Business Overview
We are a clinical stage
biopharmaceutical company focused on the discovery, development and commercialization of drugs for the treatment of cancer.
We are developing proprietary drugs independently and through research and development collaborations. Our core objective is
to leverage our proprietary phospholipid drug conjugate™ (PDC™) delivery platform to develop PDCs that
specifically target cancer cells, delivering improved efficacy and better safety as a result of fewer off-target effects. Our
PDC platform possesses the potential for the discovery and development of the next generation of cancer-targeting
treatments, and we plan to develop PDCs both independently and through research and development collaborations.
Our lead PDC therapeutic, CLR 131 is
a small-molecule PDC designed to provide targeted delivery of iodine-131 directly to cancer cells, while limiting exposure to
healthy cells. We believe this profile differentiates CLR 131 from many traditional on-market treatment options. CLR 131 is
the company’s lead product candidate and is currently being evaluated in a Phase 2 study in relapsed/refractory (r/r)
malignancies, including multiple myeloma (MM), chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL),
lymphoplasmacytic lymphoma/Waldenstrom’s macroglobulinemia (LPL/WM), marginal zone lymphoma (MZL), mantle cell lymphoma
(MCL), and diffuse large B-cell lymphoma (DLBCL). CLR 131 is also being evaluated in two
Phase 1 dose escalation studies, one in r/r MM and one in pediatric solid tumors and lymphoma. The U.S. Food and Drug
Administration (“FDA”) granted CLR 131 Fast Track Designation for both r/r MM and r/r DLBCL and Orphan Drug
Designation (ODD) of MM, LPL/WM, neuroblastoma, rhabdomyosarcoma, Ewing’s sarcoma and osteosarcoma. CLR 131 was also
granted Rare Pediatric Disease Designation (RPDD) for the treatment of neuroblastoma, rhabdomyosarcoma, Ewing’s sarcoma and osteosarcoma. Most recently, the
European Commission granted an ODD for r/r MM.
Our product pipeline also includes one
preclinical PDC chemotherapeutic program (CLR 1900) and several partnered PDC assets. The CLR 1900 Series is being targeted for
solid tumors with a payload that inhibits mitosis (cell division) a validated pathway for treating cancers.
We have leveraged our PDC platform to establish
four collaborations featuring five unique payloads and mechanisms of action. Through research and development collaborations, our
strategy is to generate near-term capital, supplement internal resources, gain access to novel molecules or payloads, accelerate
product candidate development and broaden our proprietary and partnered product pipelines.
Our PDC platform provides selective delivery of a diverse range
of oncologic payloads to cancerous cells, whether a hematologic cancer or solid tumor, a primary tumor, or a metastatic tumor and
cancer stem cells. The PDC platform’s mechanism of entry does not rely upon specific cell surface epitopes or antigens as
are required by other targeted delivery platforms. Our PDC platform takes advantage of a metabolic pathway utilized by all tumor
cell types in all stages of the tumor cycle. Tumor cells modify specific regions on the cell surface as a result of the utilization
of this metabolic pathway. Our PDCs bind to these regions and directly enter the intracellular compartment. This mechanism allows
the PDC molecules to accumulate over time, which enhances drug efficacy, and to avoid the specialized highly acidic cellular compartment
known as lysosomes, which allows a PDC to deliver molecules that previously could not be delivered. Additionally, molecules targeting
specific cell surface epitopes face challenges in completely eliminating a tumor because the targeted antigens are expressed in
limited in the total numbers on the cell surface, have longer cycling time from internalization to being present on the cell surface
again upon binding and are not present on all tumor cells of a particular cancer type. This means a subpopulation of tumor cells
always exist that cannot be targeted by therapies targeting specific surface epitopes. In addition to the benefits provided by
the mechanism of entry, PDCs offer the ability to conjugate payload molecules in numerous ways, thereby increasing the types of
molecules selectively delivered via the PDC.
The PDC platform features include the capacity
to link with almost any molecule, provide a significant increase in targeted oncologic payload delivery and the ability to target
all types of tumor cells. As a result, we believe that we can generate PDCs to treat a broad range of cancers with the potential
to improve the therapeutic index of oncologic drug payloads, enhance or maintain efficacy while also reducing adverse events by
minimizing drug delivery to healthy cells, and increasing delivery to cancerous cells and cancer stem cells.
We employ a drug discovery and development
approach that allows us to efficiently design, research and advance drug candidates. Our iterative process allows us to rapidly
and systematically produce multiple generations of incrementally improved targeted drug candidates.
A description of our PDC product candidates
follows:
Clinical Pipeline
Our lead PDC therapeutic, CLR 131 is
a small-molecule, PDC designed to provide targeted delivery of iodine-131 directly to cancer cells, while limiting exposure
to healthy cells. We believe this profile differentiates CLR 131 from many traditional on-market treatment and treatments in
development. CLR 131 is currently being evaluated in a Phase 2 study in r/r B-cell lymphomas, and two Phase 1 dose-escalating
clinical studies, one in r/r MM and one in r/r pediatric solid tumors and lymphoma. The initial Investigational New Drug
(IND) application was accepted by the FDA in March 2014 with multiple INDs submitted since that time. Initiated in March
2017, the primary goal of the Phase 2 study is to assess the compound’s efficacy in a broad range of hematologic
cancers. The Phase 1 study is designed to assess the compound’s safety and tolerability in patients with r/r MM (to
determine maximum tolerated dose) and was initiated in April 2015. The FDA previously accepted our IND application for a
Phase 1 open-label, dose escalating study to evaluate the safety and tolerability of a single intravenous administration of
CLR 131 in up to 30 children and adolescents with cancers including neuroblastoma, sarcomas, lymphomas (including
Hodgkin’s lymphoma) and malignant brain tumors. This study was initiated during the first quarter of 2019. These cancer
types were selected for clinical, regulatory and commercial rationales, including the radiosensitive nature and continued
unmet medical need in the r/r setting, and the rare disease determinations made by the FDA based upon the current definition
within the Orphan Drug Act.
In December 2014, the FDA granted ODD for
CLR 131 for the treatment of MM. Multiple myeloma is an incurable cancer of the plasma cells and is the second most common form
of hematologic cancers. In 2018, the FDA granted ODD and RPDD for CLR 131 for the treatment of neuroblastoma, rhabdomyosarcoma,
Ewing’s sarcoma and osteosarcoma. The FDA may award priority review vouchers to sponsors of rare pediatric disease products
that meet its specified criteria. The key criteria to receiving a priority review voucher is that the disease being treated is
life-threatening and that it primarily effects individuals under the age of 18. Under this program, a sponsor who receives an approval
for a drug or biologic for a rare pediatric disease can receive a priority review voucher that can be redeemed to receive a priority
review of a subsequent marketing application for a different product. Additionally, these priority review vouchers can be exchanged
or sold to other companies for them to use the voucher. In May 2019, the FDA granted Fast Track designation for CLR 131 for the
treatment of multiple myeloma in July 2019 for the treatment of DLBCL, in September, CLR 131 received Orphan Drug Designation from
the European Union for Multiple Myeloma, and in January 2020, CLR 131 the FDA granted Orphan Drug Designation for CLR 131 in lymphoplasmacytic
lymphoma (LPL).
Phase 2 Study in Patients
with r/r select B-Cell Malignancies
In February 2020,
we announced positive data from our Phase 2 CLOVER-1 study in patients with relapsed/refractory B-cell lymphomas. Relapsed/Refractory
MM and non-Hodgkin lymphoma (NHL) patients were treated with three different doses (<50mCi, ~50mCi and ~75mCi
total body dose (TBD). The <50mCi total body dose was a deliberately planned sub-therapeutic dose. CLR 131 achieved the primary
endpoint for the study. Patients with r/r MM who received the highest dose of CLR 131 showed a 42.8% overall response rate (ORR).
Those who received ~50mCi TBD had a 26.3% ORR with a combined rate of 34.5% ORR (n=33) while maintaining a well-tolerated safety
profile. Patients in the studies were elderly with a median age of 70, and heavily pre-treated, with a median of five prior lines
of treatment (range: 3 to 17), which included immunomodulatory drugs, proteasome inhibitors and CD38 antibodies for the majority
of patients. Additionally, a majority of the patients (53%) were quad refractory or greater and 44% of all treated multiple myeloma
patients were triple class refractory. 100% of all evaluable patients (n=43) achieved clinical benefit (primary outcome measure)
as defined by having stable disease or better. 85.7% of multiple myeloma patients receiving the higher total body dose levels of
CLR 131 experienced tumor reduction. The 75mCi TBD demonstrated positive activity in both high-risk patients and triple class refractory
patients with a 50% and 33% ORR, respectively.
Patients
with r/r NHL who received ~50mCi TBD and the ~75mCi TBD had a 42% and 43% ORR, respectively and a combined rate of 42%. These
patients were also heavily pre-treated, having a median of three prior lines of treatment (range, 1 to 9) with the majority
of patients being refractory to rituximab and/or ibrutinib. The patients had a median age of 70 with a range of 51 to 86. All
patients had bone marrow involvement with an average of 23%. In addition to these findings, subtype assessments were
completed in the r/r B-cell NHL patients. Patients with DLBCL demonstrated a 30% ORR with one patient achieving a complete
response (CR), which continues at nearly 24 months post-treatment. The ORR for CLL/SLL/MZL patients was 33%. Current data
from our Phase 2 CLOVER-1 clinical study show that four LPL/WM patients demonstrated 100% ORR with one patient achieving a CR
which continues at nearly 27 months post-treatment. This may represent an important improvement in the treatment of
relapsed/refractory LPL/WM as no approved or late-stage development treatments for second- and third-line patients have
reported a CR. LPL/WM is a rare, indolent and incurable form of NHL that is comprised of a niche patient population in need
of new and better treatment options.
The most frequently reported adverse events in r/r MM patients
were cytopenias, which followed a predictable course and timeline. The frequency of adverse events have not increased as doses
were increased and the profile of cytopenias remains consistent. Importantly, these cytopenias
have had a predictable pattern to initiation, nadir and recovery and are treatable. The most common grade ≥3 events at
the highest dose (75mCi TBD) were hematologic toxicities including thrombocytopenia (65%), neutropenia (41%), leukopenia (30%),
anemia (24%) and lymphopenia (35%). No patients experienced cardiotoxicities, neurological toxicities, infusion site reactions,
peripheral neuropathy, allergic reactions, cytokine release syndrome, keratopathy, renal toxicities, or changes in liver enzymes.
The safety and tolerability profile in patients with r/r NHL was similar to r/r MM patients
except for fewer cytopenias of any grade. Based upon CLR 131 being well tolerated across all dose groups and the profound responses,
especially in difficult to treat patients such as high risk and triple class refractory or penta-refractory, and corroborating
data showing the potential to further improve upon current ORRs and durability of those responses, the study has been expanded
to test a two-cycle dosing optimization regimen of CLR 131.
In July 2018, we announced that after a
single 25mCi/m2 IV administration of CLR 131, patients with relapsed/refractory aggressive DLBCL were assessed for response.
These interim data show a 33% ORR and a 50% clinical benefit response (CBR). In addition, the observed responses to date show overall
tumor reduction ranged from 60% to greater than 90%. As a result of these favorable outcomes, we have expanded this cohort to include
up to 30 additional patients. We also announced that a patient in the lymphoplasmacytic lymphoma (LPL) arm with advanced Waldenstrom
macroglobulinema showed a 94% reduction in tumor burden and complete resolution in four of five targeted masses after two doses
of CLR 131 separated by 123 days.
In July 2016, we were awarded a $2,000,000
National Cancer Institute (NCI) Fast-Track Small Business Innovation Research grant to further advance the clinical development
of CLR 131. The funds are supporting the Phase 2 study initiated in March 2017 to define the clinical benefits of CLR 131 in r/r
MM and other niche hematologic malignancies with unmet clinical need. These niche hematologic malignancies include Chronic Lymphocytic
Leukemia, Small Lymphocytic Lymphoma, Marginal Zone Lymphoma, Lymphoplasmacytic Lymphoma and DLBCL. The study is being conducted
in approximately 10 U.S. cancer centers in patients with orphan-designated relapse or refractory hematologic cancers. The study’s
primary endpoint is CBR, with additional endpoints of ORR, PFS, median Overall Survival (mOS) and other markers of efficacy following
a single 25.0 mCi/m2 dose of CLR 131, with the option for a second 25.0 mCi/m2 dose approximately 75-180
days later. Based on the performance results from Cohort 5 of our Phase 1 study in patients with r/r MM, reviewed below, we have
modified the dosing regimen of this study to a fractionated dose of 15.625 mCi/m2 administered on day 1 and day 8.
Phase 1 Study in Patients with r/r Multiple
Myeloma
In February 2020, we announced the successful
completion of our Phase 1 dose escalation study. Data from the study demonstrated that CLR 131 was safe and tolerated at total
body doses of >80mCi in r/r multiple myeloma (MM), The Phase 1 multicenter, open-label, dose-escalation study was designed to
evaluate the safety and tolerability of CLR 131 administered as a 30-minute I.V. infusion, either as a single bolus dose or as
two fractionated doses. The r/r multiple myeloma patients in this study received doses ranging from ≤25mCi to >80mCi total
body dose. To date, an independent Data Monitoring Committee determined that all doses have been safe and well-tolerated by patients.
CLR 131 in combination with dexamethasone is currently
under investigation in a Phase 1 study in adult patients with r/r MM. Patients must have been refractory to or relapsed from at
least one proteasome inhibitor and at least one immunomodulatory agent. The clinical study is a standard three-plus-three dose
escalation safety study to determine the maximum tolerable dose. Multiple myeloma is an incurable cancer of the plasma cells and
is the second most common form of hematologic cancers. Secondary objectives include the evaluation of therapeutic activity by assessing
surrogate efficacy markers, which include M protein, free light chain FLC, PFS and OS. All patients have been heavily pretreated
with an average of five prior lines of therapy. CLR 131 was deemed by an Independent Data Monitoring Committee (IDMC) to be safe
and tolerable up to its planned maximum single, bolus dose of 31.25 mCi/m2. The four single dose cohorts examined were:
12.5 mCi/m2 (~25mCi TBD), 18.75 mCi/m2 (~37.5mCi TBD), 25 mCi/m2(~50mCi TBD), and 31.25 mCi/m2(~62.5mCi
TBD), all in combination with low dose dexamethasone (40 mg weekly). Of the five patients in the first cohort, four achieved stable
disease and one patient progressed at Day 15 after administration and was taken off the study. Of the five patients admitted to
the second cohort, four achieved stable disease and one patient progressed at Day 41 after administration and was taken off the
study. Four patients were enrolled to the third cohort and all achieved stable disease. In September 2017, we announced results
for cohort 4, showing that a single infusion up to 30-minutes of 31.25mCi/m2 of CLR 131 was safe and tolerated by the
three patients in the cohort. Additionally, all three patients experienced CBR with one patient achieving a partial response (PR).
We use the International Myeloma Working Group (IMWG) definitions of response, which involve monitoring the surrogate markers of
efficacy, M protein and FLC. The IMWG defines a PR as a greater than or equal to 50% decrease in FLC levels (for patients in whom
M protein is unmeasurable) or 50% or greater decrease in M protein. The patient experiencing a PR had an 82% reduction in FLC.
This patient did not produce M protein, had received seven prior lines of treatment including radiation, stem cell transplantation
and multiple triple combination treatments including one with daratumumab that was not tolerated. One patient experiencing stable
disease attained a 44% reduction in M protein. In January 2019, we announced that the pooled mOS data from the first four cohorts
was 22.0 months. In late 2018, we modified this study to evaluate a fractionated dosing strategy to potentially increase efficacy
and decrease adverse events.
The first fractionated dose cohort was
cohort 5 in which patients received a 31.25mCi/m2 fractionated dose administered 15.625mCi/m2 (~31mCi TBD) on days 1 and 8. Results
from cohort 5 indicated enhanced tolerability and safety in comparison to cohort 4 despite an 18% increase in average total dose
from 55.29 mCi to 65.15 mCi of CLR 131. Patients in cohort 5 required less supportive care such as transfusions of platelets or
packed red blood cells than seen in previous cohorts. Similar to previous cohorts, patients experienced few off-target adverse
events, i.e. no peripheral neuropathy, embolisms, gastrointestinal upset, etc. Furthermore, surrogate efficacy markers demonstrated
that patients in cohort 5 monitored by M-protein showed a nearly 50% further reduction in M-Protein than seen in cohort 4. Based
on these results, on December 4, 2018 the IDMC recommended, advancement to a sixth cohort. Cohort 6 was initiated in late December
2018 where patients received a 37.5mCi/m2 fractionated dose administered 18.75mCi/m2 (~37.5mCi TBD) on days 1 and 8.
In May 2019, we announced initial results
from cohort 6 in our ongoing Phase 1 clinical study with CLR 131 in R/R MM. The 37.5mCi/m2 fractionated dose was determined to
be safe and tolerable by the IDMC. Data from cohort 6 showed improved efficacy and a clear dose response compared to prior cohorts,
including a 50% partial response rate, a 50% minimal response rate and 100% disease control rate. Following the determination,
we initiated a cohort 7 utilizing a 40mCi/m2 fractionated dose administered 20mCi/m2 (~40mCi TBD) on days 1 and day 8. Cohort 7
completed enrollment. Currently, some patients remain within the evaluation period with the drug being deemed to be safe and tolerable.
The International Myeloma Working Group defines a partial response as a 50% to 89.9% reduction in the marker of disease and minimal
response as 25% to 49.9% reduction in the marker of disease. One patient achieved a minimal response with a 48% reduction in their
disease marker.
In May 2019, we announced that the FDA
granted Fast Track Designation for CLR 131 in fourth line or later r/r MM. CLR 131 is our small-molecule radiotherapeutic PDC designed
to deliver cytotoxic radiation directly and selectively to cancer cells and cancer stem cells. It is currently being evaluated
in our ongoing CLOVER-1 Phase 2 clinical study in patients with relapsed or refractory multiple myeloma and other select B-cell
lymphomas.
Phase
1 Study in r/r Pediatric Patients with select Solid tumors, Lymphomas and Malignant Brain Tumors.
In December 2017 the Division of Oncology
at the FDA accepted our IND and study design for the Phase 1 study of CLR 131 in children and adolescents with select rare and
orphan designated cancers. This study was initiated during the first quarter of 2019. In December 2017, we filed an IND application
for r/r pediatric patients with select solid tumors, lymphomas and malignant brain tumors. The Phase 1 clinical study of CLR 131
is an open-label, sequential-group, dose-escalation study evaluating the safety and tolerability of intravenous administration
of CLR 131 in up to 30 children and adolescents with cancers including neuroblastoma, sarcomas, lymphomas (including Hodgkin’s
lymphoma) and malignant brain tumors. Secondary objectives of the study are to identify the recommended Phase 2 dose of CLR 131
and to determine preliminary antitumor activity (treatment response) of CLR 131 in children and adolescents. In 2018, the FDA granted
OD and RPDD for CLR 131 for the treatment of neuroblastoma, rhabdomyosarcoma, Ewing’s sarcoma and osteosarcoma. Should any
of these indications reach approval, the RPDD would enable us to receive a priority review voucher. Priority review vouchers can
be used by the sponsor to receive priority review for a future New Drug Application (“NDA”) or Biologic License Application
(“BLA”) submission, which would reduce the FDA review time from 12 months to six months. Currently, these vouchers
can also be transferred or sold to another entity.
Phase 1 Study in r/r Head and Neck Cancer
In August 2016, the University
of Wisconsin Carbone Cancer Center (“UWCCC”) was awarded a five-year Specialized Programs of Research Excellence (“SPORE”)
grant of $12,000,000 from the National Cancer Institute and the National Institute of Dental and Craniofacial Research to improve
treatments and outcomes for head and neck cancer, HNC, patients. HNC is the sixth most common cancer across the world with approximately
56,000 new patients diagnosed every year in the U.S. As a key component of this grant, the UWCCC researchers completed testing
of CLR 131 in various animal HNC models and initiated the first human clinical trial enrolling up to 30 patients combining CLR
131 and external beam radiation with recurrent HNC in Q4 2019.
Preclinical Pipeline
We believe our PDC platform has potential
to provide targeted delivery of a diverse range of oncologic payloads, as exemplified by the product candidates listed below,
that may result in improvements upon current standard of care (“SOC”) for the treatment of a broad range of human
cancers:
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CLR 1800 Series was a collaborative PDC program with Pierre Fabre that expired in January 2019. The program has been successful in demonstrating improved tolerability and efficacy in multiple animal models. The newly developed PDCs may provide enhanced therapeutic indices to otherwise highly potent, nontargeted payloads through the targeted delivery of the chemotherapeutic payload to cancer cells via our proprietary phospholipid ether delivery platform. The CLR 1800 Series remains under evaluation by us as a number of PDC molecules have the potential to be progressed toward and into IND enabling studies.
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CLR 1900 Series is an internally developed proprietary PDC program
leveraging a novel small molecule cytotoxic compound as the payload. The payload inhibits mitosis (cell division) and targets a
key pathway required to inhibit rapidly dividing cells that results in apoptosis. We believe that this program could produce a
product candidate targeted to select solid tumors. Currently, the program is in early preclinical development and if we elect to
progress any molecules further, we will select preferred candidates.
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CLR 2000 Series is a collaborative PDC program with Avicenna Oncology, or Avicenna, that we
entered into in July 2017. Avicenna is a developer of antibody drug conjugates (“ADCs”). The objective of the
research collaboration is to design and develop a series of PDCs utilizing Avicenna’s proprietary cytotoxic payload.
Although Avicenna is a developer of ADCs, this collaboration was sought as a means to overcome many of the challenges
associated with ADCs, including those associated with the targeting of specific cell surface epitopes. The CLR 2000 Series
has demonstrated improved safety, efficacy and tissue distribution with the cytotoxic payload in animal models. A candidate molecule and a
back-up have been selected for further advancement.
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CLR 2100 and 2200 Series are collaborative PDC programs with Onconova Therapeutics, Inc., or Onconova, that we entered into in September 2017. Onconova is a biotechnology company specializing in the discovery and development of novel small molecule cancer therapies. The collaboration is structured such that we will design and develop a series of PDCs utilizing different small molecules that Onconova was developing as payloads with the intent to show improved targeting and specificity to the tumor. At least one of the molecules was taken into Phase 1 clinical studies previously by Onconova. We would own all new intellectual property associated with the design of the new PDCs, and both companies will have the option to advance compounds.
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CLR 12120 Series is a collaborative PDC program with Orano Med for the development of novel PDCs utilizing Orano Med’s unique alpha emitter, lead 212 conjugated to our phospholipid ether; the companies intend to evaluate the new PDCs in up to three oncology indications. Currently this series has shown efficacy in the first two animal models tested.
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Technology Overview
Our product candidates are based on a cancer-targeting delivery
platform of optimized phospholipid ether (PLE) analogs (phospholipid ether proprietary delivery vehicle) that interact with lipid
rafts. Lipid rafts are specialized regions of a cell’s membrane phospholipid bilayer that contain high concentrations of
cholesterol and sphingolipids and serve to organize cell surface and intracellular signaling molecules. As a result of enrichment
and stabilization of lipid rafts in cancer cells, including cancer stem cells, our product candidates provide selective targeting
preferentially to cancer cells over normal healthy cells. The cancer-targeting PLE delivery vehicle was deliberately designed to
be combined with therapeutic, diagnostic and imaging molecules. For example, the cytotoxic radioisotope, iodine-131 can be attached
via a stable covalent bond to the PLE resulting in our lead PDC, CLR 131. Non-radioactive molecules, including many classes of
small molecule chemotherapeutic compounds, peptides and other molecules can also be attached to the delivery vehicle.
We are focused on exploring the creation
of additional PDCs ranging from newly discovered to well-characterized chemotherapeutic payloads. The objective is to develop PDC
chemotherapeutics through conjugation of our delivery vehicle and non-targeted anti-cancer agents to improve therapeutic indices
and expand potential indications through the targeted delivery of chemotherapeutic payloads. Initial PDC product candidates include
our CLR 1800, 1900, 2000, 2100, 2200, and 12120 series of conjugated compounds currently being researched independently and through
partnerships. Other than CLR 12120, all are small-molecule, cancer-targeting chemotherapeutics in pre-clinical research. To date,
multiple cancer-targeting product profiles have been generated from a single chemical core structure that is the foundation of
our technology platform. We also believe that additional cytotoxic PDCs may be developed possessing enhanced therapeutic indices
versus the original, non-targeted cytotoxic payload as a monotherapy.
Malignant tumor targeting, including targeting
of cancer stem cells, has been demonstrated in vivo in animal models as well as in clinical studies. Mice without intact
immune systems and inoculated with Panc-1 (pancreatic carcinoma) cells, were injected with CLR 1502, 24 or 96 hours prior to imaging.
In vivo optical imaging showed pronounced accumulation of CLR 1502 in tumors versus non-target organs and tissues. Similarly,
positron emission tomography (PET) imaging of tumor-bearing animals (colon, glioma, triple negative breast and pancreatic tumor
xenograft models) administered the imaging agent CLR 124 clearly shows selective uptake and retention by both primary tumors and
metastases, including cancer stem cells. PET/CT analysis following co-injection of CLR 131 (for therapy) and CLR 124 (for imaging)
revealed time-dependent tumor responses and disappearance over nine days in a cancer xenograft model. We believe that the capability
of our technology to target and be selectively retained by cancer stem cells in vivo, was demonstrated by treating glioma
stem cell-derived orthotopic tumor-bearing mice with another fluorescent-labeled PDC (CLR 1501), and then removing the tumor and
isolating cancer stem cells, which continued to display CLR 1501 labeling even after three weeks in cell culture.
The basis for selective tumor targeting
of our compounds lies in differences between the plasma membranes of cancer cells as compared to those of most normal cells. Data
suggests that lipid rafts serve as portals of entry for PDCs such as CLR 131 and our multiple series of drug conjugates. The marked
selectivity of our compounds for cancer cells versus non-cancer cells likely results from cancer cells maintenance of an overabundance
of lipid rafts and the stabilization of these microdomains within the plasma membrane as compared to normal cells. Following cell
entry via lipid rafts, CLR 131 is transported into the cytoplasm, where it traffics along the Golgi apparatus and is distributed
to various peri-nuclear organelles (including mitochondria and the endoplasmic reticulum). The pivotal role played by lipid rafts
is underscored by the fact that disruption of lipid raft architecture significantly eliminates uptake of our PDC delivery vehicle
into cancer cells.
Products in Development
CLR 131
CLR 131 is a small-molecule, cancer-targeting
molecular radiotherapeutic PDC that we believe has the potential to be the first radiotherapeutic agent to use PLEs to target cancer
cells. CLR 131 is comprised of our proprietary PLE, 18-(p-[I-131]iodophenyl) octadacyl phosphocholine, acting as a cancer-targeting
delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic (cell-killing) radioisotope with a half-life of
eight days that is already in common use to treat thyroid, pediatric tumors and other cancer types including NHL. It is this “intracellular
radiation” mechanism of cancer cell killing, coupled with delivery to a wide range of malignant tumor types that we believe
provides CLR 131 with anti-cancer activity. Selective uptake and retention have been demonstrated in cancer stem cells compared
with normal cells, offering the prospect of longer lasting anti-cancer activity.
Pre-clinical experiments in tumor models
have demonstrated selective killing of cancer cells along with a safe and tolerable product profile. CLR 131’s anti-tumor/survival-prolonging
activities have been demonstrated in more than a dozen models including breast, prostate, lung, brain, pancreatic, ovarian, uterine,
renal, and colorectal cancers as well as, melanoma and multiple myeloma. In all but two models, a single administration of a well-tolerated
dose of CLR 131 was sufficient to demonstrate efficacy. Moreover, efficacy was also seen in a model employing human uterine sarcoma
cells that have known resistance to many standard chemotherapeutic drugs. CLR 131 was also tested in combination with a standard
efficacious dose of gemcitabine in a pancreatic cancer model. Single doses of CLR 131 or gemcitabine given alone were equally efficacious,
while the combination therapy was significantly more efficacious than either treatment alone (additive). While single doses of
CLR 131 have been effective and tolerated in multiple preclinical animal models, CLR 131 has been shown to provide a statistically
significant improvement in efficacy and survival when provided in a multi-dose format and remains tolerated. In each study, the
dose of CLR 131 was ~100 µCi, which is approximately 50-fold less than the maximum tolerated dose (MTD) of CLR 131 determined
in a six-month rat radiotoxicity study.
Extensive IND-enabling, Good Laboratory
Practices (GLP) in vivo and in vitro pre-clinical pharmacokinetic/ distribution, toxicology and drug safety studies
were successfully completed in 2007 through 2009 using non-pharmacological concentrations/doses of PLE consistent with its role
as a delivery/retention vehicle in CLR 131. Tissue distribution studies supported prediction of acceptable human organ exposures
and body clearance for CLR 131. Importantly, and in sharp distinction from biological products labeled with I-131, the small-molecule
CLR 131 showed very minimal variation in excretion kinetics and tissue distribution among individuals within species or across
a 500-fold variation in dose. Single and repeat-dose animal toxicology studies indicated very high margins of safety with our PLE
delivery and retention vehicle even when administered at 80-200x over the amount required to deliver the anticipated maximum human
therapy dose of CLR 131.
In 2009, we filed an IND with the FDA to
study CLR 131 in humans. In February 2010, we completed a Phase 1 dosimetry study with a single intravenous dose of 10 mCi/m2
CLR 131 in eight patients with relapsed/refractory advanced solid tumors. Single doses of CLR 131 were tolerated and the reported
adverse events were all considered minimal, manageable and either not dose limiting or not related to CLR 131. There were no serious
adverse events reported. Analysis of total body imaging and blood and urine samples collected over 42 days following injection
indicated that doses of CLR 131 expected to be therapeutically effective could be administered without harming vital organs. Two
subjects (one with colorectal cancer metastasized to lung and another with prostate cancer) had tumors that were imaged with 3D
nuclear scanning (SPECT/CT) on day 6 after administration of CLR 131. Uptake of CLR 131 into tumor tissue (but not adjacent normal
tissue or bone marrow) was clearly demonstrated in both subjects. Confirming animal studies, pharmacokinetic analyses demonstrated
a prolonged half-life of radioactivity in the plasma after CLR 131 administration (approximately 200 hours) and that there was
no significant variation in excretion or radiation dosimetry among subjects. The study established an initial dose of 12.5 mCi/m2,
for the Phase 1b escalating dose study that commenced in January 2012.
The primary objective of the multicenter
Phase 1b dose-escalation study in patients with a range of advanced solid tumors was to define the MTD of CLR 131. In addition
to determining the MTD, the Phase 1b study was intended to evaluate overall tumor response (using standard RESIST 1.1 criteria)
and safety. In September 2012, we announced that we had successfully completed the second cohort in this Phase 1b dose-escalation
study. Dose escalation in four cohorts subsequently occurred with refractory cancer patients receiving single doses of 25 mCi/m2,
31.25 mCi/m2 or 37.5 mCi/m2.
Tumor treatment with radioactive isotopes
has been used as a fundamental cancer therapeutic for decades. The goals of targeted cancer therapy — selective delivery
of effective doses of isotopes that destroy tumor tissue, sparing of surrounding normal tissue, and non-accumulation in vital organs
such as the liver and kidneys — remain goals of new therapies as well. We believe our isotope delivery technology has the
potential to achieve these goals. To date, CLR 131 has been shown in animal models to reliably and near-universally accumulate
in cancer cells, including cancer stem cells, and because the therapeutic properties of iodine-131 are well known, we believe the
risk of non-efficacy in human clinical studies is less than that of other cancer therapies at this stage of development, although
no assurance can be given.
In view of CLR 131’s selective
uptake and retention in a wide range of solid tumors and in cancer stem cells, its single-agent efficacy in animal models and
its non-specific mechanism of cancer-killing (radiation), we are initially developing CLR 131 as a monotherapy for cancer
indications with significant unmet medical need. While a number of indications were evaluated as the initial target
treatment, multiple myeloma was selected principally because it is an incurable hematologic disease that is highly
radiosensitive, with significant unmet medical need in the relapse or refractory clinical setting and is designated as an
orphan disease. As a result, this may provide an accelerated regulatory pathway due to CLR 131’s unique benefits such
as a novel mechanism of action, ease of administration, and positive benefit/risk profile potential in various high unmet
cancer populations. The IND application for multiple myeloma was accepted by the FDA in September 2014. In December 2014, the
FDA granted ODD for CLR 131 for the treatment of multiple myeloma. We initiated our Phase 1 Study of CLR 131 for the
treatment of r/r MM in April 2015 and have provided periodic clinical updates. CLR 131 is being evaluated as a monotherapy
and will subsequently be explored as a combination therapy with chemotherapeutic agents, immunomodulatory agents and in
combination with external beam radiotherapy.
In September 2017, we announced results
for Cohort 4 showing that a single 30-minute infusion of 31.25mCi/m2 of CLR 131 was safe and tolerated by the three
patients in the cohort. Additionally, all three patients experienced clinical benefit with one patient achieving a partial response
(“PR”). We are monitoring response rates via surrogate markers of efficacy including M protein and FLC. The IMWG defines
a PR as a greater than or equal to 50% decrease in FLC levels (for patients in whom M protein is unmeasurable) or 50% decrease
in M protein. The patient experiencing a PR had an 82% reduction in FLC. This patient did not produce M protein, received seven
prior lines of treatment including radiation, stem cell transplantation and multiple triple combination treatments including one
with daratumumab that was not tolerated. One patient experiencing stable disease attained a 44% reduction in M protein. For all
of the patients receiving the single dose, CLR 131 was the third line of treatment or later. We have recently converted the Phase
1a clinical data (single CLR 131 dose) to pooled data for presentation of the total performance of the results to date. On January
7, 2019, we announced that the pooled mOS data from the first four cohorts was 22.0 months. Based on the safety observed to date
as well as various efficacy signals, including reductions in M protein and FLC and a pooled mOS that has not yet been reached,
the study protocol was modified for cohort 5 to introduce a fractionated dose of 15.625 mCi/m2 administered on day 1
and day 8 to further determine the optimal dose-range for CLR 131. Results from Cohort 5 indicate enhanced tolerability and safety
in comparison to Cohort 4 despite an 18% increase in total average dose from 55.29 mCi to 65.15 mCi of CLR 131. Patients in Cohort
5 required less supportive care such as transfusions of platelets or packed red blood cells than seen in previous cohorts. Furthermore,
a review of surrogate efficacy markers demonstrated that patients in Cohort 5 monitored by M-protein showed a nearly 50% further
reduction in M-Protein than seen in Cohort 4. Based on the results and an IDMC, on December 4, 2018 we initiated a sixth cohort
using a fractionated two dose regimen of 18.75 mCi/m2 administered one week apart.
CLR 131 is also being evaluated in a Phase
2 clinical study examining r/r MM patients as well as selected other B-cell hematological malignancies. Patients will receive a
25 mCi/m2 dose infused over approximately 30 minutes with the option of a second 25 mCi/m2 dose 75-180 days
later based on physician assessment. Based on the performance results from Cohort 5 of our Phase 1 study in patients with r/r MM,
reviewed below, we modified the dosing regimen of this study to a fractionated dose of 15.625 mCi/m2 administered on
day 1 and day 8. This study is partially funded through a $2,000,000 Fast Track NCI SBIR award which was granted in July 2016.
In February 2019, we announced that a single,
25mCi/m2, 30-minute intravenous infusion of CLR 131 in the first 10 patients with r/r MM were assessed. These interim
data show a 30% response rate in a patient population which received an average of five prior lines of systemic therapy (including
daratumumab), at least one stem cell transplantation with the average age being 70. The observed responses to date show overall
reductions in surrogate markers of disease (M protein or free light chains, depending upon which is being used to monitor the patient’s
disease) between 70% and over 90%. In addition to these patients, 100% of patients achieved stable disease with 2 patients experiencing
a minimal response or a minimum reduction of a 25% in the surrogate marker being used to monitor the patient’s disease. Historically,
patients receiving 4th line chemotherapy treatment show a 15% response rate, and patients receiving 5th line chemotherapy show
an 8% response rate, whether dosed as mono-therapy or in combination. The multiple myeloma average treatment response rate (RR)
provided by line of therapy was obtained through a global information and technology vendor specializing in healthcare data analysis
utilizing over 12.5 billion U.S. insurance claims and 90 million electronic medical records. As a result of these outcomes, we
have expanded this cohort to include up to 30 additional patients.
In July 2018, we announced that after a
single 25mCi/m2 IV administration of CLR 131, patients with relapsed/refractory aggressive DLBCL were assessed for response.
These interim data show a 33% ORR and a 50% CBR. In addition, the observed responses to date show overall tumor reduction ranged
from 60% to greater than 90%. As a result of these favorable outcomes, we have expanded this cohort to include up to 30 additional
patients. We also announced that a patient in the lymphoplasmacytic lymphoma (LPL) arm with advanced Waldenstrom macroglobulinema
showed a 94% reduction in tumor burden and complete resolution in four of five targeted masses after two doses of CLR 131 separated
by 123 days.
In December 2017, we filed an IND application
with the Division of Oncology at the FDA for a proposed Phase 1 study of CLR 131 in children and adolescents with select rare
and orphan designated cancers. The Phase 1 clinical study of CLR 131 is an open-label, sequential-group, dose-escalation study
to evaluate the safety and tolerability of a single intravenous administration of CLR 131 in up to 30 children and adolescents
with cancers including neuroblastoma, sarcomas, lymphomas (including Hodgkin’s lymphoma) and malignant brain tumors. Secondary
objectives of the study are to identify the recommended Phase 2 dose of CLR 131 and to determine preliminary antitumor activity
(treatment response) of CLR 131 in children and adolescents. In 2018, the FDA a granted ODD and RPDD for CLR 131 for the treatment
of neuroblastoma, rhabdomyosarcoma, Ewing’s sarcoma and osteosarcoma. Should any of these indications reach approval, the
RPDD may enable us to receive a priority review voucher. Priority review vouchers can be used by the sponsor to receive Priority
Review for a future NDA or BLA submission, which would reduce the FDA review time from 12 months to six months. Currently, these
vouchers can also be transferred or sold to another entity. We plan to initiate this Phase 1 study in 2019, at 3-5 pediatric cancer
centers within and possibly outside the US.
Market Overview
Our target market is broad and represents the market for the
treatment of cancer. The American Cancer Society estimated that approximately 1.76 million new cancer cases were expected to be
diagnosed in the U.S. in 2019 and approximately 606,880 cancer deaths in the U.S. The global market for cancer drugs reached $107
billion in annual sales (June 2015), and could reach $150 billion by 2020, according to a report dated June 2016 by the IMS Institute
for Healthcare Informatics, a unit of drug data provider IQVIA. This growth will be driven by emerging targeted therapies, which
are expected to change the cancer treatment landscape (Cowen Report), and an increased use of cancer drug combination regimens.
Multiple Myeloma
According to the National Cancer Institute
SEER database, multiple myeloma is the second most common hematologic cancer with a U.S. incidence rate and a relapse or refractory
patient population of 10,000 to 15,000. The Decision Resources Group in 2016 estimated the multiple myeloma dollar market size
to be over $17B in 2018 and is forecasted to increase to nearly $27B in 2023. The increase in drug sales over this period will
be mainly driven by the increasing incidence of multiple myeloma in each of the seven key markets with the U.S. market remaining
the largest potential market. It is believed the largest growth will occur in patients receiving at least three lines of treatment
due to the expanding elderly population, increases in treatment population and increasing rates of survival from earlier lines
of treatment. According to data obtained from Decision Resource Group, over 40% of patients in later lines of therapy while eligible,
refuse treatment due to higher treatment failure, severity of adverse events and difficulty of treatment dosing regimen. The average
response rates for patients receiving their fourth- and fifth-line treatment are 15% and 8% response rates respectively. Additionally,
the mOS for these patients also decreases by line of therapy and is less than 9 months post third-line treatment.
Based on the CLR 131 Phase 1 and Phase
2 product profile demonstrated in fifth-line patients to date with a single dose, we believe CLR 131 may meet the unmet medical
need in the heavily pre-treated patient population described above.
B-Cell Lymphoma
B-cell
lymphoma represents cancers of the lymphatic system. The lymphoma may be indolent or aggressive and circulates in the blood or
form tumors in lymph nodes. According to the National Cancer Institute SEER data base the estimated 2018 incidence of B-Cell Lymphoma
was 163,000 cases. Types of B-Cell Lymphomas include Chronic Lymphocytic Leukemia, Small Lymphocytic Leukemia, Mantel Cell Lymphoma,
Marginal Zone Lymphoma, and the most common lymphoma, DLBCL.
We
believe there is a significant unmet medical need in B-Cell Lymphoma due to continued high mortality and poor response rates remain
in second- and third- line treatments compounded by the limited durability of responses.
Based on the CLR 131 Phase 2 product profile
demonstrated in DLBCL patients to date with a single dose, we believe CLR 131 may meet the unmet medical need in the patient population
described above as well.
Neuroblastoma
Neuroblastoma, a
neoplasm of the sympathetic nervous system, is the most common extracranial solid tumor of childhood, accounting for approximately
7.8% of childhood cancers in the U.S. The National Cancer Institute states the incidence is about 10.54 cases per 1 million per
year in children younger than 15 years and 90% are younger than 5 years at diagnosis. Over 650 new cases are diagnosed each year
in North America. Approximately 50% of patients present with metastatic disease requiring systemic treatment. Clinical consequences
include abdominal distension, proptosis, bone pain, pancytopenia, fever and paralysis. Although the prognosis is favorable in children
under one year of age with an 86 to 95% 5-year survival, in children aged one to 14 years the 5-year survival ranges from 34 to
68%.
Sarcomas
Sarcomas represent a heterogeneous
disease group. Sarcomas grow in connective tissue, or cells that connect or support other kinds of tissue in the body. These
tumors are most common in the bones, muscles, tendons, cartilage, nerves and blood vessels. Sarcomas represent 15% of all
pediatric tumors and 21% of pediatric solid tumors. The National Cancer Institute SEER
data base estimates that there were 2,060 incidences in 2019. The median age at diagnosis was 3, the median age of death was
5.
We
are focused on 3 subsets of Sarcomas:
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Osteosarcoma: The tumor develops in growing bone tissues, accounts for 28% of all bone sarcomas and is the most common pediatric sarcoma (56%).
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Ewing’s Sarcoma: The tumor develops in immature tissues in bone marrow
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Rhabdomyosarcoma: Tumors develop in the muscles predominately skeletal muscle.
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Based on information from Market Insights,
Epidemiology, and Market Forecast, the global market value of the Pediatric Sarcoma Market is expected to nearly double from $324
million in 2018 to $635 million in 2025. This growth is expected to be driven by the high rate of recurrence in pediatrics, increased
incidence in select markets and new high priced therapies coming to the market.
Manufacturing
CLR 131 drug product is made via a five-step
synthetic scheme. The release specifications for the drug product have been established and validated. Through process improvements,
we have been able to achieve a longer expiry dating for the compound extending finished product shelf-life to further facilitate
ex-U.S. distribution from North America.
The drug substance base molecule is a dry
powder produced via a six-step synthetic scheme. The release specifications for the drug substance have been established
and validated. We have successfully executed large scale production of the drug substance via a contract manufacturing organization
that has been inspected and approved by the FDA and the European Medicines Agency. We have also demonstrated 60-month stability
for the drug substance in desiccated and refrigerated forms at small scale and are replicating this at large scale.
In January 2018, we initiated the planned
shutdown of our radiopharmaceutical manufacturing facility in Madison, Wisconsin. This facility was designed to provide pilot and
small-scale production of our lead clinical program CLR 131. In December 2017, we transferred the manufacturing of CLR 131 to Centre
for Probe Development and Commercialization (”CPDC”), a validated Current Good Manufacturing Practices (“cGMPs”)
manufacturing organization specializing in radiopharmaceuticals, as our exclusive source to supply drug product for our ongoing
research and clinical studies, including our Phase 1 and Phase 2 studies of CLR 131. We believe that CPDC and our other third-party
manufactures have the ability to supply large scale clinical and commercial scale material.
Sales and Marketing
We plan to pursue and evaluate all available
options to develop, launch and commercialize our compounds. These options presently include but are not limited to: entering into
an agreement for a contract sales organization (CSO) or partnering arrangement with one or more biotechnology or pharmaceutical
company with strong product development and commercialization expertise and distribution infrastructure in the U.S., Europe and/or
Japan. While we currently do not plan to build our own commercial organization for the launch and commercialization of our compounds,
we may reconsider that in the future.
Competition for Our Clinical-Stage Compounds
Currently, several classes of
approved products with various mechanisms of action exist, including: immune-modulating agents, proteasome inhibitors,
histone deacetylase inhibitors, monoclonal antibodies, corticosteroids, and traditional chemotherapeutics for the treatment
of liquid and solid tumors. While a number of indications were evaluated as the initial target treatment for CLR 131,
multiple myeloma and hematologic cancers were selected for initial clinical development principally because of its highly
radio-sensitive nature, single or multi-dose treatment, and novel mechanism of action relative to all existing classes of
approved drugs. As a result, we believe CLR 131 is a therapeutic option in the relapse or refractory setting either as a
monotherapy or in combination with currently approved agents, some of which are radio-sensitizing and maintain a differential
adverse event profile from that of CLR 131.
Intellectual Property
Our core technology platform is based on
research conducted at the University of Michigan in 1994, where phospholipid ether analogs were initially designed, synthesized,
radiolabeled, and evaluated. This research was transferred to the University of Wisconsin - Madison between 1998 and the subsequent
founding of Cellectar in 2002 to further develop and commercialize the technology. We obtained exclusive rights to the related
technology patents owned by University of Michigan in 2003 and continued development of the PDC platform while obtaining ownership
of numerous additional patents and patent applications (with various expiry until 2034 without extensions). We have established
a broad U.S. and international intellectual property rights portfolio around our proprietary cancer-targeting PLE technology platform
including CLR 131 and our PDC Programs.
PDC chemotherapeutic Programs
In November 2015, we converted our previously
filed provisional patent application for Phospholipid-Ether Analogs as Cancer Targeting Drug Vehicles to non-provisional US and
International (PCT) patent applications and were published by the U.S. Patent & Trade Office (USPTO) in May of 2016. These
patent applications further protect composition of matter and method of use for PDCs developed with our proprietary phospholipid-ether
delivery vehicle conjugated with any existing or future cytotoxic agents, including chemotherapeutics for targeted delivery to
cancer cells and cancer stem cells. Additional cytotoxic PDC compounds are covered by pending patent applications directed to the
composition of matter and method of use for cancer therapy provide intellectual property protection in the U.S. and up to 148 additional
countries. These applications, if granted, offer protection extending through at least 2035 in the U.S. and key international markets.
CLR 131
We have taken a broad approach to creating
market exclusivity for CLR 131 both within the U.S., and globally, including all major markets. This approach includes numerous
patents, patent applications and regulatory filings to provide maximum market exclusivity. Our patent portfolio for CLR 131 includes
all of the typical filings as well as unique methods of use, methods of manufacturing, use in combinations, use to treat cancer
stem cells, novel formulations, etc. In addition, to our patents, we were granted orphan designation for CLR 131 for the treatment
of multiple myeloma by the FDA in December 2014 and expect to file additional orphan designations for other rare diseases. We continue
to evaluate CLR 131 in additional hematologic and solid tumor orphan designated indications. Our patents have a variety expected
expiry with some potentially being extended on a country-by-country basis. In 2018, the FDA a granted orphan drug and a Rare Pediatric
Disease Designation (RPDD) for CLR 131 for the treatment of neuroblastoma, rhabdomyosarcoma, Ewing’s sarcoma and osteosarcoma.
We initiated a Phase 1 study in 2019.
We expect to continue to file patent applications
and acquire licenses to other patents covering methods of use, composition of matter, formulation, method of manufacture and other
patentable claims related to CLR 131 and new PDCs. These patent applications will be filed in key commercial markets worldwide.
The issued patents will generally expire between 2025 and 2035, unless extended, most likely under clinical development extensions.
In addition to the above noted patents/applications
directed to CLR 131 and our PDC pipeline portfolio, we own other patents/applications directed to different forms of phospholipid
ethers, methods of use and methods of manufacturing of phospholipid ethers.
Separate from any patent protection and
following product approval by regulatory authorities, data exclusivity may be available for various compounds for up to 10 years
on a country-by-country basis (e.g., up to five years in the U.S. and up to ten years in Europe).
Licenses / Collaborations
In August 2018, we entered into a collaboration
with Orano Med for the development of novel PDCs utilizing Orano Med’s alpha emitter lead-212 conjugated to our phospholipid
ether; the companies intend to evaluate the new PDCs in up to three oncology indications.
In September 2017, we entered into an arrangement
with Onconova Therapeutics, Inc. (Onconova). Under this arrangement, Onconova will provide us a selection of its proprietary compounds.
We will use our proprietary technology to perform research studies on such compounds with the goal of developing new conjugates.
We agreed to perform the studies within 24 months. We granted Onconova an exclusive option to acquire a royalty-bearing license
with respect to each conjugate developed. In the event an executed license agreement for a particular conjugate is not obtained,
then Onconova’s exclusive option shall terminate with respect to such conjugate.
In July 2017, we entered into an arrangement
with Avicenna Oncology GMBH (Avicenna). Under this arrangement, Avicenna will provide us a selection of its proprietary toxins.
We will use our proprietary conjugation capabilities to proceed with the conjugation in order to obtain PDCs. We will process various
in vitro and in cellulo screening against such PDCs to develop new conjugates. We granted Avicenna an exclusive option
to acquire an exclusive license to our intellectual property with respect to each conjugate developed. In the event the parties
cannot reach agreement on the terms of a definitive agreement despite good faith negotiations, Avicenna’s exclusive option
terminates as to such conjugate. Avicenna also granted to us an exclusive option to acquire an exclusive license to its intellectual
property with respect to the material provided. In the event the parties do not reach agreement on the terms of a definitive agreement,
our exclusive option terminates as to the material of Avicenna.
In December 2015, we entered into an arrangement with Institut
de Recherche Pierre Fabre (IRPF). Pierre Fabre is the third largest French pharmaceutical company with an extensive oncology research
and development infrastructure. The objective of the collaboration is to leverage our expertise in conjugation, linker chemistry
and phospholipid ether chemistry to codesign a library of PDCs employing Pierre Fabre’s chemotherapeutics. The newly developed
PDCs may provide enhanced therapeutic indices to otherwise highly potent, nontargeted payloads through the targeted delivery to
cancer cells provided by our proprietary phospholipid ether delivery platform. Research progress has been achieved, including the
demonstration of improved tolerability in animal models. Our agreement with Pierre Fabre expired in January 2019, however, we are
still evaluating the program as a number of PDC molecules are eligible for further development and potentially to be progressed
to IND enabling studies.
Research and Development
Our primary activity to date has been
research and development. The research had historically been conducted at our facility in Madison, Wisconsin and through third-party
laboratories and academic universities. Starting in 2018, we no longer used the facility in Madison, Wisconsin for these activities.
The clinical development has been completed primarily through contract research organizations at hospitals and academic centers.
We have established a collaboration outsourcing model to leverage third-party expertise, accelerate project timelines, improve
productivity and limit spend and fixed costs. Our research and development expenses were approximately $8,996,000 and $6,835,000
for 2019 and 2018, respectively.
Regulation
The production, distribution, and marketing
of products employing our technology, and our development activities, are subject to extensive governmental regulation in the U.S.
and in other countries. In the U.S., we are subject to the Federal Food, Drug, and Cosmetic Act, as amended, and the regulations
of the FDA, as well as to other federal, state, and local statutes and regulations, including the federal, state and local laws
and regulations governing the storage, use and disposal of hazardous materials, including radioactive isotopes. These laws,
and similar laws outside the U.S., govern the clinical and pre-clinical testing, manufacture, safety, effectiveness, approval,
labeling, distribution, sale, import, export, storage, record-keeping, reporting, advertising, and promotion of drugs. Product
development and approval within this regulatory framework, if successful, will take many years and involve the expenditure of substantial
resources. Violations of regulatory requirements at any stage may result in various adverse consequences, including the delay
in approving or refusal to approve a product by the FDA or other health authorities. Violations of regulatory requirements
also may result in enforcement actions, which include civil money penalties, injunctions, seizure of regulated product, and civil
and criminal charges. The following paragraphs provide further information on certain legal and regulatory issues with a particular
potential to affect our operations or future marketing of products employing our technology.
Research, Development, and Product
Approval Process
The research, development, and approval
process in the U.S. and elsewhere is intensive and rigorous and generally takes many years to complete. The typical process
required by the FDA before a therapeutic drug may be marketed in the U.S. includes:
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pre-clinical laboratory and animal tests performed under the FDA’s Good Laboratory Practices regulations, referred to herein as GLP;
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submission to the FDA of an IND application, which must become effective before human clinical studies may commence;
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human clinical studies performed under the FDA’s Good Clinical Practices regulations, to evaluate the drug’s safety and effectiveness for its intended uses;
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FDA review of whether the facility in which the drug is manufactured, processed, packed, or held meets standards designed to assure the product’s continued quality; and
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submission of a marketing application to the FDA, and approval of the application by the FDA.
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Pre-Clinical Testing
During pre-clinical testing, studies are
performed with respect to the chemical and physical properties of candidate formulations. These studies are subject to GLP requirements.
Biological testing is typically done in animal models to demonstrate the activity of the compound against the targeted disease
or condition and to assess the apparent effects of the new product candidate on various organ systems, as well as its relative
therapeutic effectiveness and safety.
Submission of IND
An IND must be submitted to the FDA and
become effective before studies in humans may commence. The IND must include a sufficient amount of data and other information
concerning the safety and effectiveness of the compound from laboratory, animal, and human clinical testing, as well as data and
information on manufacturing, product quality and stability, and proposed product labeling.
Clinical Studies
Clinical study programs in humans generally
follow a three-phase process. Typically, Phase 1 studies are conducted in small numbers of healthy volunteers or, on occasion,
in patients afflicted with the target disease. Phase 1 studies are conducted to determine the metabolic and pharmacological action
of the product candidate in humans and the side effects associated with increasing doses, and, if possible, to gain early evidence
of effectiveness. In Phase 2, studies are generally conducted in larger groups of patients having the target disease or condition
in order to validate clinical endpoints, and to obtain preliminary data on the effectiveness of the product candidate and optimal
dosing. This phase also helps determine further the safety profile of the product candidate. In Phase 3, large-scale clinical studies
are generally conducted in patients having the target disease or condition to provide sufficient data for the statistical proof
of effectiveness and safety of the product candidate as required by U.S. regulatory agencies.
In the case of products for certain serious
or life-threatening diseases, the initial human testing may be done in patients with the disease rather than in healthy volunteers.
Because these patients are already afflicted with the target disease or condition, it is possible that such studies will also provide
results traditionally obtained in Phase 2 studies. These studies are often referred to as “Phase 1/2” studies. However,
even if patients participate in initial human testing and a Phase 1/2 study is carried out, the sponsor is still responsible for
obtaining all the data usually obtained in both Phase 1 and Phase 2 studies.
U.S. law requires that studies
conducted to support approval for product marketing be “adequate and well controlled.” In general, this means
that either a placebo or a product already approved for the treatment of the disease or condition under study must be used as
a reference control. Studies must also be conducted in compliance with good clinical practice requirements, and informed
consent must be obtained from all study subjects. The clinical study process for a new compound can take ten years or more to
complete. The FDA may prevent clinical studies from beginning or may place clinical studies on hold at any point in this
process if, among other reasons, it concludes that study subjects are being exposed to an unacceptable health risk. Studies
may also be prevented from beginning or may be terminated by institutional review boards, which must review and approve all
research involving human subjects. Side effects or adverse events that are reported during clinical studies can delay,
impede, or prevent marketing authorization. Similarly, adverse events that are reported after marketing authorization can
result in additional limitations being placed on a product’s use and, potentially, withdrawal of the product from the
market.
Submission of NDA
Following the completion of clinical studies,
the data is analyzed to determine whether the studies successfully demonstrated safety and effectiveness and whether a product
approval application may be submitted. In the U.S., if the product is regulated as a drug, an NDA must be submitted and approved
before commercial marketing may begin. The NDA must include a substantial amount of data and other information concerning the safety
and effectiveness of the compound from laboratory, animal, and human clinical testing, as well as data and information on manufacturing,
product quality and stability, and proposed product labeling.
Each domestic and foreign manufacturing
establishment, including any contract manufacturers we may decide to use, must be listed in the NDA and must be registered with
the FDA. The application generally will not be approved until the FDA conducts a manufacturing inspection, approves the applicable
manufacturing process and determines that the facility is in compliance with cGMP requirements.
Under the Prescription Drug User Fee Act,
as amended, the FDA receives fees for reviewing an NDA and supplements thereto, as well as annual fees for commercial manufacturing
establishments and for approved products. These fees can be significant. For fiscal year 2019, the NDA review fee alone is $2,588,478,
although certain limited deferral, waivers, and reductions may be available.
Each NDA submitted for FDA approval is
usually reviewed for administrative completeness and reviewability within 45 to 60 days following submission of the application.
If deemed complete, the FDA will “file” the NDA, thereby triggering substantive review of the application. The FDA
can refuse to file any NDA that it deems incomplete or not properly reviewable. The FDA has established performance goals for the
review of NDAs— six months for priority applications and ten months for standard applications. However, the FDA is not legally
required to complete its review within these periods, and these performance goals may change over time.
Moreover, the outcome of the review, even
if generally favorable, typically is not an actual approval but an “action letter” that describes additional work that
must be done before the application can be approved. The FDA’s review of an application may involve review and recommendations
by an independent FDA advisory committee. Even if the FDA approves a product, it may limit the approved therapeutic uses for the
product as described in the product labeling, require that warning statements be included in the product labeling, require that
additional studies be conducted following approval as a condition of the approval, impose restrictions and conditions on product
distribution, prescribing, or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval.
Post NDA Regulation
Significant legal and regulatory requirements
also apply after FDA approval to market under an NDA. These include, among other things, requirements related to adverse event
and other reporting, product advertising and promotion, and ongoing adherence to cGMP requirements, as well as the need to submit
appropriate new or supplemental applications and obtain FDA approval for certain changes to the approved product labeling, or manufacturing
process. The FDA also enforces the requirements of the Prescription Drug Marketing Act which, among other things, imposes various
requirements in connection with the distribution of product samples to physicians.
The regulatory framework applicable to
the production, distribution, marketing and/or sale of our product pipeline may change significantly from the current descriptions
provided herein in the time that it may take for any of our products to reach a point at which an NDA is approved.
Overall research, development, and
approval times depend on a number of factors, including the period of review at FDA, the number of questions posed by the FDA
during review, how long it takes to respond to the FDA’s questions, the severity or life-threatening nature of the
disease in question, the availability of alternative treatments, the availability of clinical investigators and eligible
patients, the rate of enrollment of patients in clinical studies, and the risks and benefits demonstrated in the clinical
studies.
Other U.S. Regulatory Requirements
In the U.S., the research, manufacturing,
distribution, sale, and promotion of drug and biological products are potentially subject to regulation by various federal, state,
and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, other divisions of the
U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice and individual
U.S. Attorney offices within the Department of Justice, and state and local governments. For example, sales, marketing, and scientific/educational
grant programs must comply with the anti-fraud and abuse provisions of the Social Security Act, the False Claims Act, the privacy
provision of the Health Insurance Portability and Accountability Act, and similar state laws, each as amended. Pricing and rebate
programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health
Care Act of 1992, each as amended. If products are made available to authorized users of the Federal Supply Schedule of the General
Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal
and state consumer protection, unfair competition, and other laws.
Our research and development, manufacturing,
and administration of our drugs involve the controlled use of hazardous materials, including chemicals and radioactive materials,
such as radioactive isotopes. Therefore, we are subject to federal, state and local laws and regulations governing the storage,
use and disposal of these materials and some waste products and are required to maintain both a manufacturer’s license and
a radioactive materials license with State of Wisconsin agencies.
Moreover, we are now, and may become subject
to, additional federal, state, and local laws, regulations, and policies relating to safe working conditions, laboratory practices,
the experimental use of animals, and/or the use, storage, handling, transportation, and disposal of human tissue, waste, and hazardous
substances, including radioactive and toxic materials and infectious disease agents used in conjunction with our research work.
Foreign Regulatory Requirements
We, and any future collaborative partners,
may be subject to widely varying foreign regulations that may be quite different from those of the FDA governing clinical studies,
manufacture, product registration and approval, and pharmaceutical sales. Whether or not FDA approval has been obtained, we or
any future collaboration partners must obtain a separate approval for a product by the comparable regulatory authorities of foreign
countries prior to the commencement of product marketing in these countries. In certain countries, regulatory authorities also
establish pricing and reimbursement criteria. The approval process varies from country to country, and the time may be longer or
shorter than that required for FDA approval. In addition, under current U.S. law, there are restrictions on the export of products
not approved by the FDA, depending on the country involved and the status of the product in that country.
Reimbursement and Pricing Controls
In many of the markets where we, or
any future collaborative partners, would commercialize a product following regulatory approval, the prices of pharmaceutical
products are subject to direct price controls by law and to drug reimbursement programs with varying price control
mechanisms. Public and private health care payors control costs and influence drug pricing through a variety of mechanisms,
including through negotiating discounts with the manufacturers and through the use of tiered formularies and other mechanisms
that provide preferential access to certain drugs over others within a therapeutic class. Payors also set other criteria to
govern the uses of a drug that will be deemed medically appropriate and therefore reimbursed or otherwise covered. In
particular, many public and private health care payors limit reimbursement and coverage to the uses of a drug that are either
approved by the FDA or that are supported by other appropriate evidence (for example, published medical literature) and
appear in a recognized drug compendium. Drug compendia are publications that summarize the available medical evidence for
particular drug products and identify which uses of a drug are supported or not supported by the available evidence, whether
or not such uses have been approved by the FDA. For example, in the case of Medicare coverage for physician-administered
oncology drugs, the Omnibus Budget Reconciliation Act of 1993, with certain exceptions, prohibits Medicare carriers from
refusing to cover unapproved uses of an FDA-approved drug if the unapproved use is supported by one or more citations in the
American Hospital Formulary Service Drug Information, the American Medical Association Drug Evaluations, or the U.S.
Pharmacopoeia Drug Information. Another commonly cited compendium, for example under Medicaid, is the DRUGDEX Information
System.
Employees
As of December 31, 2019, we had eight employees,
all of whom are full-time employees.
Risks Related to Our Business and Industry
We will require additional capital in order
to continue our operations and may have difficulty raising additional capital.
We expect that we will continue to generate
operating losses for the foreseeable future. At December 31, 2019, our consolidated cash balance was approximately $10.6 million.
We believe our cash balance at December 31, 2019, is adequate to fund operations at budgeted levels into the first quarter of 2021.
We will require additional funds to conduct research and development, establish and conduct clinical and preclinical studies, establish
commercial-scale manufacturing arrangements and provide for the marketing and distribution of our products. Our ability to execute
our operating plan depends on our ability to obtain additional funding via the sale of equity and/or debt securities, a strategic
transaction or otherwise. We plan to actively pursue financing alternatives. However, there can be no assurance that we will obtain
the necessary funding in the amounts we seek or that it will be available on a timely basis or upon terms acceptable to us. If
we obtain capital by issuing debt or preferred stock, the holders of such securities would likely obtain rights that are superior
to those of holders of our common stock.
Our capital requirements and our ability
to meet them depend on many factors, including:
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the number of potential products and technologies in development;
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continued progress and cost of our research and development programs;
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progress with preclinical studies and clinical studies;
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the time and costs involved in obtaining regulatory clearance;
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costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
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costs of developing sales, marketing and distribution channels and our ability to sell our drugs;
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costs involved in establishing manufacturing capabilities for clinical study and commercial quantities of our drugs;
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competing technological and market developments;
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claims or enforcement actions with respect to our products or operations;
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market acceptance of our products;
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costs for recruiting and retaining management, employees and consultants;
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our ability to manage computer system failures or security breaches;
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costs for educating physicians regarding the application and use of our products;
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whether we are able to maintain our listing on a national exchange;
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uncertainty and economic instability resulting from conflicts, military actions, terrorist attacks, natural disasters, public health crises, including the occurrence of a contagious disease or illness, such as the COVID-19 coronavirus, cyber-attacks and general instability; and
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the condition of capital markets and the economy generally, both in the U.S. and globally.
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We may consume available resources more
rapidly than currently anticipated, resulting in the need for additional funding sooner than expected. We may seek to raise any
additional funds through the issuance of any combination of common stock, preferred stock, warrants and debt financings or by executing
collaborative arrangements with corporate partners or other sources, any of which may be dilutive to existing stockholders or have
a material effect on our current or future business prospects. If we cannot secure adequate financing when needed, we may be required
to delay, scale back or eliminate one or more of our research and development programs or to enter into license or other arrangements
with third parties to commercialize products or technologies that we would otherwise seek to develop and commercialize ourselves.
In the event that additional funds are obtained through arrangements with collaborative partners or other sources, we may have
to relinquish economic and/or proprietary rights to some of our technologies or products under development that we would otherwise
seek to develop or commercialize by ourselves. In such an event, our business, prospects, financial condition and results of operations
may be adversely affected.
We are a clinical stage biopharmaceutical company
with a going concern qualification to our financial statements and a history of losses, and we can provide no assurance as to our
future operating results.
We are a clinical stage biopharmaceutical
company and have experienced net losses and negative cash flows from operating activities since inception, and we expect such losses
and negative cash flows to continue for the foreseeable future. Whether or not we achieve profitability will depend on our success
in developing, manufacturing and marketing our product candidates. Our primary activity to date has been research and development
and conducting clinical studies. Development of our product candidates requires a process of preclinical and clinical testing during
which our product candidates could fail. We do not expect to have any products on the market for several years. We currently have
no product revenues and may not succeed in developing or commercializing any products that will generate product or licensing revenues.
We may not be able to enter into agreements with companies experienced in the manufacturing and marketing of therapeutic drugs
and, to the extent that we are unable to do so, we may not be able to market any product candidates.
As of December 31, 2019, we had working
capital of approximately $8.6 million and stockholders’ equity of approximately $9.1 million. For the period from our inception
in November 2002 until the business combination with Novelos Therapeutics, Inc. on April 8, 2011, and thereafter through December
31, 2019, we incurred aggregate net losses of approximately $111.7 million. The net loss for the year ended December 31, 2019,
was approximately $14.1 million. We may never achieve profitability.
Our financial statements as of
December 31, 2019, were prepared under the assumption that we will continue as a going concern. The independent registered
public accounting firm that audited our 2019 financial statements, in its report, included an explanatory paragraph referring
to our recurring losses since inception and expressed substantial doubt in our ability to continue as a going concern. Our
financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our ability to
continue as a going concern depends on our ability to obtain additional equity or debt financing, attain further operating
efficiencies, reduce expenditures, and ultimately generate revenue.
We rely on a collaborative outsourced business
model, and disruptions with our third-party collaborators, including potential disruptions at our sole source supplier of CLR 131,
Centre for Probe Development and Commercialization, CPDC, may impede our ability to gain FDA approval and delay or impair commercialization
of any products.
We are in the preclinical and clinical
study phases of product development and commercialization. We have closed manufacturing operations located at our corporate headquarters,
and have implemented a collaboration outsourcing model to more efficiently manage costs. We rely significantly on contracts with
third parties to use their facilities to conduct our research, development and manufacturing.
We have engaged CPDC, which has been a
validated cGMP manufacturing organization specializing in radiopharmaceuticals, as our exclusive source to supply drug product
for our ongoing research and clinical studies, including our Phase 1 and Phase 2 studies of CLR 131.
In addition, we rely exclusively on contract
research organizations to conduct research and development. Any inability of these organizations to fulfill the requirements of
their agreements with us may delay or impair our ability to gain FDA approval and commercialization of our drug delivery technology
and products.
Our reliance on third-party collaborators
exposes us to risks related to not being able to directly oversee the activities of these parties. Furthermore, these collaborators,
whether foreign or domestic, may experience regulatory compliance difficulties, mechanical shutdowns, employee strikes, or other
unforeseeable acts that may delay fulfillment of their agreements with us. Failure of any of these collaborators to provide the
required services in a timely manner or on commercially reasonable terms could materially delay the development and approval of
our products, increase our expenses, and materially harm our business, prospects, financial condition and results of operations.
We believe that we have a good working
relationship with our third-party collaborators. However, should the situation change, we may be required to relocate these activities
on short notice, and we do not currently have access to alternate facilities to which we could relocate our research, development
and/or manufacturing activities. The cost and time to establish or locate an alternate research, development and/or manufacturing
facility to develop our technology would be substantial and would delay obtaining FDA approval and commercializing our products.
Furthermore, if our products are approved
for commercial sale, we will need to work with our existing third-party collaborators to ensure sufficient capacity, or engage
additional parties with the capacity, to commercially manufacture our products in accordance with FDA and other regulatory requirements.
There can be no assurance that we would be able to successfully establish any such capacity or identify suitable manufacturing
partners on acceptable terms.
We rely on a small number of key personnel
who may terminate their employment with us at any time, and our success will depend on our ability to hire additional qualified
personnel.
Our success depends to a significant degree
on the continued services of our executive officers, including our Chief Executive Officer, James V. Caruso. Our management and
other employees may voluntarily terminate their employment with us at any time, and there can be no assurance that these individuals
will continue to provide services to us. Our success will depend on our ability to attract and retain highly skilled personnel.
We may be unable to recruit such personnel on a timely basis, if at all. The loss of services of key personnel, or the inability
to attract and retain additional qualified personnel, could result in delays in development or approval of our products, loss of
sales and diversion of management resources.
We cannot assure the successful development
and commercialization of our compounds in development.
At present, our success is dependent on
one or more of the following to occur: the successful development of CLR 131 for the treatment of a hematologic or solid tumor
cancer including multiple myeloma and B-Cell lymphomas or the treatment of pediatric solid tumors and lymphomas; the development
of new PDCs, specifically new products developed from our PDC program, and the advancement of our PDC agents through research and
development; and/or commercialization partnerships.
We are a biopharmaceutical company focused
on the discovery, development and commercialization of drugs for the treatment of cancer. We leverage our PDC platform to specifically
target treatments to cancer cells. The PDC platform possesses the potential for the discovery and development of the next generation
of cancer-targeting agents. The PDC platform features include the capacity to link with almost any molecule, the delivery of a
significant increase in targeted oncologic payload, and the ability to target all tumor cells. As a result, we believe that we
can generate PDCs to treat a broad range of cancers with the potential to improve the therapeutic index of oncologic drug payloads,
enhance or maintain efficacy while reducing adverse events by minimizing drug delivery to healthy cells, and increase delivery
to cancerous cells and cancer stem cells.
Our proposed products and their potential
applications are in an early stage of clinical and manufacturing/process development and face a variety of risks and uncertainties,
including the following:
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Future clinical study results may show that our cancer-targeting and delivery technologies are not well-tolerated by patients at their effective doses or are not efficacious.
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Future clinical study results may be inconsistent with testing results obtained to-date.
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Even if our cancer-targeting and delivery technologies are shown to be safe and effective for their intended purposes, we may face significant or unforeseen difficulties in obtaining or manufacturing sufficient quantities at reasonable prices or at all.
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Our ability to complete the development and commercialization of our cancer-targeting and delivery technologies for their intended use is substantially dependent upon our ability to raise sufficient capital or to obtain and maintain experienced and committed partners to assist us with obtaining clinical and regulatory approvals for, and the manufacturing, marketing and distribution of, our products.
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Even if our cancer-targeting and delivery technologies are successfully developed, approved by all necessary regulatory authorities, and commercially produced, there is no guarantee that there will be market acceptance of our products.
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Our competitors may develop therapeutics or other treatments that are superior or less costly than our own with the result that our product candidates, even if they are successfully developed, manufactured and approved, may not generate sufficient revenues to offset the development and manufacturing costs of our product candidates.
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If we are unsuccessful in dealing with
any of these risks, or if we are unable to successfully advance the development of our cancer-targeting and delivery technologies
for some other reason, our business, prospects, financial condition and results of operations may be adversely affected.
Failure to complete the development of our
technologies, obtain government approvals, including required FDA approvals, or comply with ongoing governmental regulations could
prevent, delay or limit introduction or sale of proposed products and result in failure to achieve revenues or maintain our ongoing
business.
Our research and development activities
and the manufacture and marketing of our intended products are subject to extensive regulation for safety, efficacy and quality
by numerous government authorities in the U.S. and abroad. Before receiving approval to market our proposed products by the FDA,
we will have to demonstrate that our products are safe and effective for the patient population for the diseases that are to be
treated. Clinical studies, manufacturing and marketing of drugs are subject to the rigorous testing and approval process of the
FDA and equivalent foreign regulatory authorities. The Federal Food, Drug, and Cosmetic Act and other federal, state and foreign
statutes and regulations govern and influence the testing, manufacturing, labeling, advertising, distribution and promotion of
drugs and medical devices. As a result, clinical studies and regulatory approval can take many years to accomplish and require
the expenditure of substantial financial, managerial and other resources.
In addition to the required regulatory
approval described above, in order to be commercially viable, we must successfully research, develop, manufacture, introduce,
market and distribute our technologies. This includes meeting a number of critical developmental milestones, including:
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demonstrating benefit from delivery of each specific drug for specific medical indications;
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demonstrating through preclinical and clinical studies that each drug is safe and effective; and
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demonstrating that we have established viable FDA cGMPs capable of potential scale-up.
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The timeframe necessary to achieve these
developmental milestones may be long and uncertain, and we may not successfully complete these milestones for any of our intended
products in development.
In addition to the risks previously discussed,
our technology is subject to developmental risks that include the following:
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uncertainties arising from the rapidly growing scientific aspects of drug therapies and potential treatments;
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uncertainties arising as a result of the broad array of alternative potential treatments related to cancer and other diseases; and
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expense and time associated with the development and regulatory approval of treatments for cancer and other diseases.
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In order to conduct the clinical studies
that are necessary to obtain approval by the FDA to market a product, it is necessary to receive clearance from the FDA to conduct
such clinical studies. The FDA can halt clinical studies at any time for safety reasons or because we or our clinical investigators
do not follow the FDA’s requirements for conducting clinical studies. If any of our studies are halted, we will not be able
to obtain FDA approval until and unless we can address the FDA’s concerns. If we are unable to receive clearance to conduct
clinical studies for a product, we will not be able to achieve any revenue from that product in the U.S., as it is illegal to sell
any drug for use in humans in the U.S. without FDA approval.
Even if we do ultimately receive FDA approval
for any of our products, these products will be subject to extensive ongoing regulation, including regulations governing manufacturing,
labeling, packaging, testing, dispensing, prescription and procurement quotas, record keeping, reporting, handling, shipment and
disposal of any such drug. Failure to obtain and maintain required registrations or to comply with any applicable regulations could
further delay or preclude development and commercialization of our drugs and subject us to enforcement action.
Clinical studies involve a lengthy and expensive
process with an uncertain outcome, and results of earlier studies may not be predictive of future study results.
In order to obtain regulatory approval
for the commercialization of our product candidates, we must conduct, at our own expense, extensive clinical studies to demonstrate
safety and efficacy of these product candidates. Clinical testing is expensive, it can take many years to complete, and its outcome
is uncertain. Failure can occur at any time during the clinical study process.
We may experience delays in clinical testing
of our product candidates. We do not know whether planned clinical studies will begin on time, need to be redesigned, or be completed
on schedule, if at all. Clinical studies can be delayed for a variety of reasons, including delays in obtaining regulatory approval
to commence a study, reaching agreement on acceptable clinical study terms with prospective sites, obtaining institutional review
board approval to conduct a study at a prospective site, recruiting patients to participate in a study, or obtaining sufficient
supplies of clinical study materials. Many factors affect patient enrollment, including the size of the patient population, the
proximity of patients to clinical sites, the eligibility criteria for the study, competing clinical studies, and new drugs approved
for the conditions we are investigating. Prescribing physicians will also have to decide to use our product candidates over existing
drugs that have established safety and efficacy profiles or other drugs undergoing development in clinical studies. Any delays
in completing our clinical studies will increase our costs, slow down our product development and approval process, and delay our
ability to generate revenue.
In addition, the results of
preclinical studies and early clinical studies of our product candidates do not necessarily predict the results of
later-stage clinical studies. Product candidates in later stages of clinical studies may fail to show the desired safety and
efficacy traits despite having progressed through initial clinical testing. The data collected from clinical studies of our
product candidates may not be sufficient to support the submission of an NDA or to obtain regulatory approval in the U.S. or
elsewhere. Because of the uncertainties associated with drug development and regulatory approval, we cannot determine if or
when we will have an approved product for commercialization or will achieve sales or profits.
Our clinical studies may not demonstrate
sufficient levels of efficacy necessary to obtain the requisite regulatory approvals for our drugs, and our proposed drugs may
not be approved for marketing.
We may be required to suspend or discontinue
clinical studies due to unexpected side effects or other safety risks that could preclude approval of our product candidates.
Our clinical studies may be suspended at
any time for a number of reasons. For example, we may voluntarily suspend or terminate our clinical studies if at any time we believe
that they present an unacceptable risk to the clinical study patients. In addition, regulatory agencies may order the temporary
or permanent discontinuation of our clinical studies at any time if they believe that the clinical studies are not being conducted
in accordance with applicable regulatory requirements or that they present an unacceptable safety risk to the clinical study patients.
Administering any product candidates to
humans may produce undesirable side effects. These side effects could interrupt, delay or halt clinical studies of our product
candidates and could result in the FDA or other regulatory authorities denying further development or approval of our product candidates
for any or all targeted indications. Ultimately, some or all of our product candidates may prove to be unsafe for human use. Moreover,
we could be subject to significant liability if any volunteer or patient suffers, or appears to suffer, adverse health effects
as a result of participating in our clinical studies.
Controls we or our third-party collaborators
have in place to ensure compliance with all applicable laws and regulations may not be effective.
We and our third-party collaborators are
subject to federal, state and local laws and regulations governing the storage, use and disposal of hazardous materials and waste
products. Current or future regulations may impair our research, development, manufacturing and commercialization efforts. The
inability of our third-party collaborators to maintain the required licenses and permits for any reason will negatively impact
our manufacturing, research and development activities. In addition, we may be required to indemnify third-party collaborators
against certain liabilities arising out of any failure by them to comply with such regulations and/or laws. If we or our third
party collaborators fail to comply with any of these regulations and/or laws, a range of consequences could result, including the
suspension or termination of clinical studies, failure to obtain approval of a product candidate, restrictions on our products
or manufacturing processes, withdrawal of our products from the market, significant fines, exclusion from government healthcare
programs, or other sanctions or litigation.
We expect to rely on our patents as well as
specialized regulatory designations such as orphan drug classification for our product candidates, but regulatory drug designations
may not confer marketing exclusivity or other expected commercial benefits.
We expect to file for ODD or other regulatory
designations (fast track, break-through, priority review, etc.) as appropriate for our product candidates. Orphan drug status confers
seven years of marketing exclusivity under the Federal Food, Drug, and Cosmetic Act in the U.S., and up to ten years of marketing
exclusivity in Europe for a particular product in a specified indication. We have been granted ODD in the U.S. for CLR 131 as a
therapeutic for the treatment of multiple myeloma, neuroblastoma, osteosarcoma, rhabdomyosarcoma, Ewing’s sarcoma and lymphoplasmacytic
lymphoma. While we have been granted this orphan designation, we will not be able to rely on it to exclude other companies from
manufacturing or selling products using the same principal molecular structural features for the same indication beyond these timeframes
without our patent portfolio. For any product candidate for which we have been or will be granted ODD in a particular indication,
it is possible that another company also holding ODD for the same product candidate will receive marketing approval for the same
indication before we do. If that were to happen, our applications for that indication may not be approved until the competing company’s
period of exclusivity expires. Even if we were the first to obtain marketing authorization for an orphan drug indication, there
are circumstances under which a competing product may be approved for the same indication during the seven-year period of marketing
exclusivity, such as if the later product is shown to be clinically superior to the orphan product or deemed a different product
than ours. Further, the seven-year marketing exclusivity would not prevent competitors from obtaining approval of the same product
candidate as ours for indications other than those in which we have been granted ODD, or for other indications if not for our patent
portfolio, or for the use of other types of products in the same indications as our orphan product. Furthermore, although the ODD
and exclusivity are in effect right now, the FDA has the authority to modify this assessment at any time.
The FDA has granted rare pediatric disease
designation, RPDD, to CLR 131 for treatment of neuroblastoma and rhabdomyosarcoma; however, we may not be able to realize any value
from such designation.
Our CLR 131 compound has received RPDD
designation from the FDA for the treatment of neuroblastoma, rhabdomyosarcoma, osteosarcoma and Ewing’s sarcoma. The FDA
defines a “rare pediatric disease” as a disease that affects fewer than 200,000 individuals in the U.S. primarily under
the age of 18 years old. Under the FDA’s Rare Pediatric Disease Priority Review Voucher program, upon the approval of an
NDA or a BLA for the treatment of a rare pediatric disease, the sponsor of such application would be eligible for a Rare Pediatric
Disease Priority Review Voucher that can be used to obtain priority review for a subsequent NDA or BLA. There is no assurance we
will receive a Rare Pediatric Disease Priority Review Voucher or that it will result in a faster development process, review or
approval for a subsequent marketing application. Further, this program has been subject to criticism, including by the FDA, and
it is possible that even if we obtain approval for CLR 131 and qualify for such a Priority Review Voucher, the program may no longer
be in effect at the time of approval. Also, although Priority Review Vouchers may be sold or transferred to third parties, there
is no guaranty that we will be able to realize any value if we were to sell a Priority Review Voucher.
We are exposed to product, clinical and preclinical
liability risks that could create a substantial financial burden should we be sued.
Our business exposes us to potential product
liability and other liability risks that are inherent in the testing, manufacturing and marketing of pharmaceutical products. In
addition, the use in our clinical studies of pharmaceutical products that we, or our current or potential collaborators, may develop
and then subsequently sell, may cause us to bear a portion of, or all, product liability risks. While we carry an insurance policy
covering up to $5,000,000 per occurrence and $5,000,000 in the aggregate for liability incurred in connection with such claims
should they arise, there can be no assurance that our insurance will be adequate to cover all situations. Moreover, there can be
no assurance that such insurance, or additional insurance if required, will be available or, if available, will be available on
commercially reasonable terms. Furthermore, our current and potential partners with whom we have collaborative agreements, or our
future licensees, may not be willing to indemnify us against these types of liabilities and may not themselves be sufficiently
insured or have a net worth sufficient to satisfy any product liability claims. A successful product liability claim or series
of claims brought against us could have a material adverse effect on our business, prospects, financial condition and results of
operations.
Acceptance of our products in the marketplace
is uncertain and failure to achieve market acceptance will prevent or delay our ability to generate revenues.
Our future financial performance will depend,
at least in part, on the introduction and customer acceptance of our proposed products. Even if approved for marketing by the necessary
regulatory authorities, our products may not achieve market acceptance. The degree of market acceptance will depend on a number
of factors including:
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receiving regulatory clearance of marketing claims for the uses that we are developing;
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establishing and demonstrating the advantages, safety and efficacy of our technologies;
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pricing and reimbursement policies of government and third-party payors such as insurance companies, health maintenance organizations and other health plan administrators;
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attracting corporate partners, including pharmaceutical companies, to assist in commercializing our intended products; and
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marketing our products.
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Physicians, patients, payors or the medical
community, in general, may be unwilling to accept, use or recommend any of our products. If we are unable to obtain regulatory
approval or commercialize and market our proposed products as planned, we may not achieve any market acceptance or generate revenue.
The market for our proposed products is rapidly
changing and competitive, and new therapeutics, drugs and treatments that may be developed by others could impair our ability to
develop our business or become competitive.
The pharmaceutical and biotechnology industries
are subject to rapid and substantial technological change. Developments by others may render our technologies and proposed products
noncompetitive or obsolete, or we may be unable to keep pace with technological developments or other market factors. Technological
competition from pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying into the
field is intense and expected to increase. Most of these entities have significantly greater research and development capabilities
and budgets than we do, as well as substantially more marketing, manufacturing, financial and managerial resources. These entities
represent significant competition for us. Acquisitions of, or investments in, competing pharmaceutical or biotechnology companies
by large corporations could increase our competitors’ financial, marketing, manufacturing and other resources.
Our resources are limited, and we may experience
management, operational or technical challenges inherent in our activities and novel technologies. Competitors have developed,
or are in the process of developing, technologies that are, or in the future may be, the basis for competition. Some of these technologies
may accomplish therapeutic effects similar to those of our technology, but through different means. Our competitors may develop
drugs and drug delivery technologies that are more effective than our intended products and, therefore, present a serious competitive
threat to us.
The potential widespread acceptance of
therapies that are alternatives to ours may limit market acceptance of our products even if they are commercialized. Many of our
targeted diseases and conditions can also be treated by other medication or drug delivery technologies. These treatments may be
widely accepted in medical communities and have a longer history of use. The established use of these competitive drugs may limit
the potential for widespread acceptance of our technologies and products if commercialized.
We may face litigation from third parties claiming
our products infringe on their intellectual property rights, particularly because there is often substantial uncertainty about
the validity and breadth of medical patents.
We may be exposed to future litigation
by third parties based on claims that our technologies, products or activities infringe on the intellectual property rights of
others or that we have misappropriated the trade secrets of others. This risk is exacerbated by the fact that the validity and
breadth of claims covered in medical technology patents, and the breadth and scope of trade-secret protection, involve complex
legal and factual questions for which important legal principles are unresolved. Any litigation or claims against us, whether valid
or not, could result in substantial costs, place a significant strain on our financial and managerial resources, and harm our reputation.
License agreements that we may enter into in the future would likely require that we pay the costs associated with defending this
type of litigation. In addition, intellectual property litigation or claims could force us to do one or more of the following:
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cease selling, incorporating or using any of our technologies and/or products that incorporate the challenged intellectual property, which would adversely affect our ability to generate revenue;
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obtain a license from the holder of the infringed intellectual property right, which license may be costly or may not be available on reasonable terms, if at all; or
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redesign our products, which would be costly and time-consuming.
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If we are unable to adequately protect or enforce
our rights to intellectual property or to secure rights to third-party patents, we may lose valuable rights, experience reduced
market share, assuming any, or incur costly litigation to protect our intellectual property rights.
Our ability to obtain licenses to patents,
maintain trade-secret protection, and operate without infringing the proprietary rights of others will be important to commercializing
any products under development. Therefore, any disruption in access to the technology could substantially delay the development
of our technology.
The patent positions of biotechnology
and pharmaceutical companies, such as ours, for products that involve licensing agreements are frequently uncertain and
involve complex legal and factual questions. In addition, the coverage claimed in a patent application can be significantly
reduced before the patent is issued or in subsequent legal proceedings. Consequently, our patent applications and any issued
and licensed patents may not provide protection against competitive technologies or may be held invalid if challenged or
circumvented. To the extent we license patents from third parties, the early termination of any such license agreement would
result in the loss of our rights to use the covered patents, which could severely delay, inhibit or eliminate our ability to
develop and commercialize compounds based on the licensed patents. Our competitors may also independently develop products
similar to ours or design around or otherwise circumvent patents issued or licensed to us. In addition, the laws of some
foreign countries may not protect our proprietary rights to the same extent as U.S. law.
We also rely on trade secrets, technical
know-how and continuing technological innovation to develop and maintain our competitive position. Although we generally require
our employees, consultants, advisors and collaborators to execute appropriate confidentiality and assignment-of-inventions agreements,
our competitors may independently develop substantially equivalent proprietary information and techniques, reverse engineer our
information and techniques, or otherwise gain access to our proprietary technology. We may be unable to meaningfully protect our
rights in trade secrets, technical know-how and other nonpatented technology.
We may have to resort to litigation to
protect our rights for certain intellectual property or to determine the scope, validity or enforceability of our intellectual
property rights. Enforcing or defending our rights would be expensive, could cause diversion of our resources, and may not prove
successful. Any failure to enforce or protect our rights could cause us to lose the ability to exclude others from using our technology
to develop or sell competing products.
Conflicts, military actions, terrorist attacks,
natural disasters. public health crises, including the occurrence of a contagious disease or illness, such as the COVID-19 coronavirus,
cyber-attacks and general instability could adversely affect our business.
Conflicts, military actions, terrorist attacks, natural disasters
and public health crises have precipitated economic instability and turmoil in financial markets. Instability and turmoil may result
in raw material cost increases. The uncertainty and economic disruption resulting from hostilities, military action, acts of terrorism,
public health crises or cyber-attacks may impact our operations or those of our suppliers. Accordingly, any conflict, military
action, terrorist attack, public health crises or cyber-attack that impacts us or any of our suppliers, could have a material adverse
effect on our business, liquidity, prospects, financial condition and results of operations.
Confidentiality agreements with employees and
others may not adequately prevent disclosure of our trade secrets and other proprietary information and may not adequately protect
our intellectual property, which could limit our ability to compete.
We operate in the highly technical field
of research and development of small-molecule drugs and rely, in part, on trade-secret protection in order to protect our proprietary
trade secrets and unpatented know-how. However, trade secrets are difficult to protect, and we cannot be certain that our competitors
will not develop the same or similar technologies on their own. We have taken steps, including entering into confidentiality agreements
with our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors, to protect our trade
secrets and unpatented know-how. These agreements generally require that the other party keep confidential and not disclose to
third parties all confidential information developed by the party or made known to the party by us during the course of the party’s
relationship with us. Also, we typically obtain agreements from these parties that inventions conceived by them in the course of
rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign
intellectual property rights to us. Enforcing a claim that a party has illegally obtained, and is using our trade secrets or know-how,
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 or know-how. The failure to obtain or maintain trade-secret protection could adversely affect
our competitive position.
We may be subject to claims that our employees
have wrongfully used or disclosed alleged trade secrets of their current or former employers.
As is common in the biotechnology and
pharmaceutical industry, we engage individuals who were previously employed at other biotechnology or pharmaceutical companies,
including our competitors or potential competitors or who are employed by academic research institutions. Although no claims against
us are currently pending, we may be subject to claims that we, or these employees, have used or disclosed trade secrets or other
proprietary information of their current or former employers, either inadvertently or otherwise. Litigation may be necessary to
defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial
costs and be a distraction to management.
Due to continued changes in marketing, sales
and distribution, we may be unsuccessful in our efforts to sell our proposed products, develop a direct sales organization, or
enter into relationships with third parties.
We have not established marketing, sales
or distribution capabilities for our proposed products. Until such time as our proposed products are further along in the development
process, we will not devote any meaningful time and resources to this effort. At the appropriate time, we will determine whether
we will develop our own sales and marketing capabilities or enter into agreements with third parties to sell our products.
We have limited experience in developing,
training or managing a sales force. If we choose to establish a direct sales force, we may incur substantial additional expenses
in developing, training and managing such an organization. We may be unable to build a sales force on a cost-effective basis or
at all. In addition, we will compete with many other companies that currently have extensive marketing and sales operations. Our
marketing and sales efforts may be unable to compete against these other companies. We may be unable to establish a sufficient
sales and marketing organization on a cost-effective or timely basis, if at all.
If we choose to enter into agreements with
third parties to sell our proposed products, we may be unable to establish or maintain third-party relationships on a commercially
reasonable basis, if at all. In addition, these third parties may have similar or more established relationships with our competitors.
We may be unable to engage qualified distributors.
Even if engaged, these distributors may:
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fail to adequately market our products;
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fail to satisfy financial or contractual obligations to us;
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offer, design, manufacture or promote competing products; or
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cease operations with little or no notice.
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If we fail to develop sales, marketing
and distribution channels, we would experience delays in product sales and incur increased costs, which would have a material adverse
effect on our business, prospects, financial condition and results of operation.
If we are unable to convince physicians of
the benefits of our intended products, we may incur delays or additional expense in our attempt to establish market acceptance.
Achieving use of our products in the target
market of cancer diagnosis and treatment may require physicians to be informed regarding these products and their intended benefits.
The time and cost of such an educational process may be substantial. Inability to successfully carry out this physician education
process may adversely affect market acceptance of our proposed products. We may be unable to educate physicians, in sufficient
numbers, in a timely manner regarding our intended proposed products to achieve our marketing plans and product acceptance. Any
delay in physician education may materially delay or reduce demand for our proposed products. In addition, we may expend significant
funds towards physician education before any acceptance or demand for our proposed products is created, if at all.
If users of our products are unable to obtain
adequate reimbursement from third-party payors, or if additional healthcare reform measures are adopted, it could hinder or prevent
the commercial success of our product candidates.
The continuing efforts of government
and insurance companies, health maintenance organizations and other payors of healthcare costs to contain or reduce costs of
healthcare may adversely affect our ability to generate future revenues and achieve profitability, including by limiting the
future revenues and profitability of our potential customers, suppliers and collaborative partners. For example, in certain
foreign markets pricing or profitability of prescription pharmaceuticals are subject to government control. The U.S.
government is implementing, and other governments have shown significant interest in pursuing, healthcare reform. Any
government-adopted reform measures could adversely affect the pricing of healthcare products and services in the U.S. or
internationally and the amount of reimbursement available from governmental agencies or other third-party payors. The
continuing efforts of the U.S. and foreign governments, insurance companies, managed care organizations, and other payors of
healthcare services to contain or reduce healthcare costs may adversely affect our ability to set prices for our products,
should we be successful in commercializing them, and this would negatively affect our ability to generate revenues and
achieve and maintain profitability.
New laws, regulations and judicial decisions,
or new interpretations of existing laws, regulations and decisions, that relate to healthcare availability, methods of delivery
or payment for healthcare products and services, or sales, marketing or pricing of healthcare products and services may also limit
our potential revenue and may require us to revise our research and development programs. The pricing and reimbursement environment
may change in the future and become more challenging for several reasons, including policies advanced by the current or future
executive administrations in the U.S., new healthcare legislation, or fiscal challenges faced by government health administration
authorities. Specifically, in both the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory
proposals to change the healthcare system in ways that could affect our ability to sell our products profitably. In the U.S., changes
in the federal healthcare policy were enacted in 2010 and are being implemented. Some reforms could result in reduced reimbursement
rates for our product candidates, which would adversely affect our business strategy, operations and financial results. Our ability
to commercialize our products will depend in part on the extent to which appropriate reimbursement levels for the cost of our products
and related treatment are obtained by governmental authorities, private health insurers, and other organizations such as health
maintenance organizations (“HMOs”). Third-party payors are increasingly challenging the prices charged for medical
drugs and services. Also, the trend toward managed healthcare in the U.S. and the concurrent growth of organizations such as HMOs
that could control or significantly influence the purchase of healthcare services and drugs, as well as legislative proposals to
reform healthcare or change government insurance programs, may all result in lower prices for or rejection of our drugs. The cost
containment measures that healthcare payors and providers are instituting, and the effect of any healthcare reform, could materially
harm our ability to operate profitably.
Our business and operations may be materially
adversely affected in the event of computer system failures or security breaches.
Despite
the implementation of security measures, our internal computer systems, and those of our third-party manufacturers, contract research
organizations and other third parties on which we rely, are vulnerable to damage from computer viruses, unauthorized access, cyber-attacks,
natural disasters, fire, terrorism, war and telecommunication and electrical failures. If such an event were to occur and interrupt
our operations, it could result in a material disruption in our business. For example, the loss of clinical study data from ongoing
or planned clinical studies could result in delays in our regulatory approval efforts and significantly increase our costs to
recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data
or applications, loss of trade secrets, inappropriate disclosure of confidential or proprietary information, including protected
health information or personal data of employees or former employees, lack of access to our clinical data, or disruption of the
manufacturing process, we could incur liability and the further development of our drug candidates could be delayed. We may also
be vulnerable to cyber-attacks or other malfeasance by hackers. This type of breach of our cybersecurity may compromise our confidential
and financial information, adversely affect our business, or result in legal proceedings. Further, these cybersecurity breaches
may inflict reputational harm upon us that may result in decreased market value and erode public trust.
Failure to maintain effective internal controls
could adversely affect our ability to meet our reporting requirements.
We are required to establish and maintain
appropriate internal controls over financial reporting. Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley
Act of 2002 require an annual assessment of internal controls over financial reporting and for certain issuers an attestation of
this assessment by the issuer’s independent registered public accounting firm. The standards to assess that our internal
controls over financial reporting are effective are evolving and complex, require significant documentation and testing, and may
require remediation if they are not met. We expect to incur significant expenses and to devote resources to Section 404 compliance
on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to complete the assessment of
the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal
control over financial reporting. As a result, we may not be able to complete the assessment and remediation process on a timely
basis. In addition, although attestation requirements by our independent registered public accounting firm are not presently applicable
to us, we could become subject to these requirements in the future, and we may encounter problems or delays in completing the implementation
of any resulting changes to internal controls over financial reporting.
Effective internal controls are necessary
for us to provide reasonable assurance with respect to our financial reports and to effectively prevent fraud. Failure to maintain
effective internal controls could adversely affect our public disclosures regarding our business, prospects, financial condition
or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify
weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may
raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control
over financial reporting or disclosure of management’s assessment of our internal controls over financial reporting our business
and results of operations could be harmed, we could fail to meet our reporting obligations, and there could be a material adverse
effect on our common stock price.
Risks Related to Our Equity Securities
We have in the past received notices from Nasdaq
of noncompliance with its listing rules, and delisting with Nasdaq could impact the price of our common stock and our ability to
raise funds.
The failure to meet continuing compliance
standards subjects our common stock to delisting. We have not received any other notices of noncompliance with Nasdaq listing
rules, but we have received such notices as recently as 2016. Any future failure to comply with Nasdaq’s listing rules and
any resulting delisting from the Nasdaq would reduce the visibility, liquidity and price
of our common stock and could limit our ability to raise funds in the future.
Our stock price has experienced price fluctuations.
There can be no assurance that the market
price for our common stock will remain at its current level, and a decrease in the market price could result in substantial losses
for investors. The market price of our common stock may be significantly affected by one or more of the following factors:
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announcements or press releases relating to the biopharmaceutical sector or to our own business or prospects;
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regulatory, legislative or other developments affecting us or the healthcare industry generally;
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sales by holders of restricted securities pursuant to effective registration statements or exemptions from registration;
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market conditions specific to biopharmaceutical companies, the healthcare industry and the stock market generally; and
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our ability to maintain our listing on the Nasdaq exchange.
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Our common stock could be further diluted as
the result of the issuance of additional shares of common stock, convertible securities, warrants or options.
In the past, we have issued common stock,
convertible securities (such as convertible preferred stock and notes) and warrants in order to raise capital. We have also issued
equity as compensation for services and incentive compensation for our employees and directors. We have shares of common stock
reserved for issuance upon the exercise of certain of these securities and may increase the shares reserved for these purposes
in the future. Our issuance of additional common stock, convertible securities, options and warrants could dilute our common stock,
affect the rights of our stockholders, reduce the market price of our common stock, result in adjustments to exercise prices of
outstanding warrants (resulting in these securities becoming exercisable for, as the case may be, a greater number of shares of
our common stock), or obligate us to issue additional shares of common stock to certain of our stockholders.
Provisions of our certificate of incorporation,
by-laws, and Delaware law may make an acquisition of us or a change in our management more difficult.
Certain provisions of our certificate of
incorporation and by-laws could discourage, delay or prevent a merger, acquisition or other change in control that stockholders
may consider favorable, including transactions in which an investor might otherwise receive a premium for its shares. These provisions
also could limit the price that investors might be willing to pay in the future for shares of our common stock or warrants, thereby
depressing the market price of our common stock. Stockholders who wish to participate in these transactions may not have the opportunity
to do so.
Furthermore, these provisions could prevent
or frustrate attempts by our stockholders to replace or remove our management. These provisions:
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provide for the division of the Board into three classes as nearly equal in size as possible with staggered three-year terms and further limit the removal of directors and the filling of vacancies;
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authorize our Board to issue without stockholder approval blank-check preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our Board;
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require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent;
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establish advance notice requirements for stockholder nominations to our Board or for stockholder proposals that can be acted on at stockholder meetings;
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limit who may call stockholder meetings; and
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require the approval of the holders of 75% of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our certificate of incorporation and by-laws.
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In addition, because we are incorporated
in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain
criteria are met, prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging
or combining with us for a prescribed period of time.
We have not paid dividends in the past and
do not expect to pay dividends for the foreseeable future. Any return on investment may be limited to the value of our common stock.
No cash dividends have been paid on our
common stock. We do not expect to pay cash dividends in the near future. Payment of dividends would depend upon our profitability
at the time, cash available for those dividends, and other factors as our Board may consider relevant. If we do not pay dividends,
our common stock may be less valuable because a return on an investor’s investment will occur only if our stock price appreciates.