interests will be diluted and the terms may include liquidation or other preferences that adversely
affect their rights as a stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting
our ability to take specific actions such as incurring additional debt, making capital expenditures or declaring dividends. If
we raise additional funds through collaboration or licensing arrangements with third parties, we may have to relinquish valuable
rights to our technologies or drug candidates, or grant licenses on terms that are not favorable to us. In addition, sales of a
substantial number of shares of our common stock or other securities in the public market could occur at any time. These sales,
or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price
of our common stock.
We may issue additional shares of our common stock in
accordance with our equity incentive plans or upon exercise or conversion of outstanding securities that are exercisable for or
convertible into shares of our common stock, which may cause dilution to existing stockholders.
As of December 31, 2019, there were 67,681
shares of common stock reserved for issuance upon the exercise of outstanding options granted under our equity incentive plans.
As of December 31, 2019, there were 609,121 additional shares of common stock reserved for future issuance of awards under the
Bio-Path Holdings, Inc. 2017 Stock Incentive Plan, as amended (the “2017 Stock Incentive Plan”). In addition, as of
December 31, 2019, there were 858,699 shares of common stock reserved for issuance upon the exercise of outstanding warrants that
we have issued in connection with prior securities offerings. To the extent that outstanding stock options and warrants are exercised,
existing stockholders’ ownership interests may be diluted.
The trading price of our common stock has been volatile
and is likely to be volatile in the future.
The trading price of our common stock has
been highly volatile. On March 10, 2014, our common stock commenced trading on The Nasdaq Capital Market, and there is a limited
history on which to gauge the volatility of our stock price on The Nasdaq Capital Market. From January 1, 2017 through December
31, 2019, our stock price has fluctuated from a low of $1.61 to a high of $270.00, after adjustment for reverse stock splits. The
market price for our common stock will be affected by a number of factors, including:
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the denial or delay of regulatory approvals of our drug candidates or receipt of regulatory approval of competing products;
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our ability to accomplish clinical, regulatory and other drug development milestones;
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the ability of our drug candidates, if they receive regulatory approval, to achieve market success;
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the performance of third-party manufacturers and suppliers;
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developments with respect to patents and other intellectual property rights;
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sales of common stock or other securities by us or our stockholders in the future;
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additions or departures of key scientific or management personnel;
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disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our drug candidates;
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trading volume of our common stock;
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investor perceptions about us and our industry;
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public reaction to our press releases, other public announcements and SEC and other filings;
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the failure of analysts to cover us, or changes in analysts’ estimates or recommendations;
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the failure by us to meet analysts’ projections or guidance;
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general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors; and
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the other factors described elsewhere in this “Item 1A. Risk Factors” or the section titled “Risk Factors” contained in our other public filings.
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The stock prices of many companies in the
biotechnology industry have experienced wide fluctuations that have often been unrelated to the operating performance of these
companies. Following periods of volatility in the market price of a company’s securities, securities class action litigation
often has been initiated against a company. If any class action litigation is initiated against us, we may incur substantial costs
and our management’s attention may be diverted from our operations, which could materially adversely affect our business
and financial condition.
Our common stock is thinly traded and in the future may
continue to be thinly traded, and our stockholders may be unable to sell at or near asking prices or at all if they need to sell
their shares to raise money or otherwise desire to liquidate such shares.
To date, we have a low volume of daily trades
in our common stock on The Nasdaq Capital Market. Our stockholders may be unable to sell their common stock at or near their asking
prices or at all, which may result in substantial losses to our stockholders.
The market for our common stock may be characterized
by significant price volatility when compared to seasoned issuers, and we expect that our share price will be more volatile than
a seasoned issuer for the foreseeable future. As noted above, our common stock may be sporadically and/or thinly traded. As a consequence
of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence
the price of those shares in either direction.
Our certificate of incorporation grants our Board of Directors
the power to designate and issue additional shares of common and/or preferred stock.
Our authorized capital consists of
200,000,000 shares of common stock and 10,000,000 shares of preferred stock. Our preferred stock may be designated into
series pursuant to authority granted by our certificate of incorporation, and on approval from our Board of Directors (the
“Board”). The Board, without any action by our stockholders, may designate and issue shares in such classes or
series as the Board deems appropriate and establish the rights, preferences and privileges of such shares, including
dividends, liquidation and voting rights. The rights of holders of other classes or series of stock that may be issued could
be superior to the rights of holders of our common shares. The designation and issuance of shares of capital stock having
preferential rights could adversely affect other rights appurtenant to shares of our common stock.
We do not anticipate paying cash dividends, and accordingly
stockholders must rely on stock appreciation for any return on their investment in us.
We anticipate that we will retain our earnings,
if any, for future growth and therefore do not anticipate paying cash dividends in the future. As a result, only appreciation of
the price of our common stock will provide a return to stockholders.
Our management is required to devote substantial time
and incur additional expense to comply with public company regulations.
As a public reporting company, we are subject
to the Sarbanes-Oxley Act of 2002, as well as to the information and reporting requirements of the SEC and other federal securities
laws. We are also subject to the rules of The Nasdaq Stock Market. As a result, we incur significant legal, accounting, and other
expenses that we would not incur as a private company, including costs associated with our public company reporting requirements
and corporate governance requirements. Compliance with these public company obligations places significant additional demands on
our limited number of finance and accounting staff and on our financial, accounting and information systems.
Our common stock may be delisted from The Nasdaq Capital
Market which could negatively impact the price of our common stock and our ability to access the capital markets.
The listing standards of The Nasdaq Capital
Market provide that a company, in order to qualify for continued listing, must maintain a minimum stock price of $1.00 and satisfy
standards relative to minimum stockholders’ equity, minimum market value of publicly held shares and various additional requirements.
If we fail to comply with all listing standards applicable to issuers listed on The Nasdaq Capital Market, our common stock may
be delisted. If our common stock is delisted, it could reduce the price of our common stock and the levels of liquidity available
to our stockholders. In addition, the delisting of our common stock could materially adversely affect our access to the capital
markets and any limitation on liquidity or reduction in the price of our common stock could materially adversely affect our ability
to raise capital. Delisting from The Nasdaq Capital Market could also result in other negative consequences, including the potential
loss of confidence by suppliers, customers and employees, the loss of institutional investor interest and fewer business development
opportunities.
In the past, we have received a notice of
non-compliance from the Listing Qualifications Department of The Nasdaq Stock Market LLC with respect to the $1.00 minimum closing
bid price requirement. Although we have regained compliance with the minimum closing bid price requirement after implementing reserve
stock splits, there can be no assurance that we will be able to meet the minimum closing bid price requirement or other listing
requirements in the future.
ITEM 1B. UNRESOLVED
STAFF COMMENTS
None.
ITEM 2. PROPERTIES
In April 2014, we entered into a lease agreement
for approximately 3,000 square feet of office space for general and administrative purposes in Bellaire, Texas, which is part of
the Houston metropolitan area. The term of the lease began on August 1, 2014 and was scheduled to terminate on July 31, 2019. In
May 2019, we entered into an amendment to the lease agreement to extend the term of the lease to October 31, 2024.
In April 2016, we entered into a lease agreement
for approximately 2,100 square feet of lab space located in Bellaire, Texas for research and development purposes. The term of
the lease began on May 1, 2016 and was scheduled to terminate on April 30, 2019. In December 2018, we entered into an amendment
to the lease agreement to extend the term of the lease to April 30, 2022.
We do not own or lease any other real property
that is materially important to our business. We believe that our current facilities are adequate for our current needs and that
additional space will be available when and as needed.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. MINE SAFETY
DISCLOSURES
Not applicable.
Notes to Consolidated Financial Statements
December 31, 2019
Unless the context requires otherwise, references in these Notes
to the Consolidated Financial Statements to “we,” “our,” “us,” “the Company” and
“Bio-Path” refer to Bio-Path Holdings, Inc. and its subsidiary. Bio-Path Holdings, Inc.’s wholly-owned subsidiary,
Bio-Path, Inc., is sometimes referred to herein as “Bio-Path Subsidiary.”
|
1.
|
Organization and Business
|
The Company is a clinical and preclinical stage oncology focused
RNAi nanoparticle drug development company utilizing a novel technology that achieves systemic delivery for target specific protein
inhibition for any gene product that is over-expressed in disease. Our drug delivery and antisense technology, called DNAbilize®,
is a platform that uses P-ethoxy, which is a deoxyribonucleic acid (DNA) backbone modification that is intended to protect the
DNA from destruction by the body’s enzymes when circulating in vivo, incorporated inside of a neutral charged lipid
bilayer. We believe this combination allows for high efficiency loading of antisense DNA into non-toxic, cell-membrane-like structures
for delivery of the antisense drug substance into cells. In vivo, the DNAbilize® delivered antisense drug substances
are systemically distributed throughout the body to allow for reduction or elimination of target proteins in blood diseases and
solid tumors. DNAbilize® is a registered trademark of the Company. Using DNAbilize® as a platform for drug development
and manufacturing, we currently have three antisense drug candidates in development to treat at least five different cancer disease
indications.
Bio-Path Subsidiary was founded in May 2007 as a Utah corporation.
In February 2008, Bio-Path Subsidiary completed a reverse merger with the Company, which at the time was traded over the counter
and had no current operations. The prior name of Company was changed to Bio-Path Holdings, Inc. and the directors and officers
of Bio-Path Subsidiary became the directors and officers of Bio-Path Holdings, Inc. The Company’s operations to date have
been limited to organizing and staffing the Company, acquiring, developing and securing its technology and undertaking product
development for a limited number of product candidates.
In June 2015, the Company established an “at the market”
(“ATM”) program through which it may offer and sell up to $25.0 million of its common stock from time to time, at Bio-Path’s
discretion, through an investment banking firm, acting as sales agent. Sales of Bio-Path common stock under the ATM program will
be made directly on or through The Nasdaq Capital Market, among other methods. The ATM program may be terminated by either the
investment banking firm or the Company upon ten days’ notice. We are subject to certain restrictions on our ability to offer
and sell shares of our common stock under the ATM program. To date, the Company has not offered or sold any shares of its common
stock under the ATM program.
On January 17, 2019, we effected a reverse stock split of our
outstanding shares of common stock at a ratio of 1-for-20, and our common stock began trading on the split-adjusted basis on the
Nasdaq Capital Market at the commencement of trading on January 18, 2019. All common stock share and per share amounts in our consolidated
financial statements have been adjusted to give effect to the 1-for-20 reverse stock split.
As the Company has not begun its planned principal operations
of commercializing a product candidate, the Company’s activities are subject to significant risks and uncertainties, including
the potential requirement to secure additional funding, the outcome of the Company’s clinical trials, and failing to operationalize
the Company’s current drug candidates before another company develops similar products.
|
2.
|
Summary of Significant Accounting Policies
|
Principles of Consolidation — The consolidated
financial statements include the accounts of Bio-Path Holdings, Inc., and its wholly-owned subsidiary Bio-Path, Inc. All intercompany
accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents — The Company
considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Concentration of Credit Risk — Financial
instruments that potentially subject us to a significant concentration of credit risk consist of cash. The Company maintains its
cash balances with one major commercial bank, JPMorgan Chase Bank. The balances are insured by the Federal Deposit Insurance Corporation
(the “FDIC”) up to $250,000. As a result, as of December 31, 2019, approximately $20.2 million of our cash balance
was not covered by the FDIC. As of December 31, 2018, we had approximately $1.0 million in cash on-hand, of which approximately
$0.8 million was not covered by the FDIC. To date, the Company has not incurred any losses on its cash balances.
Furniture, fixtures and equipment — Furniture,
fixtures and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the
assets. Depreciation expense was $0.1 million and $0.3 million for the years ended December 31, 2019 and 2018, respectively.
The estimated useful
lives are as follows:
Computers and equipment
– 3 years
Furniture and fixtures
– 7 years
Scientific equipment
–7 years
Leasehold improvements
– Lesser of useful life or lease term
Major additions and improvements are capitalized, while costs
for minor replacements, maintenance and repairs that do not increase the useful life of an asset are expensed as incurred.
Long-Lived Assets — Our long-lived
assets consist of furniture, fixtures and equipment, leasehold improvements and right-of-use operating assets. Long-lived
assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of the asset is measured by a comparison of the asset’s carrying amount to the
estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds
its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount
of the asset exceeds the fair value of the asset.
Research and Development Costs — Costs and
expenses that can be clearly identified as research and development are charged to expense. Advance payments, including nonrefundable
amounts, for goods or services that will be used or rendered for future research and development activities are deferred and capitalized.
Such amounts will be recognized as an expense as the related goods are delivered or the related services are performed. If the
goods will not be delivered, or services will not be rendered, then the capitalized advance payment is charged to expense.
The Company estimates its clinical trial expense each period
based on a cost per patient calculation which is derived from estimated start-up costs, clinical trial costs based on the number
of patients and length of treatment and clinical study report costs. These services are performed by the Company’s third-party
clinical research organizations, laboratories and clinical investigative sites. The expense is recorded in research and development
expense each period. Amounts that have been prepaid in advance of work performed are recorded in other current assets.
For each of the years ended December 31, 2019 and 2018, we had
$4.6 million of costs classified as research and development expense.
Stock-Based Compensation — The Company has
accounted for stock-based compensation under the provisions of generally accepted accounting principles (“GAAP”). The
provisions require us to record an expense associated with the fair value of stock-based compensation. We currently use the Black-Scholes
option valuation model to calculate stock-based compensation at the date of grant. Option pricing models require the input of highly
subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value
estimate.
Net Loss Per Share — Basic net loss per
common share is computed by dividing net loss attributable to common stockholders for the period by the weighted average number
of common shares outstanding during the period. Although there were warrants and stock options outstanding during 2019 and 2018,
no potential common shares shall be included in the computation of any diluted per-share amount when a loss exists, as it would
be anti-dilutive. Consequently, diluted net loss per share as presented in the financial statements is equal to basic net loss
per share for the years 2019 and 2018. The calculation of diluted earnings per share for 2019 did not include 67,681 shares and
858,699 shares issuable pursuant to the exercise of outstanding common stock options and warrants, respectively, as of December
31, 2019 as the effect would be anti-dilutive. The calculation of diluted earnings per share for 2018 did not include 37,067 shares
and 183,714 shares issuable pursuant to the exercise of outstanding common stock options and warrants, respectively, as
of December 31, 2018 as the effect would be anti-dilutive.
Use of Estimates — The preparation of consolidated
financial statements in conformity with accounting principles generally accepted in the United States (“U.S.”) requires
management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated financial statements
and accompanying notes. On an ongoing basis, the Company evaluates its estimates and judgments, which are based on historical and
anticipated results and trends as well as on various other assumptions that the Company believes to be reasonable under the circumstances.
By their nature, estimates are subject
to an inherent degree of uncertainty and, as such, actual results
may differ from the Company’s estimates. These estimates include accrued clinical trial costs, stock-based compensation expense,
valuation of warrants and valuation of deferred tax assets.
Income Taxes — Deferred income tax assets
and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and
are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
Liquidity — Since its inception, the Company
has devoted substantially all of its efforts to product development, raising capital and building infrastructure, and has not generated
significant revenues from its planned principal operations. The Company does not anticipate generating significant revenues for
the foreseeable future. The Company’s activities are subject to significant risks and uncertainties.
The Company has experienced significant losses since its inception,
including net losses of $8.6 million for each of the years ended December 31, 2019 and 2018. As of December 31, 2019, the Company
had an accumulated deficit of $56.3 million and $20.4 million in cash and cash equivalents. The Company has no debt commitments.
Substantially all of the Company’s net losses have resulted from costs incurred in connection with its research and development
activities and its general and administrative expenses to support operations. The Company’s net losses may fluctuate significantly
from quarter to quarter and year to year.
The Company believes that its available cash at December
31, 2019 will be sufficient to fund liquidity and capital expenditure requirements for at least the next 12 months from the
date of issuance of these consolidated financial statements. However, the Company expects to continue to incur net losses for
the foreseeable future. The Company expects to continue to incur significant operating expenses in connection with its
ongoing activities, including conducting clinical trials, manufacturing development and seeking regulatory approval of its
drug candidates, prexigebersen, BP1002 and BP1003. Accordingly, the Company will continue to require substantial additional
capital to fund its projected operating requirements. Such additional capital may not be available when needed or on terms
favorable to the Company. In addition, the Company may seek additional capital due to favorable market conditions or
strategic considerations, even if it believes it has sufficient funds for our current and future operating plan. There can be
no assurance that the Company will be able to continue to raise additional capital through the sale of securities in the
future. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in
spending, extend payment terms with suppliers, and/or suspend or curtail planned programs. Any of these actions could
materially harm the Company’s business, results of operations, financial condition and future prospects.
Recent Accounting Pronouncements — From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) that are adopted by the
Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards,
which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption.
In February 2016, the FASB issued ASU No. 2016-02, Leases.
The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease
liability initially measured at the present value of the lease payments on the balance sheet for all leases with terms longer than
12 months. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those
fiscal years. In 2018, the FASB issued ASU 2018-01 and ASU 2018-11, which collectively adds two practical expedients and provides
an alternative modified retrospective transition method in the year of adoption. Management adopted the new standard on January 1, 2019
using the modified retrospective transition approach with no restatement of prior periods or cumulative adjustment to accumulated
deficit. We elected the “package of practiced expedients”, which permits us not to reassess under the new standard
our prior conclusions about lease identification, lease classification and indirect costs. We also elected the short-term lease
exemption and therefore do not recognize ROU assets or corresponding liabilities for lease agreements with an original term of
12 months or less. Consequently, prior year financials statements have not been updated and the disclosures required under the
new standard have not been provided for periods prior to the adoption date. Upon adoption of the new standards, the Company recognized
$0.1 million for ROU assets and corresponding lease liabilities on the consolidated balance sheet related to leases for office
and lab space. The adoption of these ASU’s on January 1, 2019 did not have a significant impact on our consolidated financial
statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair
Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.
The new standard eliminates certain disclosure requirements for fair value measurements for all entities, requires public
entities to disclose certain new information and modifies some disclosure requirements. This standard is effective for fiscal
years beginning after December 15, 2019, with early adoption permitted. Management does not believe there will be a
significant impact on our consolidated financial statements as the Company does not currently have any fair value
measurements to disclose.
Management has reviewed all other recently issued pronouncements
and has determined they will have no material impact on the Company’s consolidated financial statements.
Correction
of Immaterial Errors in Previously Issued Financial Statements - In evaluating the consolidated financial statements
as of and for the year ended December 31, 2018, the Company subsequently identified immaterial errors within the
Company’s consolidated balance sheet as of December 31, 2018 and consolidated statement of cash flows for the year ended
December 31, 2018. The Company has assessed the effects of these errors and based upon quantitative and qualitative factors,
determined that the errors were not material to the previously issued consolidated financial statements.
The following table summarizes
the correction of immaterial errors as of and for the year ended December 31, 2018:
|
|
2018
|
|
|
|
As Reported
|
|
|
Adjustments
|
|
|
As Corrected
|
|
|
|
(in thousands)
|
|
Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets
|
|
$
|
593
|
|
|
$
|
210
|
|
|
$
|
803
|
|
Total current assets
|
|
|
1,929
|
|
|
|
210
|
|
|
|
2,139
|
|
Total Assets
|
|
|
2,335
|
|
|
|
210
|
|
|
|
2,545
|
|
Accounts payable
|
|
|
813
|
|
|
|
(226
|
)
|
|
|
587
|
|
Accrued expenses
|
|
|
304
|
|
|
|
436
|
|
|
|
740
|
|
Total current liabilities
|
|
|
1.117
|
|
|
|
210
|
|
|
|
1,327
|
|
Total Liabilities
|
|
|
1,117
|
|
|
|
210
|
|
|
|
1,327
|
|
Total Liabilities & Shareholders’ Equity
|
|
|
2,335
|
|
|
|
210
|
|
|
|
2,545
|
|
Consolidated Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets
|
|
|
(240
|
)
|
|
|
(210
|
)
|
|
|
(450
|
)
|
Accounts payable and accrued expenses
|
|
|
326
|
|
|
|
210
|
|
|
|
536
|
|
|
3.
|
Prepaid Drug Product for Testing
|
Advance payments, including nonrefundable amounts, for goods
or services that will be used or rendered for future clinical development activities are deferred and capitalized. Such amounts
will be recognized as an expense as the related goods are delivered or the related services are performed. The Company recognized
certain expenses and incurred installment costs for its contract drug manufacturing and raw material suppliers with prepayments
totaling $0.3 million through 2018 pursuant to drug supply contracts for the manufacture and delivery of prexigebersen for testing
in two Phase 2 clinical trials and Bcl-2 for testing in a Phase 1 clinical trial. This amount was carried on the Balance Sheet
as of December 31, 2018 at cost as Prepaid Drug Product for Testing. The Company recognized certain expenses and incurred additional
installment costs during 2019, with advanced payments totaling $0.8 million, which are carried on the Balance Sheet as of December
31, 2019 as Prepaid Drug Product for Testing (See Note11).
As of December 31, 2019, Other Current Assets included prepaid
expenses of $0.8 million, comprised primarily of prepayments made for our clinical trials for prexigebersen in AML and CML of $0.6
million and prepaid insurance of $0.2 million. As of December 31, 2018, Other Current Assets included prepaid expenses of $0.8
million, comprised primarily of prepayments made for our clinical trial for prexigebersen in AML of $0.6 million, prepaid insurance
of $0.1 million and other prepaid expenses of $0.1 million.
|
5.
|
Property and Equipment
|
The following table summarizes property and equipment as of
December 31, 2019 and 2018:
|
|
|
|
December 31,
|
|
|
|
Estimated Useful
Lives
|
|
2019
|
|
|
2018
|
|
|
|
(in years)
|
|
(in thousands)
|
|
Leasehold improvements
|
|
2 to 5
|
|
$
|
463
|
|
|
$
|
432
|
|
Computers and office equipment
|
|
3
|
|
|
60
|
|
|
|
60
|
|
Furniture and fixtures
|
|
7
|
|
|
46
|
|
|
|
46
|
|
Scientific equipment
|
|
7
|
|
|
460
|
|
|
|
460
|
|
Total
|
|
|
|
|
1,029
|
|
|
|
998
|
|
Less: Accumulated depreciation
|
|
|
|
|
(726
|
)
|
|
|
(592
|
)
|
Net property and equipment
|
|
|
|
$
|
303
|
|
|
$
|
406
|
|
As of December 31, 2019, Current Liabilities
included accounts payable of $0.5 million, comprised primarily of amounts owed for external research expenses related to manufacturing
costs of $0.3 million and legal and patent fess of $0.2 million. As of December 31, 2018, Current Liabilities included accounts
payable of $0.6 million, comprised primarily of preclinical expenses of $0.2 million, amounts owed to the Company’s clinical
research organizations for our clinical trials for prexigebersen in AML and CML of $0.1 million, an annual license maintenance
fee of $0.1 million, manufacturing costs of $0.1 million and other payables of $0.1 million.
As of December 31, 2019, Current Liabilities included
accrued expenses of $0.7 million, comprised primarily of accrued employee vacation and bonus expenses of $0.4 million, clinical
and preclinical expenses of $0.2 million and other accrued expenses of $0.1 million. As of December 31, 2018, Current Liabilities
included accrued expenses of $0.7 million, comprised primarily of accrued clinical and preclinical expenses of $0.5 million, employee
vacation and bonus expenses of $0.1 million and legal and professional fees of $0.1 million.
Issuances of Common Stock – On September
20, 2018, we entered into a securities purchase agreement with certain investors pursuant to which we agreed to sell, in a registered
direct offering, an aggregate of 98,454 shares of our common stock and pre-funded warrants to purchase up to 14,624 shares of our
common stock for gross proceeds of approximately $1.5 million (the “2018 Registered Direct Offering”). In a concurrent
private placement, we also agreed pursuant to the securities purchase agreement to issue to such investors Series A warrants to
purchase up to 113,077 shares of our common stock (the “2018 Private Placement”). Additionally, we issued warrants
to purchase up to 6,785 shares of our common stock in a private placement to H.C. Wainwright & Co., LLC as compensation for
its services as a placement agent in connection with the 2018 Registered Direct Offering and the 2018 Private Placement. The 2018
Registered Direct Offering and the 2018 Private Placement closed on September 25, 2018. The net proceeds to the Company from the
offerings, after deducting the placement agent’s fees and expenses, our offering expenses, and excluding the proceeds, if
any, from the exercise of the warrants issued in the offerings, were approximately $1.2 million.
On January 14, 2019, we entered into an underwriting agreement
with H.C. Wainwright & Co., LLC relating to an underwritten public offering of 429,616 shares of our common stock for gross
proceeds of approximately $1.1 million (the “2019 Underwritten Offering”). The offering price to the public in the
2019 Underwritten Offering was $2.60 per share, and H.C. Wainwright & Co., LLC agreed to purchase the shares in the 2019 Underwritten
Offering from the Company pursuant to the underwriting agreement at a price of $2.418 per share. Additionally, we issued warrants
to purchase up to 25,777 shares of our common stock in a private placement to H.C. Wainwright & Co., LLC as compensation for
its services as underwriter in connection with the 2019 Underwritten Offering. The 2019 Underwritten Offering closed on January
17, 2019. The net proceeds to the Company from the 2019 Underwritten Offering, after deducting the underwriting discounts and commissions
and expenses and the Company’s estimated offering expenses, and excluding the proceeds, if any, from the exercise of the
underwriter warrants, were approximately $0.9 million.
On January 18, 2019, we entered into a securities purchase
agreement with certain investors pursuant to which we agreed to sell, in a registered direct offering, an aggregate of
648,233 shares of our common stock for gross proceeds of approximately $1.7 million (the “January 2019 Registered
Direct Offering”). In a concurrent private placement, we also agreed pursuant to the securities purchase agreement to
issue to such investors Series A warrants to purchase up to 324,117 shares of our common stock (the “January 2019
Private Placement”). Additionally, we issued warrants to purchase up to 38,894 shares of our common stock in a private
placement to H.C. Wainwright & Co., LLC as compensation for its services as a placement agent in connection with the 2019
Registered Direct Offering and the 2019 Private Placement. The 2019 Registered Direct Offering and the 2019 Private Placement
closed on January 23, 2019. The net proceeds to the Company from the offerings, after deducting the placement agent’s
fees and expenses, our offering expenses, and excluding the proceeds, if any, from the exercise of the warrants issued in the
offerings, were approximately $1.5 million.
On March 12, 2019, we entered into a securities purchase agreement
with certain investors pursuant to which we agreed to sell, in a registered direct offering, an aggregate of 712,910 shares of
our common stock for gross proceeds of approximately $18.5 million (the “March 2019 Registered Direct Offering”). Additionally,
we issued warrants to purchase up to 42,775 shares of our common stock in a private placement to H.C. Wainwright & Co., LLC
as compensation for its services as a placement agent in connection with the March 2019 Registered Direct Offering. The March 2019
Registered Direct Offering closed on March 14, 2019. The net proceeds to us from the offerings, after deducting the placement agent’s
fees and expenses, our offering expenses, and excluding the proceeds, if any, from the exercise of the warrants issued in the offerings,
were approximately $17.0 million.
On November 21, 2019, we entered into a securities purchase
agreement with certain investors pursuant to which we agreed to sell, in a registered direct offering, an aggregate of 808,080
shares of our common stock and warrants to purchase up to 606,060 shares of our common stock for gross proceeds of approximately
$8.0 million under the 2019 Shelf Registration Statement (the “November 2019 Registered Direct Offering”). Additionally,
we issued warrants to purchase up to 48,485 shares of our common stock to H.C. Wainwright & Co., LLC as compensation for its
services as a placement agent in connection with the November 2019 Registered Direct Offering, which warrants and the common stock
issuable upon exercise of such warrants were registered under the 2019 Shelf Registration Statement. The November 2019 Registered
Direct Offering closed on November 25, 2019. The net proceeds to us from the offerings, after deducting the placement agent’s
fees and expenses, our offering expenses, and excluding the proceeds, if any, from the exercise of the warrants issued in the offerings,
were approximately $7.3 million.
During the fiscal year ended December 31, 2019, we issued an
aggregate of 409,875 shares of our common stock pursuant to the exercise of warrants at a weighted average exercise price of approximately
$2.67 per share. The net proceeds to us from the exercise of the warrants were approximately $1.1 million.
Stockholders’ Equity totaled $21.1 million as of December
31, 2019 compared to $1.2 million as of December 31, 2018. There were 3,691,857 shares of common stock issued and outstanding as
of December 31, 2019. There were no preferred shares outstanding as of December 31, 2019.
|
9.
|
Stock-Based Compensation Plan
|
The 2017 Plan – On December 21, 2017,
the Company’s stockholders approved the Bio-Path Holdings, Inc. 2017 Stock Incentive Plan (as amended, the “2017
Plan”), which replaced the First Amended 2007 Stock Incentive Plan, as amended (the “2007 Plan”). The 2007
Plan expired by its terms in January 2018, and no awards were made under the 2007 Plan from the approval of the 2017 Plan on
December 21, 2017 until the expiration of the 2007 Plan. The 2017 Plan provides for the grant of Incentive Stock Options,
Non-Qualified Stock Options, Restricted Shares, Restricted Share Units, Stock Appreciation Rights, Performance-Based Awards
and other stock-based awards, or any combination of the foregoing to the Company’s employees, non-employee directors
and consultants. On December 19, 2019, the Company’s stockholders approved an amendment to the 2017 Plan to increase
the number of shares reserved for grant and issuance pursuant to the 2017 Plan by 600,000 shares to 660,000 shares. As of
December 31, 2019, there were 609,121 additional shares of common stock reserved for future issuance of awards under the 2017
Plan. Under the 2017 Plan, the exercise price of awards is determined by the Board of Directors or the compensation
committee of the Board of Directors, and for options intended to qualify as qualified Incentive Stock Options, may not be
less than the fair market value as determined by the closing stock price at the date of the grant. Each option and award
under the 2017 Plan shall vest and expire as determined by the Board of Directors or the compensation committee. Options
expire no later than ten years from the date of grant. All grants provide for accelerated vesting if there is a change of
control, as defined in the 2017 Plan.
Stock option awards granted for the years 2019 and 2018 were
estimated to have a weighted average fair value per share of $16.26 and $26.55, respectively. The fair value calculation is based
on stock options granted during the year using the Black-Scholes option-pricing model on the date of grant. In addition, for all
stock options granted, exercise price was determined based on the fair market value as determined by the closing stock price at
the date of the grant. For stock options granted during 2019 and 2018 the following weighted average assumptions were used in determining
fair value:
|
|
2019
|
|
2018
|
Risk-free interest rate
|
|
|
2.23
|
%
|
|
|
2.70
|
%
|
Expected volatility
|
|
|
126
|
%
|
|
|
90
|
%
|
Expected term in years
|
|
|
6.0
|
|
|
|
6.1
|
|
Dividend yield
|
|
|
-
|
%
|
|
|
-
|
%
|
The Company determines the expected term of its stock option
awards using the simplified method based on the weighted average of the length of the vesting period and the term of the exercise
period. Expected volatility is determined by the volatility of the Company’s historical stock price over the expected term
of the grant. The risk-free interest rate for the expected term of each option granted is based on the U.S. Treasury yield curve
in effect at the time of grant.
Option activity under the Plans for the
year ended December 31, 2019, was as follows (in thousands, except as noted):
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Price
|
|
|
Term
|
|
|
Value
|
|
|
|
|
|
|
(per share)
|
|
|
(in years)
|
|
|
|
|
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2018
|
|
|
37
|
|
|
$
|
112.60
|
|
|
|
7.5
|
|
|
$
|
-
|
|
Granted
|
|
|
35
|
|
|
|
18.40
|
|
|
|
9.2
|
|
|
|
|
|
Forfeited
|
|
|
(3
|
)
|
|
|
36.68
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(1
|
)
|
|
|
61.18
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2019
|
|
|
68
|
|
|
$
|
68.56
|
|
|
|
7.7
|
|
|
$
|
-
|
|
Vested and expected to vest December 31, 2019
|
|
|
58
|
|
|
$
|
76.12
|
|
|
|
7.4
|
|
|
$
|
-
|
|
Exercisable at December 31, 2019
|
|
|
26
|
|
|
$
|
138.77
|
|
|
|
5.5
|
|
|
$
|
-
|
|
The aggregate intrinsic value represents the total pretax intrinsic
value (the difference between the Company’s closing stock price on December 31, 2019 and the exercise price, multiplied by
the number of in-the-money options) that would have been received by the option holders had all option holders exercised their
options on December 31, 2019. This amount changes based on the fair market value of the Company’s stock.
Option activity under the Plans for the
year ended December 31, 2018, was as follows (in thousands, except as noted):
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Price
|
|
|
Term
|
|
|
Value
|
|
|
|
|
|
|
(per share)
|
|
|
(in years)
|
|
|
|
|
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2017
|
|
|
32
|
|
|
$
|
232.00
|
|
|
|
4.0
|
|
|
$
|
-
|
|
Granted
|
|
|
20
|
|
|
|
34.60
|
|
|
|
9.3
|
|
|
|
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(15
|
)
|
|
|
267.20
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2018
|
|
|
37
|
|
|
$
|
112.60
|
|
|
|
7.5
|
|
|
$
|
-
|
|
Vested and expected to vest December 31, 2018
|
|
|
31
|
|
|
$
|
124.60
|
|
|
|
7.2
|
|
|
$
|
-
|
|
Exercisable at December 31, 2018
|
|
|
15
|
|
|
$
|
181.00
|
|
|
|
5.1
|
|
|
$
|
-
|
|
The aggregate intrinsic value represents the total pretax intrinsic
value (the difference between the Company’s closing stock price on December 31, 2018 and the exercise price, multiplied by
the number of in-the-money options) that would have been received by the option holders had all option holders exercised their
options on December 31, 2018. This amount changes based on the fair market value of the Company’s stock.
Stock-Based Compensation Expense –
Total stock-based compensation expense for the year ended 2019 was $0.7 million which consisted of research and development
expense of $0.1 million and general and administrative expense of $0.6 million. As of December 31, 2019, future stock-based
compensation expense for all outstanding unvested options was $0.6 million, which is expected to be recognized over a
weighted-average vesting period of 2.2 years. Total stock-based compensation expense for the year ended 2018 was $0.6 million
which consisted of research and development expense of $0.1 million and general and administrative expense of $0.5
million.
A summary of warrants outstanding and exercisable as of December
31, 2019 (in thousands, except as noted):
|
|
Warrants Outstanding
|
|
|
Warrants Exercisable
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Remaining
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
Number
|
|
|
Contractual
|
|
|
Exercise
|
|
|
Number
|
|
|
Exercise
|
|
Year Issued
|
|
Outstanding
|
|
|
Life
|
|
|
Price
|
|
|
Exercisable
|
|
|
Price
|
|
|
|
|
|
|
(in years)
|
|
|
(per share)
|
|
|
|
|
|
(per share)
|
|
2016
|
|
|
6
|
|
|
|
2.0
|
|
|
$
|
466.26
|
|
|
|
6
|
|
|
$
|
466.26
|
|
2017
|
|
|
23
|
|
|
|
2.4
|
|
|
|
118.95
|
|
|
|
23
|
|
|
|
118.95
|
|
2018
|
|
|
120
|
|
|
|
4.2
|
|
|
|
19.20
|
|
|
|
120
|
|
|
|
19.20
|
|
2019
|
|
|
710
|
|
|
|
4.8
|
|
|
|
11.31
|
|
|
|
710
|
|
|
|
11.31
|
|
|
|
|
859
|
|
|
|
4.7
|
|
|
$
|
18.67
|
|
|
|
859
|
|
|
$
|
18.67
|
|
|
11.
|
Commitments and Contingencies
|
Drug Supplier Project Plan – The amounts
paid for manufacture of the Company’s Grb2 drug substance, prexigebersen, prexigebersen-A, Bcl-2 drug substance and BP1002
drug product that have not been expensed total $0.8 million and are carried on the balance sheet as of December 31, 2019 as Prepaid
Drug Product for Testing (See Note 3). Total commitments for the Company’s drug supplier project plan are $1.4 million as
of December 31, 2019, comprised of $1.1 million to the manufacturer of prexigebersen, prexigebersen-A and BP1002 drug product,
$0.2 million for manufacture of our Grb2 and Bcl-2 drug substances, and $0.1 million for manufacturing development. We expect to
incur $0.9 million of these commitments over the next 12 months.
In April 2014, the Company entered into a five-year lease agreement
for administrative office space located in Bellaire, Texas. The term of the lease began on August 1, 2014 and was set to expire
on July 31, 2019; however, in May 2019, we entered into an amendment to the lease agreement to extend the term of the lease for
a period of five years, beginning on August 1, 2019 and ending on October 31, 2024.
In April 2016, the Company entered into a three-year lease agreement
for lab space located in Bellaire, Texas that required Bio-Path to pay $2,500 per month over the term of the lease. The term of
lease began on May 1, 2016 and was set to expire on April 30, 2019; however, in December 2018, we entered into an amendment to
the lease agreement to extend the term for a period of three years, beginning on May 1, 2019 and ending on April 30, 2022. The
amendment also amended the monthly rent from $2,500 per month to $2,575 per month over the term of the lease.
At the inception of an agreement, the Company determines
if the agreement is a lease based on the unique facts and circumstances in each agreement. Lease classification, recognition,
and measurement are then determined at the lease commencement date. For agreements that contain a lease, we identify lease
and non-lease components, determine the consideration in the contract, determine whether the lease is an operating or
financing lease and recognize ROU assets and lease liabilities. Lease liabilities and their corresponding ROU assets are
recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease
contracts is typically not readily determinable so we use an incremental borrowing rate based on the information available at
the lease commencement date, which represents an estimated rate that would be incurred to borrow over a similar term in a
similar economic environment. The weighted average incremental borrowing rate utilized on our lease liabilities as of
December 31, 2019 was 8.0%.
Our current leases include options to renew which can
impact the lease term. The exercise of these options is at the Company’s discretion and we do not include any of these
options within the expected lease term as we are not reasonably certain we will exercise these options. Fixed lease payments
on operating leases are recognized over the expected term of the lease on a straight-line basis within our consolidated
financial statements. Our leases are included in ROU assets, current portion of lease liabilities and noncurrent lease
liabilities in our consolidated balance sheet for the year ended December 31, 2019.
The following table summarizes our operating lease assets and
liabilities as of December 31, 2019:
|
|
ROU Assets
and Liabilities
|
|
|
|
(in thousands)
|
|
Assets:
|
|
|
|
|
Operating lease assets
|
|
$
|
367
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Current portion of lease liabilities
|
|
|
85
|
|
Noncurrent lease liabilities
|
|
|
330
|
|
Total operating lease liabilities
|
|
$
|
415
|
|
The following table summarizes our lease related costs for the
year ended December 31, 2019:
|
|
Lease Costs
|
|
|
|
(in thousands)
|
|
Operating lease costs
|
|
$
|
114
|
|
Variable lease costs
|
|
|
6
|
|
Total lease costs
|
|
$
|
120
|
|
The Company made cash payments for its operating leases of
$0.1 million for the year ended December 31, 2019. The Company recognized $0.3 million in 2019 for ROU assets and corresponding
lease liabilities related to the amendment of our office lease in addition to the $0.1 million recognized upon adoption of the
new lease standard on January 1, 2019 (See Note 2). Additionally, the Company recognized $31,000 of non-cash leasehold
improvements for the year ended December 31, 2019.
The following table summarizes our expected minimum lease payments
as of December 31, 2019:
As of December 31, 2019
|
(in thousands)
|
2020
|
|
$
|
115
|
|
2021
|
|
|
117
|
|
2022
|
|
|
98
|
|
2023
|
|
|
89
|
|
2024 and thereafter
|
|
|
76
|
|
Future minimum lease payments
|
|
|
495
|
|
Less: Interest
|
|
|
(80
|
)
|
Present value of operating lease liabilities
|
|
$
|
415
|
|
As of December 31, 2019, the weighted average remaining lease
term was 4.4 years.
ASC 840 Disclosures
The following table summarizes our expected minimum lease payments
as of December 31, 2018:
As of December 31, 2018
|
|
(in thousands)
|
|
2019
|
|
$
|
82
|
|
2020
|
|
|
31
|
|
2021
|
|
|
31
|
|
2022
|
|
|
10
|
|
Future minimum lease payments
|
|
$
|
154
|
|
The Company recognized $120,000 in rent expense for office and
lab space for the year ended December 31, 2019.
The Company initiated a contribution savings plan under Section
401(k) of the Internal Revenue Code in 2016. Under the plan, all eligible employees may contribute up to the statutory allowable
amount governed by the Internal Revenue Service for any calendar year. We make matching contributions equal to 100% of the first
3% and 50% of the next 2% of each employee’s base salary up to the allowable amount which is fully vested on the date the
matching contributions are made. For the years ended December 31, 2019 and 2018, matching contributions totaled $29,000 and $35,000,
respectively.
At December 31, 2019, the Company had a net operating loss carryforward
for federal income tax purposes of $51.4 million, $35.8 million of which begins to expire in varying amounts in tax year 2026.
$15.6 million of net operating losses, incurred after December 31, 2017, carryforward indefinitely. During the years ended December
31, 2019 and 2018, the Company raised additional equity capital. IRC Section 382 imposes certain limitations on the use of a net
operating losses to offset future taxable income when an ownership change has occurred. The Company has yet to determine whether
an ownership change occurred in 2019 or 2018. If an ownership change is determined to have occurred, additional limitations on
the Company’s net operating losses incurred prior to the ownership change may apply. The Company has a research and development
tax credit carryforward of $2.1 million for federal income tax purposes that begins to expire in varying amounts in tax year 2028.
In assessing the ability to realize its deferred tax assets,
management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers evidence such as the reversal of deferred tax liabilities,
projected future results of operations, and tax planning strategies in making this assessment. Based upon the level of historical
taxable income, significant book losses during the current and prior periods, and projections for future results of operations
over the periods in which the deferred tax assets are deductible, among other factors, management continues to conclude that the
Company does not meet the “more likely than not” requirement of ASC 740 in order to recognize deferred tax assets.
As such, a valuation allowance has been recorded to offset the Company’s net deferred tax assets at December 31, 2019. The
Company recorded an increase in the valuation allowance of $2.0 million for the year ended December 31, 2019.
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs
Act (the “2017 Tax Act”). The 2017 Tax Act significantly changes corporate income tax laws in the U.S. including reducing
the corporate income tax rate from a maximum of 35% to a flat rate of 21%, effective January 1, 2018. As a result of the reduction
in the corporate income tax rate under the 2017 Tax Act, an adjustment was recorded in 2017 to the deferred tax asset of $4.9 million.
Due to the uncertainty surrounding the realization of the
benefits of its deferred assets, including NOL carryforwards, the Company has provided a 100% valuation allowance on its
deferred tax assets at December 31, 2019 and 2018. The valuation allowance was $13.4 million and $11.4 million as of December
31, 2019 and 2018, respectively.
The components of the Company’s deferred tax asset are
as follows:
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(in thousands)
|
|
Deferred tax assets – non-current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued bonuses
|
|
$
|
64
|
|
|
$
|
12
|
|
Accrued vacation
|
|
|
16
|
|
|
|
15
|
|
Net operating loss (NOL) carryover
|
|
|
10,789
|
|
|
|
9,191
|
|
Technology license amortization
|
|
|
-
|
|
|
|
-
|
|
Research & development tax credits
|
|
|
2,070
|
|
|
|
1,780
|
|
Share based expense
|
|
|
401
|
|
|
|
310
|
|
Other
|
|
|
4
|
|
|
|
5
|
|
Fixed asset depreciation
|
|
|
61
|
|
|
|
50
|
|
Total deferred tax asset
|
|
|
13,405
|
|
|
|
11,363
|
|
Less: valuation allowance
|
|
|
(13,405
|
)
|
|
|
(11,363
|
)
|
Net deferred tax asset
|
|
|
-
|
|
|
|
-
|
|
Deferred tax liability- non-current
|
|
|
-
|
|
|
|
-
|
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Reconciliation between income taxes at the
statutory tax rate (21%) and the actual income tax provision for continuing operations follows:
|
|
December 31,
|
|
|
2019
|
|
|
2018
|
|
|
|
(in thousands)
|
Loss before income taxes
|
|
$
|
(8,599
|
)
|
|
$
|
(8,583
|
)
|
Tax (benefit) at statutory tax rate
|
|
|
(1,806
|
)
|
|
|
(1,802
|
)
|
Effects of:
|
|
|
|
|
|
|
|
|
Exclusion of incentive stock option expense
|
|
|
53
|
|
|
|
47
|
|
R&D tax credits
|
|
|
(290
|
)
|
|
|
(238
|
)
|
Increase (decrease) in valuation allowance
|
|
|
2,041
|
|
|
|
1,845
|
|
FMV of warrants
|
|
|
-
|
|
|
|
-
|
|
Prior year adjustments
|
|
|
-
|
|
|
|
-
|
|
Carryforward adjustment
|
|
|
2
|
|
|
|
2
|
|
ASC 718 additional paid in capital adjustment
|
|
|
-
|
|
|
|
146
|
|
Rate change on net deferred tax asset
|
|
|
-
|
|
|
|
-
|
|
Provision for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
As of December 31, 2019, the Company had no unrecognized income
tax benefits. The Company’s policy for classifying interest and penalties associated with unrecognized income tax benefits
is to include such items as tax expense. No interest or penalties have been recorded as of the year ended December 31, 2019, and
no interest or penalties have been accrued as of December 31, 2019 and 2018.
The Company’s open years for Internal Revenue Service
(IRS) examination purposes due to normal statute of limitation are 2016, 2017 and 2018. However, since the Company has operating
loss carryforwards, the IRS has the ability to make adjustments to items that originate in a year otherwise barred by the statute
of limitations under Section 6501 of the Internal Revenue Code of 1986, as amended (the “code”), in order to redetermine
tax for an open year to which those items are carried. Therefore, in a year in which a net operating loss deduction was claimed,
the IRS may examine the year in which the net operating loss was generated and adjust it accordingly for purposes of assessing
additional tax in the year the net operating loss was claimed. The Company is not currently under examination by the IRS or any
other taxing authorities.