ITEM 1. BUSINESS
Overview
We are a clinical-stage immuno-oncology company
specializing in the development and commercialization of novel cell-based immunotherapies and innovative peptide-based vaccines
for the treatment of hematological malignancies and solid tumor indications. Our MultiTAA T cell technology is based on the selective
expansion of non-engineered, tumor-specific T cells that recognize tumor associated antigens (“TAA” i.e. tumor targets)
and kill tumor cells expressing those targets. Once infused into patients, this population of T cells recognizes multiple tumor
targets to produce broad spectrum anti-tumor activity. Because we do not genetically engineer our T cells, when compared to current
engineered chimeric antigen receptor (“CAR”) and T cell receptor (“TCR”)-based approaches, our products
are significantly less expensive to manufacture and appear to be markedly less toxic, and yet are associated with meaningful clinical
benefit. As a result, we believe our portfolio of T cell therapies has a compelling therapeutic product profile, as compared to
current gene-modified CAR and TCR-based therapies. In addition, our Folate Receptor Alpha program (TPIV200) for breast and ovarian
cancers and our HER2/neu program (TPIV100/110) are in Phase II clinical trials. In parallel, we are developing a proprietary nucleic
acid-based antigen expression technology named PolyStart™ to improve the ability of the immune system to recognize and destroy
diseased cells.
Immuno-oncology, which utilizes a patient’s
own immune system to combat cancer, is one of the most actively pursued areas of research by biotechnology and pharmaceutical companies
today. Interest and excitement about immunotherapy are driven by compelling efficacy data in cancers with historically bleak outcomes,
and the potential to achieve a cure or functional cure for some patients. Harnessing the power of the immune system is an important
component of fighting cancerous cells in the body. Our MultiTAA T cell therapy platform identifies and selects effectively all
T cells that are specific for any peptide from the antigens that we target (e.g., WT1, MAGE-A4, PRAME, Survivin, NY-ESO-1, and
SSX2). Our in-vitro manufacturing process promotes proliferation of very rare cancer-killing T cells and augments their anti-tumor
properties to provide benefit to patients following their infusion. By using the multi-antigen targeted approach, our proprietary
technology can kill heterogeneous tumor cell populations more effectively than single-antigen targeted approaches, thereby reducing
the likelihood of tumor escape and potentially increasing the durability of a patient’s response to therapy.
We believe that our therapy presents a promising innovation in immuno-oncology.
Our therapy has been developed through our collaboration with the Cell and Gene Therapy Center at Baylor College of Medicine (“BCM”)
founded by Malcolm K. Brenner, M.D., Ph.D., a recognized pioneer in immuno-oncology. Our cell therapy founders include Drs. Malcolm
Brenner M.D., Ph.D., Ann Leen, Ph.D., Juan Vera, M.D., Helen Heslop, M.D., DSc (Hon) and Cliona Rooney, Ph.D., who all have significant
experience in this field. Dr. James P. Allison, Dr. Malcom K. Brenner, Dr. Helen E. Heslop, Dr. Cliona M. Rooney and Dr. Padmanee
Sharma serve on our Scientific Advisory Board.
Our Strategy
Our goal is to be the leader in the development
and commercialization of transformative immunotherapies for the treatment of hematological malignancies and solid tumors. We will
be developing a portfolio of highly-differentiated T cell therapies utilizing our MultiTAA platform that has the potential to significantly
disrupt the current cell therapy landscape, while substantially improving survival and quality of life for patients with cancers.
Key elements of our strategy include:
·
Expedite
clinical development, regulatory approval, and commercialization of our lead product candidates.
Based on results in the Phase I clinical trials
conducted at BCM, we plan to advance our lead product candidates into Phase II clinical trials and facilitate the initiation of
company-sponsored clinical trials in post-transplant acute myeloid leukemia (AML) and in other tumor types based on emerging data.
We expect to finalize our first clinical trial protocol by end of second quarter of 2019.
We plan to initiate a Phase II clinical trial
in post-transplant AML in the second half of 2019 and in other tumor types based on emerging data in the future. We anticipate
that product manufacturing in support of those clinical trials will be conducted at BCM’s Good Manufacturing Practices (“GMP”)
cell manufacturing facility.
In 2019, we expect to begin the
technology transfer process and begin the planning and implementation of additional GMP manufacturing capacity capable of
supporting our manufacturing needs with respect to pivotal trials. If the results of our Phase II studies are positive, we
will explore potential avenues to achieve regulatory approval for the use of our products in these indications, including any
potential avenues for obtaining accelerated approval. The U.S. Food and Drug Administration (“FDA”) may grant
accelerated approval for product candidates used to treat serious conditions that fill an unmet medical need based on a
surrogate or intermediate endpoint. We believe that an accelerated approval strategy may be warranted given the limited
options available for patients with post-transplant AML. However, if the FDA grants accelerated approval, confirmatory trials
will be required by the FDA.
·
Continue
collaboration with our partners and increase our internal research and development activities to improve and develop adoptive cell
therapy technologies.
We finalized a strategic alliance with BCM,
in which we will sponsor selected research at the institution in support of our technology. In conjunction with this strategic
alliance, BCM will conduct selected Phase I/II clinical trials using our technology. If data from these early clinical trials appear
positive, we will consider the therapeutic and commercial potential for such therapies to be advanced as new products for us.
In addition, we plan to use BCM facilities
to enable the process development and manufacturing required to support the Phase II clinical trials of our product candidates.
Outside of our relationship with BCM, we will invest in our own research and development and chemistry, manufacturing and controls
(“CMC”) capabilities to enhance our ability to conduct process development to optimize our manufacturing process, product
quality and commercial scalability.
We believe that the G-Rex® (G-Rex® is a registered trademark
of Wilson Wolf Manufacturing Corporation (“Wilson Wolf:”)) based manufacturing process we have in place is highly robust
and scalable, and we will continue to invest resources in further refining the manufacturing process to create a product with highly
attractive commercial attributes. We plan to engage Wilson Wolf (a company controlled by John Wilson, a director of the Company)
to further customize the G-Rex® to optimally match our manufacturing requirements and to develop a scalability plan to drive
efficiencies for a commercial product.
·
Invest
in our platform to maximize the beneficial outcomes for cancer patients.
We plan to explore new product opportunities
by expanding and/or customizing the antigens we target to expand the indications in which our products may be used, including solid
tumors or other hematologic malignancies. Additionally, our research and development efforts may include the exploration of dosing
and/or frequency of product administration and the relationship of these factors with potential therapeutic benefit.
·
Leverage
our relationships with our founding institutions, scientific founders and other scientific advisors.
Our world-renowned scientific founders and
scientific advisors have made seminal contributions to major discoveries in the field of immuno-oncology, and have significant
experience in oncology, immunology and cell therapy. We intend to significantly leverage the knowledge, experience and advice of
our scientific founders and advisors, as well as the institutional expertise of BCM, the Mayo Foundation and our other major institutional
partners, to advance our therapies through the clinic and into commercialization.
We are in the process of evaluating the peptide
vaccine therapeutic products and programs to determine the future strategy and the proper allocation of our resources to best maximize
stockholder value. In conjunction with this evaluation process we may de-emphasize or terminate certain of our therapeutic products
or programs. Such strategic review and evaluations are to be a priority and an important part of our ongoing operations.
MultiTAA T Cell Products
Multi Tumor-Associated Antigen (“MultiTAA”)
Approach
Cancers are heterogeneous in their expression
of antigens. Tumors generally consist of individual cancer cells expressing different antigens, and each of those antigens can
be present at a different level that can change over time. Therapies targeting only a single antigen are vulnerable to evolutionary
escape mechanisms.
Even if the single-antigen specific therapy
can eliminate all the tumor cells expressing the targeted antigen, the residual tumor cells that do not express that antigen may
survive and expand. In addition, tumor cells may also downregulate or mutate the targeted antigen, thus becoming invisible to the
T cell therapy. Both phenomena create a transformed tumor that is impervious to that therapy. This process is referred to as antigen-negative
tumor immune escape. Our solution to the problem of tumor heterogeneity was to develop T cell products that simultaneously attack
multiple tumor-expressed antigens and thereby enable more complete initial tumor targeting, thus minimizing the subsequent opportunity
for the cancer to engage escape mechanisms. Data suggest this strategy may be responsible for recruitment and activation of unique
cancer-killing cells from the patient’s own immune repertoire to participate in cancer eradication, further minimizing the
possibility for tumor cell escape.
Our proprietary MultiTAA T cell platform may
have meaningful advantages over CAR and TCR-engineered cell therapy approaches. Compared to current gene-modified T cell therapies,
our programs are characterized by the following:
·
Demonstrated
clinical benefit, without the need for lymphodepletion before infusion:
In BCM’s Phase I lymphoma study,
we saw complete responses (“CRs”) in six of its evaluable patients, including three CRs in patients with diffuse large
B-cell lymphoma (“DLBCL”). We believe it is significant that no patient with a CR has subsequently relapsed with disease,
whereas typically 30% or more of patients with CR in reported CAR-T studies relapse within one year. In patient results to date,
observed therapeutic responses appear to be highly durable, with some patients being relapse-free beyond five years.
·
Non-gene-modified:
Unlike
CAR-T and TCR approaches, our therapy requires no genetic modification of T cells, a costly and complex process that significantly
complicates the manufacturing of a patient product. We believe our therapy can be manufactured at a fraction of the cost of a gene-modified
T cell product.
·
Low
incidence rate of adverse events:
In 78 patients treated to date, BCM has seen only one grade III adverse
reaction possibly related to its therapy. This appears favorable compared to published CD19 CAR-T studies, wherein up to 95% of
patients had associated grade III or higher adverse events during treatment. There have been no cases of cytokine-release syndrome
(“CRS”), or related serious adverse events (“SAEs”) in patients treated with our therapy to date.
·
Capable
of addressing a broad repertoire of cancer cells:
While CAR-T and TCR therapies generally target a single
epitope, our manufacturing process selects T cells that are specific for multiple peptides derived from several targeted antigens.
Deep gene sequencing of the clinical products shows that a typical patient dose usually consists of approximately 4,000 unique
T cell clonotypes targeting up to five different tumor-associated antigens. The five antigen targets can be recognized by a very
wide range of T cells, facilitating robust killing of targeted cancer cells.
·
Appears
to drive endogenous immune responses:
We see evidence of “epitope spreading” in the treated patients,
meaning that the therapy is potentially inducing an enhanced response by the patient’s own T cells (specific for an expanded
set of tumor-associated antigens beyond those targeted by the infused product). BCM’s correlative analyses show expansion
of endogenous T cells, other than those present in our product, in the months following the infusion of our product. This phenomenon,
also known as “antigen spreading,” is potentially important in generating a durable response for a patient, because
it enables the killing of tumors that do not express any of the antigens initially targeted by our product.
Peptide Vaccine Products and Technologies in Development
In contrast to standard therapies for cancer
treatment including surgery, radiation therapy and chemotherapy that target both cancer cells and normal cells, we are also developing
vaccines that precisely target breast and ovarian cancers. We are currently developing three core technology platforms:
1) an exclusively licensed peptide-based vaccine
(composition and methods of use) for the treatment of breast cancers that overexpress Human Epidermal Growth Factor Receptor 2
(HER2/neu) (TPIV100/110),
(2) an exclusively licensed peptide-based vaccine
(composition and methods of use) for treating breast and ovarian cancers that overexpress Folate Receptor Alpha (TPIV200), and
(3) a wholly-owned nucleic acid-based vaccine
(composition and methods of use) technology (PolyStart™) for treatment of various cancers or infectious disease.
Our peptide vaccines are derived from
naturally processed T cell antigens and are potentially effective standalone therapies but may also enhance the efficacy of
other immunotherapy approaches such as CAR-T cell therapies and PD-1 inhibitors, for example, as well as our own MultiTAA T
cell therapies.
The status of our development of other products and technologies
is set forth in the table below:
|
Product/Candidate
|
|
|
Description
|
|
|
Application
|
|
|
Status
|
|
TPIV100/110 HER2/neu Breast Cancer Vaccine
|
|
|
Peptide Vaccine
|
|
|
Treatment of HER2/neu+ Breast Cancer
|
|
|
Phase I trial completed Phase I(b) trial to start in 2019 (TPIV100)
Phase I/II to start in 2019 (TPIV110)
|
|
TPIV200 Folate Receptor Alpha Vaccine
|
|
|
Peptide Vaccine
|
|
|
Treatment of Folate Receptor Alpha+/Triple-Negative Breast and Ovarian Cancer
|
|
|
Phase I trial completed Multiple Phase II trials started in 2016 and 2017 and enrollment completed in 2018
|
|
PolyStart™
|
|
|
Nucleic acid expression technology
|
|
|
Broad Application to “Prime”- and- “Boost”
|
|
|
Preclinical
|
Background and History of Cancer Immunotherapies
Despite advances in options for treatment,
cancer continues to be one of the main causes of death in developed countries. Historically, cancer therapy has been constrained
to surgery, radiation, and chemotherapy. More recently, advances in the understanding of the immune system’s role in cancer
surveillance have led to immunotherapy becoming an important treatment approach. Cancer immunotherapy began with treatments that
nonspecifically activated the immune system and had limited efficacy and/or significant toxicity. In contrast, newer immunotherapy
treatments can activate specific, potent immune cells, leading to improved safety and efficacy. Within the immunotherapy category,
treatments have included vaccines, cytokine therapies, antibody therapies, and adoptive cell therapies.
In 1996, Dr. Dana Leach, Dr. Matthew Krummel
and Dr. James Allison reported that monoclonal antibodies (“mAbs”) blocking CTLA-4 could treat tumors in animal models.
Subsequently, mAbs that targeted CTLA-4 and PD-1 became known as “immune checkpoint inhibitors” (“ICIs”).
Immune checkpoints are a means by which cancer cells inhibit or turn down the body’s immune response to cancer. By interfering
with these cloaking mechanisms, ICIs have shown an ability to activate T cells, shrink tumors, and improve patient survival. Recent
clinical data from checkpoint inhibitors such as ipilimumab, nivolumab and pembrolizumab have confirmed both the validity of this
approach and the importance of T cells as promising tools for the treatment of cancer.
Despite these many advances, there persists a significant unmet
need in cancer therapeutics. We believe that the use of human cells as a therapeutic modality to re-engage the immune system will
be the next significant advancement in the treatment of cancer. These cellular therapies may avoid the long-term side effects associated
with current treatments and have the potential to be effective regardless of the type of previous treatments patients have experienced.
T Cell Therapy Overview
The field of adoptive cell
transfer (“ACT”) is currently comprised primarily of CAR and TCR engineered T cells and has emerged from
principles of basic immunology to become a paradigm-shifting clinical immunotherapy. T cell therapy has evolved as one of the
most promising branches of immunotherapy. T cell immunotherapy involves the infusion of immune cells into a patient. Immune
cells used for immunotherapy treatments can either be collected from the patient (autologous) or harvested from a
donor (allogeneic). The cells are retrieved and either genetically modified to express tumor-specific CARs or TCRs or mixed
with specific antigens. The cells are then cultured to proliferate and the proliferated cells are infused into the patient.
Upon infusion, the cells can target and eliminate cancerous cells. Unlike chemotherapy, which is unable to distinguish
between healthy and malignant cells, T cells produced for immunotherapy can selectively attack cancer cells that express the
target antigen(s). This leads to a more effective treatment platform with fewer side effects. Some of these infused T cells
may remain in the body for long periods of time, providing immunological memory, thus leading to longer and more durable
responses.
TCRs and CARs have distinct signaling properties
and antigen sensitivities. TCRs recognize peptide fragments from proteins expressed either inside the cell or on the cell surface,
which are presented to T cells via a major histocompatibility complex (“MHC”). CARs are programmed to recognize a specific
cell surface protein. Because CARs are specific for a single antigen, or more precisely a single epitope within the single antigen,
they are very narrowly focused and come with limitations. When a CAR-T cell product is applied to a specific antigen of a heterogeneous
disease, CAR-T cells may leave behind tumor cells that do not express the target antigen, which can lead to tumor relapse due to
immune escape.
Our approach is to avoid genetic engineering by relying upon the
native T cell receptor, which has evolved over millions of years to provide T cells with an exquisite capacity to recognize and
kill cancer cells. Use of the native T cell receptor is the bedrock of our versatile immunotherapy, which is intended to provide
a cost-effective and non-toxic strategy to target multiple tumor antigens and lead to durable responses. The process entails expanding
tumor-specific T cells from patients (autologous), or a patient’s hematopoietic stem cell donor (allogeneic). This is achieved
by
in vitro
manipulation consisting of co-culturing a patient’s or donor’s antigen presenting cells with patient
(or donor) peripheral blood mononuclear cells (“PBMCs”), respectively. As a source of antigen, we use overlapping peptide
libraries spanning each of several immunogenic target antigens that are typically associated with certain types of cancer. These
peptides are 15 amino acids in length, overlapping by 11 amino acids and span the entire length of each of the target antigens.
This typical footprint of peptides allows us to induce both CD4
+
(helper) and CD8
+
(cytotoxic) T cells. Following
manufacture, these cells are frozen and stored for later infusion. Once infused, the natural characteristics of T cells take over
and the T cells multiply in quantity, forming an army of T cells that kill the targeted cancer cells.
Process Development and Manufacturing
We are advancing two MultiTAA T cell products
through clinical development:(a) Mixed Antigen Peptide Pool (“MAPP”) T cells currently used for patients
with lymphoma, multiple myeloma (“MM”) and selected solid tumors, is an autologous product that targets the NY-ESO-1,
PRAME, MAGE-A4, Survivin and SSX2 antigens; and (b) Leukemia Antigen Peptide Pool (“LAPP”) T cells, currently used
for patients with AML, is an allogeneic product targeting the WT1, NY-ESO-1, PRAME, and Survivin antigens using the blood of the
stem cell donor as a source of the cells used for therapy. While the blood source and the antigens for stimulation differ between
the LAPP and the MAPP products, the manufacturing process for each product is otherwise identical.
In the manufacturing process, blood is drawn
from either the individual patient (in the case of the autologous MAPP T cells) or from the allogeneic stem cell transplant donor
(in the case of the allogeneic LAPP T cells). Although the T cells that are selected and expanded by our process exist in a patient’s
circulating blood, these T cells are often present at very low frequencies. Researchers at BCM believe that these T cells are adversely
affected by the suppressive tumor microenvironment. It is a well-accepted concept that cancers not only evade immune detection
but often actively suppress the function of the human immune system. Our manufacturing and culturing process is intended to (i) identify
the T cells specific for the antigens that we intend to target, (ii) restore these T cells to functionality with respect to their
anti-tumor capability and (iii) expand the population of those T cells specific for our targets to achieve the required patient
dose.
After blood is drawn, PBMCs are isolated and
cryopreserved. Sufficient numbers of cryopreserved PBMCs are taken to be used to manufacture a patient-specific product. These
cells are placed inside a G-Rex® manufacturing device or standard plasticware and combined with an experimentally optimized
mix of GMP-grade cytokines that is used to restore and enhance the functional capability of the cultured T cells.
In addition, libraries of overlapping peptides
(“pepmix”) spanning the target antigens are combined and added to the cell culture. Each peptide within the pepmix
represents a small segment of a target antigen, which a T cell might recognize. Each library represents the entire protein sequence
of a target antigen, with each peptide in the pepmix overlapping significantly with the peptides adjacent to it within the antigen’s
protein sequence. This overlapping structure allows us to isolate, activate and expand any T cell that is specific for any segment
of the antigens that we target in the unique genetic background of every patient.
The G-Rex® is a cell culture device manufactured
by Wilson Wolf used by many cell therapy developers, both in commercial and academic settings. The device allows a user to introduce
cells, media and other reagents into a cell culture chamber, which has a gas-permeable membrane at its bottom. The cells settle
on this gas-permeable membrane through which oxygen and carbon dioxide are exchanged (i.e. the cells can breathe at the base
of the device), while nutrients required for cell expansion are obtained from the medium above the cells. This system allows for
the highly robust growth of cells in culture, by providing them with superior access to oxygen and nutrients. Cells manufactured
in the device grow efficiently without need for agitation by a technician, scientist or automated system.
Inside the G-Rex® or the regular plasticware,
PBMCs are co-cultured with antigen-presenting cells that have been exposed to the stimulating pepmixes. This results in the selective
expansion of T cells that specifically recognize the target antigens. At
the end of the manufacturing process, the resulting product is a mix of helper (CD4
+
) and cytotoxic (CD8
+
)
T cells that recognize the antigens we are targeting.
Once cell manufacturing is complete, the product
is tested for identity, sterility, phenotype, and safety before it is released for infusion into a patient. Sampling of product
indicates that, on average, approximately 4,000 different T cell clonotypes are present in a typical 5-antigen-specific patient
product.
Upon release of the final
patient product, the cells are frozen and transported to the site where the cells will be administered. The standard
dose for patients with lymphoma, AML or myeloma ranges from 5 – 20 million cells per meter squared
(compared to typical doses of 10 – 40 million cells per adult patient). These cell doses represent a
significantly smaller dose of cells, when compared to CAR-T or TCR therapies. As a result, our therapy requires only a very
small infusion volume that can be administered to patients within minutes at an outpatient center. Due to the low incidence
of adverse events with our therapies, patients do not need to be hospitalized and monitored overnight. Instead, the patients
are evaluated for any immediate infusion-related reactions and can then usually be discharged within two hours.
Clinical-stage MultiTAA T Cell Therapy
(1) Baylor College of Medicine
Our MAPP and LAPP product candidates identify
and select for substantially all T cells that are specific for any peptide derived from the targeted antigens, thereby recognizing
and killing heterogeneous tumors more effectively than single-antigen targeted approaches. These product candidates are currently
in Phase I clinical trials for lymphoma, AML/myelodysplastic syndromes (“MDS”), and multiple myeloma (“MM”)
at BCM and each of these programs is ready for initiation of Phase II. BCM has also initiated Phase I trials in acute lymphocytic
leukemia (“ALL”), breast and pancreatic cancers.
In lymphoma, MAPP T cell therapy is currently
in a Phase I trial that has treated 15 patients with active disease (“lymphoma active group”), of which all 15 patients
had follow-up date beyond 3 months post-infusion, and 17 patients in remission (“lymphoma adjuvant group”). No SAEs
or CRS have been observed in any of these patients.
Of the 15 patients in the lymphoma active group,
6 patients demonstrated a complete response, 3 patients had durable stable disease and 6 patients had transient disease stabilization
(range 3 – 9 months). None of the complete responder patients has subsequently progressed after receiving MAPP
T cells. The duration of response for the complete responder patients ranged from 5 months to over 5 years (ongoing). Of the 17
patients in the lymphoma adjuvant group, 15 patients were in a continuing complete response, at the time of data cutoff. The duration
of response for these patients ranged from 3 to over 48 months.
In post-transplant AML, a setting where currently
the only available alternative therapy is a donor lymphocyte infusion (“DLI”), we have seen significant therapeutic
benefit for patients, without causing graft-versus-host disease (“GVHD”) — a frequent side effect
of DLIs. LAPP T cell therapy is currently in a Phase I trial that has treated 6 patients with active disease (“AML/MDS active
group”) after allogeneic hematopoietic stem cell transplant (“HSCT”), and 13 patients in remission after HSCT
(“AML/MDS adjuvant group”), of which 11 patients were evaluable. One patient had a transient elevation in liver enzymes.
Otherwise there were no possibly/probably related SAEs, nor episodes of CRS.
Of the 6 evaluable patients in the AML/MDS
active group, 1 patient demonstrated a complete response which was durable for 13 months, 1 patient demonstrated a partial response
that enabled that patient to receive a second allogeneic stem cell transplant, and 2 additional patients, who did not meet partial
response criteria, experienced disease stabilization enabling a 2-month delay to next-line therapy. Two patients were non-responsive
to MultiTAA therapy and progressed with relapsed/refractory disease. One patient demonstrated ongoing stable disease. The duration
of response for the complete or partial response patients ranged from 7 to 11 months. Overall survival ranged from 4 to 21 months
after T cell infusions. Of the 11 evaluable patients in the AML/MDS adjuvant group, 9 patients demonstrated a continued complete
response. The duration of response for these patients ranged from 6 weeks to 2.5 years. Two patients saw local relapse in the central
nervous system, but in both cases these patients were successfully treated with local therapy alone. One patient saw extramedullary
relapse and was subsequently treated in the active disease arm of the trial, generating a CR that was durable for 13 months. One
patient relapsed 8 months after receiving MultiTAA T cells but following a second allogeneic stem cell transplant this patient
remains alive in relapse 1.5 years following his initial T cell infusion.
MAPP T cell therapy is also being evaluated
at BCM in a Phase I/II trial for patients with MM. One arm of this trial assessed patients who received MAPP T cells more than
90 days after an autologous stem cell transplant (“ASCT”), while a second arm assessed patients who received MAPP T
cells within 90 days of ASCT. We have not seen a meaningful difference in response rates or durability between the two arms and
intend to standardize future trials based upon a protocol wherein patients will receive MAPP T cells immediately post ASCT.
Of the patients evaluated in the MM trial,
there were 10 patients with residual active disease, 8 of whom were evaluable with greater than 3 months of available follow-up
date. Of these evaluable patients, 1 patient demonstrated complete response and 3 patients demonstrated partial responses.
The duration of response ranged from 6 to 29 months. Additionally, there were 8 patients treated in remission after ASCT and all
were evaluable. Seven of the 8 patients remain in continuing complete remission. The duration of response for these patients ranged
from 6 to 22 months.
BCM Exclusive License Agreement
On March 16, 2018, we entered into an exclusive license agreement
(the “BCM License Agreement”) with BCM, under which we received a worldwide, exclusive license to BCM’s rights
in and to certain intellectual property rights including European patent EP 2470644 (estimated expiration date August 24, 2030)
to develop and commercialize MultiTAA product candidates in exchange for an initial issuance of equity in the Company and future
royalties and milestone payments.
Exclusive license to BCM’s Subject
Technology:
1. “Generation of CTL Lines with Specificity
Against Multiple Tumor Antigens or Multiple Viruses”
2. “Pepmixes to Generate Multiviral CTLs with Broad Specificity”
3. “Immunogenic Antigen Identification from a Pathogen and
Correlation to Clinical Efficacy”
In partial consideration for the exclusive
rights granted under the BCM License Agreement, prior to the Merger, Marker Cell issued shares of Marker Cell common stock to BCM
valued at approximately $5.0 million at the time of issuance. Such initial equity issuance was exchanged into merger consideration
of 1,490,813 shares of our common stock and warrants to acquire 540,643 shares of our common stock. Additional consideration includes
a royalty paid on net sales by us to BCM according to the royalty schedule in the BCM License Agreement. The royalty fee schedule
is based on aggregate net sales in four different ranges: (1) less than $500M, (2) $500M to $1.0B, (3) $1.0B and over, and (4)
$2.0B and over. The corresponding royalty percentages range from 0.65% to 5.0% - increasing in proportion to the
aggregate net sales. The royalty fee may be reduced in the event that we must pay additional royalties with respect to third-party
owned patent rights or technology necessary for the use, manufacture or sale of a licensed product. We also agreed to pay BCM one-time
milestone payments upon the occurrence of nine particular milestones relating to completion of the first dosing in clinical trials
for a first and second distinct product, receipt of approval from the FDA, and hitting certain net sales goals. Under the agreement,
we may be obligated to make aggregate milestone payments of up to $64.85 million. We are also responsible for sublicensing
fees. In addition, under the BCM License Agreement, we are responsible for reimbursing BCM for patent-related expenses. We will
be responsible for filing, prosecuting and maintaining all patent applications and patents included in the licensed patent rights
and all such related legal costs incurred after the date of the BCM License Agreement, except such legal costs shall be reduced
on a pro-rata basis on a patent or patent application basis should BCM license such patent or patent application in additional
fields of use to any third party.
In addition, upon a liquidity event (as defined
in the BCM License Agreement) of the Company, BCM will receive a liquidity incentive payment of 0.5% of the liquidity event proceeds
(as defined in the BCM License Agreement) received by us or our stockholders in the liquidity event.
We have agreed to indemnify BCM and certain
persons affiliated with BCM against claims and liabilities directly or indirectly related to or arising out of the design, process,
manufacture or use by any third party of the licensed products, even though such claims and liabilities result in whole or in part
from the negligence of the BCM indemnified parties or are based upon doctrines of strict liability or product liability, but not
claims or liabilities arising from the gross negligence or intentional misconduct of any such BCM indemnified parties.
Unless terminated sooner, the license will
expire on a licensed product-by-product basis and country by country basis, on the later of (i) the date of expiration
of the last valid claim of patent rights to expire that covers the sale of such licensed product in such country, or (ii) the
first date following the tenth anniversary of the first commercial sale of first licensed product by us in such country. After
such expiration, but not termination, the licenses granted to us shall survive and become a perpetual, paid-in-full license in
such country with respect to such licensed product.
We have the right in our sole discretion to
terminate the BCM License Agreement upon 60 days’ written notice to BCM. BCM has the right to terminate the agreement upon
material default or failure of us of our overall obligation to perform any of the terms, covenants or provisions of the license
agreement, including failure to make timely payment, taken as a whole, and which default or failure remains uncured thirty days
after written notice from BCM of such material default or failure to correct such default or failure. Notwithstanding the foregoing,
if a material default or failure is not susceptible to cure within the 30-day cure period, BCM’s right to terminate shall
be suspended if, and for so long as, (i) we have provided BCM with a written plan that is reasonably calculated to effect
a cure, (ii) such plan is reasonably acceptable to BCM, in its sole but reasonable discretion, and (iii) we commit to
and do carry out such plan; provided, however, that, unless mutually agreed to by the parties in such plan, such suspension of
BCM’s right to terminate shall not extend beyond 60 days after the original cure period. In addition, either party’s
right to terminate the license agreement shall be tolled for so long as dispute resolution procedures are being pursued by the
allegedly breaching party in good faith, and if it is finally and conclusively determined that the allegedly breaching party is
in material breach, then the breaching party shall have the right to cure within 30 days after such determination. BCM also has
the right to terminate the agreement if we shall (i) become involved in insolvency, dissolution, bankruptcy or receivership
proceedings affecting the operation of our business, (ii) make an assignment of all or substantially all of our assets for
the benefit of creditors, or (iii) if a receiver or trustee is appointed for us and we shall, after the expiration of 30 days
following any of the enumerated events, are unable to secure a dismissal, stay or other suspension of such proceedings.
In the event of termination of the BCM License
Agreement, but not expiration, all rights to the subject technology and patent rights thereunder shall revert to BCM, except to
the extent necessary to exercise any surviving right or license thereunder. We may sell any licensed products actually in its possession
at the effective date of termination, provided that we continue to pay to BCM royalties on all such sales in accordance with the
license agreement and otherwise complies with the terms of the license agreement and sells all such licensed products within six
months after the effective date of the termination.
On November 16, 2018, in furtherance of the
BCM License Agreement and as contemplated by the terms thereof, we entered into a Sponsored Research Agreement (“SRA”)
with BCM, which provided for the conduct of research for us by credentialed personnel at BCM’s Center for Cell and Gene Therapy.
Each of Dr. Vera and Dr. Leen also serve as our Chief Development Officer and Chief Scientific Officer, respectively. The SRA has
a four-year term and the research is to be supervised at BCM by co-investigators Dr. Vera and Dr. Leen. Pursuant to the SRA, we
have agreed to pay BCM up to $256,272 for years one and two under the SRA with $76,882 paid up front and $153,764 paid in equal
monthly installments over two years. Payments for years three and four are to be covered by an amendment
We will need to enter into additional agreements
with BCM with respect to (i) a strategic alliance to advance pre-clinical research, early stage clinical trials, and Phase II clinical
trials with respect to our product candidates, as well as continued access to our clinical data, and (ii) product manufacturing
and support, including personnel and space at the institution for the foreseeable future.
Mayo Foundation for Medical Education and
Research Relationships
We have exclusively licensed the intellectual
property for our TPIV100/110 HER2/neu breast cancer vaccine and TPIV200 folate receptor alpha vaccine product candidates from the
Mayo Foundation for Medical Education and Research (the “Mayo Foundation”).
As part of our business strategy, we establish
business relationships, including collaborative arrangements with other companies and medical research institutions to assist in
the clinical development of certain of our drugs and drug candidates and to provide support for our research programs.
Below is a brief description of our significant
business relationships and collaborations and related license agreements with Mayo Foundation that expand our pipeline and provide
us with certain rights to existing and potential new products and technologies.
On May 26, 2010, we signed a Technology
Option Agreement with the Mayo Foundation in Rochester, Minnesota, for the evaluation of HER2/neu peptide epitopes as antigens
for a breast cancer vaccine. The agreement grants us an exclusive worldwide option to become the exclusive licensee of the technology
after completion of Phase I clinical trials.
Following approval of the IND by the FDA in
July 2011, we executed a Sponsored Research Agreement with the Mayo Foundation for the clinical trial.
Mayo Patent & Know-How License:
On March 25, 2012, we entered into a
Patent & Know-How License Agreement with the Mayo Foundation pursuant to which we acquired certain intellectual property
rights from the Mayo Foundation for the development and commercialization of certain products, methods and processes property
relating to a proprietary HER2/neu technology.
The Mayo Foundation granted us a license (with
a right to sublicense) on a worldwide basis to make, sell and use products for prophylactic and therapeutic use. This license is
an exclusive license for products that are based on the intellectual property and non-exclusive for products that are based on
Mayo Foundation know–how and materials. The intellectual property licensed includes U.S. patents 9,814,767 (estimated expiration
date February 15, 2033) and 10,117,919 (estimated expiration date February 15, 2033) and European patent 2814836 (estimated expiration
date February 15, 2033).
Under this agreement, and subject to certain
exceptions, we are responsible for, among other things, developing the technology under the Patent Rights to bring Licensed Products
(as defined in the agreement) to market and costs of filing, prosecution and maintenance of the Patent Rights. Mayo Foundation
controls the prosecution and maintenance of the Patent Rights in consultation with us.
The Mayo Foundation granted this license in
exchange for an upfront payment of $250,000 that we paid in three installments. In addition to the upfront payment, we are to pay
an annual license maintenance fee, milestone fees, royalty fees (which will be subject to a minimum annual royalty fee once royalty
fees are due), and a $500,000 diligence fee had a Phase I clinical trial for a Licensed Product not been initiated prior to the
fifth anniversary of the agreement and a $2,000,000 diligence fee if we fail to initiate a Phase II clinical trial for a Licensed
Product prior to the eighth anniversary of the agreement.
We have agreed to indemnify and hold Mayo Foundation
harmless from any damages caused as a result of (i) the practice or exercise of any rights and assignments granted by the agreement
by or on behalf of us, any affiliate, or any sub-licensee; (ii) research, development, design, manufacture, distribution, use,
sale, importation, exportation or other disposition of Licensed Products; (iii) our, any affiliates, or any sub-licensee’s
act or omission; and (iv) third party suits for patent infringement involving a Licensed Product.
The term of this agreement runs from March
25, 2012 until the date of the last to expire of the Valid Claims (as defined in the agreement), provided that Mayo Foundation
may terminate the agreement if, among other matters, (i) 45 days after providing us with notice of a material breach of this agreement,
we fail to cure such breach, (ii) we fail to initiate a Phase III clinical trial for a Licensed Product prior to the tenth anniversary
of the agreement, and (iii) we cease to conduct business in the normal event of operations or become insolvent or bankrupt. We
may voluntarily terminate the agreement at any time upon written notice to Mayo Foundation.
Mayo HER2/neu License:
On May 4, 2016, we entered into a License and
Assignment Agreement with Mayo Foundation (“Mayo Foundation HER2/neu License”) pursuant to which we acquired certain
intellectual property rights from the Mayo Foundation for the development and commercialization of certain products, methods and
processes property relating to any cancer indication in which the HER2/neu antigen is overexpressed. The Mayo Foundation HER2/neu
License resulted from our exercise of an option that was issued pursuant to a Technology Option Agreement that we entered into
with the Mayo Foundation on May 25, 2010.
The Mayo Foundation granted us a license (with
a right to sublicense) on a worldwide basis to make, sell and use products for therapeutic use against breast, ovarian, lung and
any other cancers that overexpress HER2/neu antigens. This license is an exclusive license for products that are based on the intellectual
property and non-exclusive for products that are based on Mayo Foundation know–how and materials. The intellectual property
licensed includes European patent 2215111 (estimated expiration date October 30, 2028).
Under the Mayo Foundation HER2/neu License,
and subject to certain exceptions, we are responsible for, among other things, developing the technology under the Patent Rights
to bring Licensed Products (both as defined in the Mayo Foundation HER2/neu License) to market and costs of filing, prosecution
and maintenance of the Patent Rights. Mayo Foundation has sole control over the protection, defense, enforcement, maintenance abandonment
and other handling of the Know-How (as defined in the Mayo Foundation HER2/neu License) and Materials (as defined in the Mayo Foundation
HER2/neu License).
The Mayo Foundation granted this license in
exchange for an initial payment of $300,000. The Mayo Foundation assigned to us IND # 14749, and we assumed all responsibility
and liability for this investigational new drug application. In addition to the initial payment, we are to pay an annual license
maintenance fee, milestone fees and royalty fees (which will be subject to a minimum annual royalty fee once royalty fees are due).
We have agreed to indemnify and hold Mayo Foundation
harmless from any damages caused as a result of (i) the practice or exercise of any rights and assignments granted by the agreement
by or on behalf of us or any sub-licensee; (ii) research, development, design, manufacture, distribution, use, sale, importation,
exportation or other disposition of Licensed Products; (iii) our or any sub-licensee’s act or omission, including negligence
or willful misconduct; and (iv) third party suits for patent infringement involving a Licensed Product.
The term of this agreement runs from May 4,
2016 until the date of our last obligation to make payments under the agreement, provided that Mayo Foundation may terminate the
agreement if, among other matters, (i) 30 days after providing us with notice of a material breach of this agreement, we fail to
cure such breach, (ii) 90 days after providing us with written notice, we fail to meet either of the following diligence events
(a) initiate a Phase II clinical trial for a Licensed Product prior to the second anniversary of the agreement and, once initiated,
keep current on all of our Phase II funding obligations and (b) initiate a Phase IIB or III clinical trial for a Licensed Product
prior to the fifth anniversary of the agreement, (iii) we fail to make a sale of a Licensed Product by May 4, 2026, and (iv) we
cease to conduct business in the normal event of operations or become insolvent or bankrupt. We may voluntarily terminate the agreement
at any time upon written notice to Mayo Foundation.
Mayo Folate Receptor Alpha License:
On July 21, 2015, we entered into a License
and Assignment Agreement with Mayo Foundation (“Mayo Foundation FRa License”) pursuant to which we acquired certain
intellectual property rights from the Mayo Foundation for the development and commercialization of certain products, methods and
processes property relating to a Folate Receptor Alpha immunotherapeutic vaccine comprised of a set of unique peptide epitopes
targeting breast, lung and ovarian cancer. The Mayo Foundation FRa License resulted from our exercise of an option that we acquired
from Ayer Special Situations Fund I, LP (“Ayer”) that was issued pursuant to a Technology Option Agreement that Ayer
entered into with the Mayo Foundation on March 18, 2014.
The Mayo Foundation granted us a license (with
a right to sublicense) on a worldwide basis to make, sell and use products for therapeutic use against breast, ovarian, lung and
other cancers that express Folate Receptor Alpha. This license is an exclusive license for products that are based on the intellectual
property and non-exclusive for products that are based on Mayo Foundation know–how and materials. The intellectual property
that is licensed includes US patents 8,486,412 (estimated expiration date April 3, 2029), 8,858,952 (estimated expiration date
March 10, 2031), 9,243,033 (July 10, 2027) and 9,915,646 (estimated expiration date June 1, 2027).
Under the Mayo Foundation FRa License, and
subject to certain exceptions, we are responsible for, among other things, developing the technology under the Patent Rights to
bring Licensed Products (both as defined in the Mayo Foundation FRa License) to market and costs of filing, prosecution and maintenance
of the Patent Rights. Mayo Foundation has sole control over the protection, defense, enforcement, maintenance abandonment and other
handling of the Know-How (as defined in the Mayo Foundation FRa License) and Materials (as defined in the Mayo Foundation FRa License).
The Mayo Foundation granted this license in
exchange for an initial upfront payment of $350,000. The Mayo Foundation assigned to us IND # 14546, and we assumed all responsibility
and liability for this investigational new drug application. In addition to the initial upfront payment, we are to pay additional
upfront payments, an annual license maintenance fee, milestone fees and royalty fees (which will be subject to a minimum annual
royalty fee once royalty fees are due).
We have agreed to indemnify and hold Mayo Foundation
harmless from any damages caused as a result of (i) the practice or exercise of any rights and assignments granted by the Mayo
Foundation FRa License by or on behalf of us or any sub-licensee; (ii) research, development, design, manufacture, distribution,
use, sale, importation, exportation or other disposition of Licensed Products; (iii) our or any sub-licensee’s act or omission,
including negligence or willful misconduct; and (iv) third party suits for patent infringement involving a Licensed Product.
The term of this agreement runs from July 21,
2015 until the date of our last obligation to make payments under this agreement, provided that the Mayo Foundation may terminate
this agreement if, among other matters, (i) 30 days after providing us with notice of a material breach of this agreement, we fail
to cure such breach, (ii) 90 days after providing us with written notice, we fail to meet either of the following diligence events
(a) initiate a Phase II clinical trial for a Licensed Product prior to the 2nd anniversary of the Mayo Foundation FRa License and,
once initiated, keep current on all of our Phase II funding obligations and (b) initiate a Phase IIB or III clinical trial for
a Licensed Product prior to the 5th anniversary of the Mayo Foundation FRa License, (iii) we fail to make a sale of a Licensed
Product by July 21, 2025 and (iv) we cease to conduct business in the normal event of operations or become insolvent or bankrupt.
We may voluntarily terminate the Mayo Foundation FRa License at any time upon written notice to Mayo Foundation.
Intellectual Property
Our commercial success will depend in part
on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions, improvements, and
know-how related to the business; to defend and enforce proprietary rights, including any patents that we may own in the future;
to preserve the confidentiality of our trade secrets and other intellectual property; to obtain and maintain licenses to use intellectual
property owned by third parties; and to operate without infringing the valid and enforceable patents and other proprietary rights
of third parties. Our ability to stop third parties from making, using, selling, offering to sell, or importing our products may
depend on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities — in
other words, the rights obtained under exclusive license arrangements such as those pursuant to our BCM License Agreement and our
Mayo Foundation licenses. With respect to both licensed and company-owned intellectual property, we cannot be sure that patents
will be granted with respect to any of our pending patent applications or with respect to any patent applications filed in the
future, nor can we be sure that any of our existing patents or any patents that may be granted in the future will be commercially
useful in protecting our commercial products and methods of manufacturing the same.
To achieve this objective, a strategic
focus for us has been to identify and license key patents and patent applications that serve to enhance our intellectual
property and technology position. Currently, all of our MultiTAA intellectual property rights are licensed from BCM. Our
intellectual property portfolio currently includes patent applications having: (1) claims directed to methods of generating
multi-antigen specific T cell products; and (2) claims directed to therapeutic uses of such multi-antigen specific T cell
products. We believe our patent portfolio, together with our efforts to develop and patent next-generation
technologies, provides us with a substantial intellectual property position. However, the area of patent and other
intellectual property rights in biotechnology is an evolving one with many risks and uncertainties.
Patents
Patents and other proprietary rights are vital
to our business operations. We protect our technology through various United States and foreign patent filings and maintain trade
secrets that we own. Our policy is to seek appropriate patent protection both in the United States and abroad for our proprietary
technologies and product candidates. An enforceable patent with appropriate claim coverage can provide an advantage over competitors
who may seek to employ similar approaches to develop therapeutics, and so the future commercial success of products, and therefore
our future success, will be in part dependent on our intellectual property strategy. The information provided in this section should
be reviewed in the context of the information disclosed elsewhere in this annual report under “Risk Factors”. We reassess
the value of each patent at the time maintenance fees are due, and in cases where maintaining the patent is judged to be of no
significant strategic value, we decline to pay the maintenance fee.
There can be no assurance that our patents,
and any patents that may be issued or licensed to us in the future, will afford protection against competitors with similar technology.
In addition, no assurances can be given that the patents issued or licensed to us will not be infringed upon or designed around
by others or that others will not obtain patents that we would need to license or design around. If the courts uphold existing
or future patents containing broad claims over technology used by us, the holders of such patents could require us to obtain licenses
to use such technology. Patent coverage may also vary from country to country based on the scope of available patent protection.
There are also opportunities to obtain an extension of patent coverage for a product in certain countries, which adds further complexity
to the determination of patent life.
We currently have a number of issued and pending
patents covering composition of matter of our PolyStart™ technology including: U.S. 9,364,523 (estimated expiration date
March 17, 2035); U.S. 9,655,956 (estimated expiration date March 17, 2035); U.S. 9,988,643 (estimated expiration date March 17,
2035); and U.S. 10,030,252 (estimated expiration date March 17, 2035)
The effect of the issued United States patents
is that they provide us with patent protection for the claims covered by the patents. While the expiration of a product patent
normally results in a loss of market exclusivity for the covered product or product candidate, commercial benefits may continue
to be derived from: (i) later-granted patents on processes and intermediates related to the most economical method of manufacture
of the active ingredient of such product; (ii) patents relating to the use of such product; (iii) patents relating to novel
compositions and formulations; and (iv) in the United States and certain other countries, market exclusivity that may be available
under relevant law. The effect of patent expiration on our product candidates also depends upon many other factors such as the
nature of the market and the position of the product in it, the growth of the market, the complexities and economics of the process
for manufacture of the active ingredient of the product and the requirements of new drug provisions of the Federal Food, Drug and
Cosmetic Act or similar laws and regulations in other countries.
Our pending patent applications cover a range
of technologies, including specific embodiments and applications for treatment of various medical indications, improved application
methods and adjunctive utilization with other therapeutic modalities. The coverage claimed in a patent application can be significantly
reduced before the patent is issued. Accordingly, we do not know whether any of the applications we will acquire, or license will
result in the issuance of patents, or, if any patents are issued, whether they will provide significant proprietary protection
or will be challenged, circumvented or invalidated. Because unissued U.S. patent applications are maintained in secrecy for a period
of eighteen months and U.S. patent applications filed prior to November 29, 2000 are not disclosed until such patents are issued,
and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be
certain of the priority of inventions covered by pending patent applications. Moreover, we may have to participate in opposition
proceedings in a foreign patent office, or for United States patent applications filed before March 16, 2013, in interference proceedings
declared by the United States Patent and Trademark Office “USPTO”) to determine priority of invention, or in United
States
inter partes
review or post-grant review procedures, any of which could result in substantial cost to us, even if
the eventual outcome is favorable to us. There can be no assurance that the patents, if issued, would be held valid by a court
of competent jurisdiction. An adverse outcome could subject us to significant liabilities to third parties, require disputed rights
to be licensed from third parties or require us to cease using such technology.
We have patents and patent applications in
other countries, as well as in the European Patent Office that we believe provide equivalent or comparable protection for our product
candidates in jurisdictions internationally that we consider to be key markets. Because of the differences in patent laws and laws
concerning proprietary rights, the extent of protection provided by U.S. patents or proprietary rights owned by us may differ from
that of their foreign counterparts.
Trade Secrets
We also rely on trade secrets and know-how
relating to our proprietary technology and product candidates, continuing innovation, and in-licensing opportunities to develop,
strengthen and maintain our proprietary position in the field of immuno-oncology. However, trade secrets can be difficult to protect.
We also plan to rely on regulatory protection afforded through orphan drug designations, data exclusivity, market exclusivity and
patent term extensions when available, as well as contractual agreements with our academic and commercial partners.
We require each of our employees, consultants
and advisors to execute a confidentiality agreement upon the commencement of any employment, consulting or advisory relationship
with us. Each agreement provides that all confidential information developed or made known to the individual during the course
of the relationship will be kept confidential and not be disclosed to third parties except in specified circumstances. In the case
of employees, the agreements provide that all inventions conceived by an employee shall be our exclusive property.
Trademarks
We currently have pending with the USPTO applications
for registration of the trademarks POLYSTART™ and “Marker Therapeutics.” We currently have the trademark “TapImmune”
registered with the USPTO. We also have rights to use other names essential to our business. Federally registered trademarks have
a perpetual life if they are maintained and renewed on a timely basis and used properly as trademarks, subject to the rights of
third parties to seek cancellation of the trademarks if they claim priority or confusion of usage. We regard our trademarks and
other proprietary rights as valuable assets and believe they have significant value to us.
We believe that our patents, the protection
of discoveries in connection with our development activities, our proprietary products, technologies, processes and know-how and
all our intellectual property are important to our business. There can be no assurance that any of our patents, licenses or other
intellectual property rights will afford us any protection from competition.
Manufacturing
Our manufacturing strategy is to contract with
BCM and other third parties to manufacture our MultiTAA-specific T cells, as well as the raw materials, our active pharmaceutical
ingredients (“API”) and finished solid dose products for our peptide vaccines for clinical and ultimately commercial
uses. We currently do not operate manufacturing facilities for clinical or commercial production of our drug candidates. In addition,
we expect for the foreseeable future to continue to rely on third parties for the manufacture of our clinical and commercial supply
of MultiTAA-specific T cells, and of the raw materials, API and finished drug product for our peptide vaccines. Of note, we anticipate that product manufacturing of MultiTAA-specific cells in support
of Phase I/II clinical trials will be conducted at BCM within its GMP cell manufacturing facility.
In this manner, we expect to continue to build
and maintain our supply chain and quality assurance resources.
Manufacturing of our Products
Our supply chain for manufacturing raw materials,
API, peptide vaccines, as well as MultiTAA-specific T cell products ready for distribution and commercialization is a multi-step process. Establishing and managing the supply chain requires a significant financial commitment and the creation
and maintenance of numerous third-party contractual relationships.
We contract with third parties to manufacture
our peptide vaccines and MultiTAA-specific T cells for clinical purposes. Third-party manufacturers supply us with raw materials
for the peptide vaccines, and other third-party manufacturers convert these raw materials into API or convert the API into final
dosage form. For most of our peptide vaccine candidates, once our raw materials are produced, we rely on different third parties
to manufacture the API, to make finished drug product and to lyophilize, package and label the finished product. While we currently
have focused on single vendors for manufacturing of peptide, formulation development, and lyophilization and vialing, we have access
to numerous other vendors, if required. Similarly, BCM is currently the sole manufacturer of our MultiTAA-specific T cells.
We may not be able to obtain sufficient quantities
of any of our raw materials or peptide vaccine candidates if our designated manufacturers do not have the capacity or capability
to manufacture our products according to our schedule and specifications. If any of these single source suppliers become unable
or unwilling to supply us with API or finished product that complies with applicable regulatory requirements, we could incur significant
delays in our clinical trials which could have a material adverse effect on our business. Similarly, if BCM become unable or unwilling
to manufacture our MultiTAA-specific T cells that comply with applicable regulatory requirements, we could incur significant delays
in our clinical trials which could have a material adverse effect on our business.
For our future products, we may continue
contracting third-party suppliers to manufacture sufficient quantities of our peptide vaccine and MultiTAA-specific T cell candidates
for clinical and commercial supply. If we are unable to contract for large scale manufacturing with third parties on acceptable
terms for our future products or develop manufacturing capabilities internally, our ability to conduct large scale clinical trials
and ultimately meet customer demand for commercial products will be adversely affected.
Third-party Manufacturers
Our third-party manufacturers are independent
entities subject to their own unique operational and financial risks which are out of our control. If our third-party manufacturers
fail to perform as required, this could impair our ability to deliver our products on a timely basis or cause delays in our clinical
trials and applications for regulatory approval. To the extent that these risks materialize and affect their performance obligations
to us, our financial results may be adversely affected.
While we believe there are multiple third-party
suppliers available to provide most of the materials and services needed to manufacture our product candidates, and proper inventory
planning is required for the materials that cannot be second-sourced, there is always a risk that we may underestimate demand
and that our manufacturing capacity through third-party manufacturers may not be sufficient.
Access to Supplies and Materials
Our third-party manufacturers need access to
certain supplies and products to manufacture our drug candidates. If delivery of material from their suppliers were interrupted
for any reason or if they are unable to purchase sufficient quantities of raw materials used to manufacture our drug candidates,
it could significantly delay our drug candidates in development for clinical trials.
Competition
Our drug discovery, development and ultimate
commercialization activities face, and will continue to face, intense competition from organizations such as pharmaceutical and
biotechnology companies, as well as academic and research institutions and government agencies. We face significant competition
from organizations, particularly fully integrated pharmaceutical companies that are pursuing pharmaceuticals which are competitive
with our drug candidates. Our product candidates may compete with product candidates from a number of companies, which are developing
various types of similar in vivo T-cell immunotherapies and therapeutic cancer vaccines to treat cancer, including: Advaxis
Inc., Genzyme Molecular Oncology, Immune Design, Oncothyreon, Celldex, BN Immunotherapeutics, Immunocellular, SELLAS Life Sciences
Group, Inc. (formerly) Galena BioPharma, Antigen Express, Transgene S. A., and Bavarian Nordic. In addition, other adoptive T-cell
therapies, monoclonal antibodies and checkpoint inhibitors also provide competition in the oncology space. In these areas, competitors
include Iovance, Immatics, Torque Therapeutics, AdaptImmune, Mana Therapeutics, Juno Therapeutics/Celgene/Bristol Myers Squibb,
Kite Pharma/Gilead, Novartis, Roche Pharmaceuticals, Merck & Co, AstraZeneca plc and Medimmune, LLC. We believe that our non-engineered
T cells therapy and our in vivo T-cell therapy approaches will be synergistic and may improve therapies being developed by these
competitors.
Many companies and institutions, either alone
or together with their collaborative partners, have substantially greater financial, technical and human resources, and significantly
greater experience than we do in the following:
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undertaking preclinical testing and clinical trials;
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obtaining FDA and other regulatory approvals of products; and
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manufacturing, marketing, distributing and selling products.
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Accordingly, our competitors may succeed in
obtaining patent protection, receiving FDA and other regulatory approval or commercializing products that compete with our drug
candidates.
In addition, any drug candidate that we successfully
develop may compete with existing therapies that have long histories of safe and effective use. Competition may also arise from:
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other drug development technologies and methods of preventing or reducing the incidence of disease;
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new small molecules; or
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other classes of therapeutic agents.
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We face, and will continue to face, intense
competition from other companies for collaborative arrangements with pharmaceutical and biotechnology companies, for establishing
relationships with academic and research institutions and for licenses to drug candidates or proprietary technology. These competitors,
either alone or with their collaborative partners, may succeed in developing products that are more effective than ours.
Our ability to compete successfully will depend,
in part, on our ability to:
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develop proprietary products;
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develop and maintain products that reach the market first, are technologically superior to and/or are of lower cost than other
products in the market;
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attract and retain scientific, product development and sales and marketing personnel;
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obtain patent or other proprietary protection for our products and technologies;
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obtain required regulatory approvals; and
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manufacture, market, distribute and sell any products that we develop.
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In a number of countries, including in particular,
developing countries, government officials and other groups have suggested that pharmaceutical companies should make drugs available
at a low cost. In some cases, governmental authorities have indicated that where pharmaceutical companies do not do so, their patents
might not be enforceable to prevent generic competition. Some major pharmaceutical companies have greatly reduced prices for their
drugs in certain developing countries. If certain countries do not permit enforcement of any of our patents, sales of our products
in those countries, and in other countries could be reduced by generic competition or by parallel importation of our product. Alternatively,
governments in those countries could require that we grant compulsory licenses to allow competitors to manufacture and sell their
own versions of our products in those countries, thereby reducing our product sales, or we could respond to governmental concerns
by reducing prices for our products. In all these situations, our results of operations could be adversely affected.
Government Regulation
Our ongoing research and development activities
and any manufacturing and marketing of our drug candidates are subject to extensive regulation by numerous governmental authorities
in the United States and other countries. Government authorities in the United States, at the federal, state and local level, and
in other countries and jurisdictions, including the European Union, extensively regulate, among other things, the research, development,
testing, manufacture, quality control, approval, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution,
marketing, post-approval monitoring and reporting, and import and export of pharmaceutical products. The processes for obtaining
regulatory approvals in the United States and in foreign countries and jurisdictions, along with subsequent compliance with applicable
statutes and regulations and other regulatory authorities, require the expenditure of substantial time and financial resources.
The failure to comply with applicable U.S.
requirements at any time during the product development process, approval process or after approval may subject an applicant and/or
sponsor to a variety of administrative or judicial sanctions, including refusal by the FDA to approve pending applications, withdrawal
of an approval, imposition of a clinical hold, issuance of warning letters and other types of letters, product recalls, product
seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution,
disgorgement of profits, or civil or criminal investigations and penalties brought by the FDA and the Department of Justice (“DOJ”),
or other governmental entities. The government regulations below may apply to any of our product candidates or anticipated pipeline
of products.
FDA Review and Approval Process
The regulatory review and approval process
is lengthy, expensive and uncertain. The steps generally required before a drug may be marketed in the United States include:
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preclinical laboratory tests,
animal studies and formulation studies in compliance with the FDA’s Good Laboratory Practice (“GLP”) and Good
Manufacturing Practice (“GMP”) regulations;
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submission to the FDA of
an Investigational New Drug application (“IND”) for human clinical testing, which must become effective before human
clinical trials may commence;
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performance of adequate and
well-controlled clinical trials in three phases, as described below, to establish the safety and efficacy of the drug for each
indication;
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submission of a New Drug
Application (“NDA”) or Biologics License Application (“BLA”) to the FDA for review;
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random inspections of clinical
sites to ensure validity of clinical safety and efficacy data;
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satisfactory completion of
an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current
good manufacturing practices;
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FDA approval of the NDA or
BLA; and
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payment of user and establishment
fees, if applicable.
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Similar requirements exist within foreign agencies
as well. The time required to satisfy FDA requirements or similar requirements of foreign regulatory agencies may vary substantially
based on the type, complexity and novelty of the product or the targeted disease.
Preclinical testing includes laboratory evaluation
of product pharmacology, drug metabolism, and toxicity which includes animal studies, to assess potential safety and efficacy as
well as product chemistry, stability, formulation, development, and testing. The results of the preclinical tests, together with
manufacturing information and analytical data, are submitted to the FDA as part of an IND. An IND will automatically become effective
30 days after receipt by the FDA, unless before that time, the FDA raises safety concerns or questions about the conduct of
the clinical trial(s) included in the IND, which are further parsed into hold and non-hold questions/issues. In the case of hold
issues, the IND sponsor and the FDA must resolve all FDA concerns or questions before clinical trials can proceed. We cannot be
sure that submission of an IND will result in the FDA allowing clinical trials to commence.
Clinical trials involve the administration
of the investigational drug to human subjects under the supervision of qualified investigators and in accordance with good clinical
practices regulations covering the protection of human subjects. These regulations require all research subjects to provide informed
consent. Clinical trials are conducted under protocols detailing the objectives of the study, the parameters to be used in monitoring
safety, and the effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND and each
trial must be reviewed and approved by an Institutional Review Board (“IRB”) before it can begin.
Clinical trials typically are conducted in
three sequential phases, but the phases may overlap or be combined. Phase I usually involves the initial introduction of the
investigational drug into healthy volunteers to evaluate its safety, dosage tolerance, absorption, metabolism, distribution and
excretion. Phase II usually involves clinical trials in a limited patient population to evaluate dosage tolerance and optimal
dosage, identify possible adverse effects and safety risks, and evaluate and gain preliminary evidence of the efficacy of the drug
for specific indications. Phase III clinical trials usually further evaluate clinical efficacy and safety by testing the drug
in its final form in an expanded patient population, providing statistical evidence of efficacy and safety, and providing an adequate
basis for labeling. We cannot guarantee that Phase I, Phase II or Phase III testing will be completed successfully
within any specified period of time, if at all. Furthermore, we, the IRB, or the FDA may suspend clinical trials at any time on
various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.
As a separate amendment to an IND, a clinical
trial sponsor may submit to the FDA a request for a Special Protocol Assessment (“SPA”). Under the SPA procedure, a
sponsor may seek the FDA’s agreement on the design and size of a clinical trial intended to form the primary basis of an
effectiveness claim. If the FDA agrees in writing, its agreement may not be changed after the trial begins, except when agreed
by FDA or in limited circumstances, such as when a substantial scientific issue essential to determining the safety and effectiveness
of a drug candidate is identified after a Phase III clinical trial is commenced and agreement is obtained with the FDA. If
the outcome of the trial is successful, the sponsor will ordinarily be able to rely on it as the primary basis for approval with
respect to effectiveness. However, additional trials could also be requested by the FDA to support approval, and the FDA may make
an approval decision based on a number of factors, including the degree of clinical benefit as well as safety. The FDA is not obligated
to approve an NDA or BLA as a result of a SPA agreement, even if the clinical outcome is positive.
Even after initial FDA approval has been obtained,
post-approval trials or Phase IV studies, may be required to provide additional data, and will be required to obtain approval
for the sale of a product as a treatment for a clinical indication other than that for which the product was initially tested and
approved. Also, the FDA will require post-approval safety reporting to monitor the side effects of the drug. Results of post-approval
programs may limit or expand the indication or indications for which the drug product may be marketed. Further, if there are any
requests for modifications to the initial FDA approval for the drug, including changes in indication, manufacturing process, manufacturing
facilities, or labeling, a supplemental NDA or BLA may be required to be submitted to the FDA.
The length of time and related costs necessary
to complete clinical trials varies significantly and may be difficult to predict. Clinical results are frequently susceptible to
varying interpretations that may delay, limit or prevent regulatory approvals. Additional factors that can cause delay or termination
of our clinical trials, or cause the costs of these clinical trials to increase, include:
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slow patient enrollment due
to the nature of the protocol, the proximity of patients to clinical sites, the eligibility criteria for the study, competition
with clinical trials for other drug candidates or other factors;
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inadequately trained or insufficient
personnel at the study site to assist in overseeing and monitoring clinical trials;
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delays in approvals from
a study site’s IRB;
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longer than anticipated treatment
time required to demonstrate effectiveness or determine the appropriate product dose;
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lack of sufficient supplies
of the drug candidate for use in clinical trials;
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adverse medical events or
side effects in treated patients; and
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lack of effectiveness of
the drug candidate being tested.
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Any drug is likely to produce some toxicities
or undesirable side effects in animals and in humans when administered at sufficiently high doses and/or for sufficiently long
periods of time. Unacceptable toxicities or side effects may occur at any dose level. The appearance of any unacceptable toxicity
or side effect could cause us or regulatory authorities to interrupt, limit, delay or abort the development of any of our drug
candidates and could ultimately prevent their marketing approval by the FDA or foreign regulatory authorities for any or all targeted
indications.
Fast Track Designation and Accelerated
Approval
The FDA’s fast track and breakthrough
therapy designation programs are intended to facilitate the development and expedite the review of drug candidates intended for
the treatment of serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs for these
conditions. Under these programs, FDA can, for example, review portions of an NDA or BLA for a drug candidate before the entire
application is complete, thus potentially beginning the review process at an earlier time.
We cannot guarantee that the FDA will grant
any of our requests for fast track or breakthrough therapy designations, that any such designations would affect the time of review
or that the FDA will approve the NDA or BLA submitted for any of our drug candidates, whether or not these designations are granted.
Additionally, FDA approval of a fast track/breakthrough product can include restrictions on the product’s use or distribution
(such as permitting use only for specified medical conditions or limiting distribution to physicians or facilities with special
training or experience). Approval of such designated products can be conditioned on additional clinical trials after approval.
The FDA is required to facilitate the development,
and expedite the review, of biologics that are intended for the treatment of a serious or life-threatening disease or condition
for which there is no effective treatment, and which demonstrate the potential to address unmet medical needs for the condition.
Under the fast track program, the sponsor of a new biologic candidate may request that the FDA designate the candidate for a specific
indication as a fast track biologic concurrent with, or after, the filing of the IND for the candidate. The FDA must determine
if the biologic candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.
Under the fast track program and FDA’s
accelerated approval regulations, the FDA may approve a biologic for a serious or life-threatening illness that provides meaningful
therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical
benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely
to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity,
or prevalence of the condition and the availability or lack of alternative treatments.
In clinical trials, a surrogate endpoint is
a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient
feels, functions, or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. A
biologic candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion
of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval
trials, or confirm a clinical benefit during post-marketing trials, will allow the FDA to withdraw the biologic from the market
on an expedited basis. All promotional materials for biologic candidates approved under accelerated regulations are subject to
prior review by the FDA.
In addition to other benefits such as the ability
to use surrogate endpoints and engage in more frequent interactions with the FDA, the FDA may initiate review of sections of a
fast track product’s BLA before the application is complete. This rolling review is available if the applicant provides,
and the FDA approves, a schedule for the submission of the remaining information and the applicant pays applicable user fees. However,
the FDA’s time period goal for reviewing an application does not begin until the last section of the BLA is submitted. Additionally,
the fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data
emerging in the clinical trial process.
Breakthrough Therapy Designation
The FDA is also required to expedite the development and review
of the application for approval of biological products that are intended to treat a serious or life-threatening disease or condition
where preliminary clinical evidence indicates that the biologic may demonstrate substantial improvement over existing therapies
on one or more clinically significant endpoints.
Under the breakthrough therapy program, the sponsor of a new biologic
candidate may request that the FDA designate the candidate for a specific indication as a breakthrough therapy concurrent with,
or after, the filing of the IND for the biologic candidate. The FDA must determine if the biological product qualifies for breakthrough
therapy designation within 60 days of receipt of the sponsor’s request.
Sponsors submit the results of preclinical
studies and clinical trials to the FDA as part of an NDA or BLA. NDAs and BLAs must also contain extensive product manufacturing
information and proposed labeling. Upon receipt, the FDA initially reviews the NDA or BLA to determine whether it is sufficiently
complete to initiate a substantive review. If the FDA identifies deficiencies that would preclude substantive review, the FDA will
refuse to accept the NDA or BLA and will inform the sponsor of the deficiencies that must be corrected prior to resubmission. If
the FDA accepts the submission for review (then deemed a “filing”), the FDA typically completes the NDA or BLA review
within a pre-determined time frame. Under the Prescription Drug User Fee Act, the FDA agrees to review NDAs and BLAs under either
a standard review or priority review. FDA procedures provide for priority review of NDAs and BLAs submitted for drugs that, compared
to currently marketed products, if any, offer a significant improvement in the treatment, diagnosis or prevention of a disease.
The FDA seeks to review NDAs and BLAs that are granted priority status more quickly than NDAs and BLAs given standard review status.
The FDA’s stated policy is to act on 90% of priority NDAs and BLAs within eight months of receipt (or six months after filing,
which occurs 60 days after NDA or BLA submission). Although the FDA historically has not met these goals, the agency has made
significant improvements in the timeliness of the review process. NDA and BLA review often extends beyond anticipated completion
dates due to FDA requests for additional data or clarification, the FDA’s decision to have an advisory committee review,
and difficulties in scheduling an advisory committee meeting. The recommendations of an advisory committee are not binding on the
FDA.
To obtain FDA approval to market a product,
we must demonstrate that the product is safe and effective for the patient population that will be treated. If regulatory approval
of a product is granted, the approval will be limited to those disease states and conditions for which the product is safe and
effective, as demonstrated through clinical trials. Marketing or promoting a drug for an unapproved indication is prohibited. Furthermore,
approval may entail requirements for post-marketing studies or risk evaluation and mitigation strategies, including the need for
patient and/or physician education, patient registries, medication or similar guides, or other restrictions on the distribution
of the product. If an NDA or BLA does not satisfy applicable regulatory criteria, the FDA may deny approval of an NDA or BLA or
may issue a complete response, and require, among other things, additional clinical data or analyses.
In Canada, the Therapeutic Products Directorate
and the Biologics and Genetic Therapies Directorate of Health Canada (“HC”) ensure that clinical trials are properly
designed and undertaken and that subjects are not exposed to undue risk. Regulations define specific Investigational New Drug submission
(“IND”) application requirements, which must be complied with before a new drug can be distributed for trial purposes.
The directorates currently review the safety, efficacy and quality data submitted by the sponsor and approve the distribution of
the drug to the investigator. The sponsor of the trial is required to maintain accurate records, report adverse drug reactions,
and ensure that the investigator adheres to the approved protocol. Trials in humans should be conducted according to generally
accepted principles of good clinical practice. Management believes that these standards provide assurance that the data and reported
results are credible and accurate, and that the rights, integrity, and privacy of clinical trial subjects are protected.
Sponsors wishing to conduct clinical trials
in Phases I through III of development must apply under a 30-day default system. Applications must contain the information described
in the regulations, including: a clinical trial attestation; a protocol; statements to be contained in each informed consent form
that set out the risks posed to the health of clinical trial subjects as a result of their participation in the clinical trial;
an investigator’s brochure; applicable information on excipients (delivery vehicles); and chemistry and manufacturing information.
The sponsor can proceed with the clinical trial
if the directorates have not objected to the sale or importation of the drug within 30 days after the date of receipt of the clinical
trial application and Research Ethics Board approval for the conduct of the trial at the site has been obtained. Additional information
is available on Health Canada’s website -
www.hc-sc.gc.ca
.
Outside the United States and Canada, our ability
to market a product is contingent upon receiving a marketing authorization from the appropriate regulatory authorities. The requirements
governing the conduct of clinical trials, marketing authorization, pricing and reimbursement vary widely from country to country.
At present, foreign marketing authorizations are applied for at a national level, although within the European Union (“EU”),
registration procedures are available to companies wishing to market a product in more than one EU member state. If the regulatory
authority is satisfied that adequate evidence of safety, quality and efficacy has been presented, a marketing authorization may
be granted. This foreign regulatory approval process involves all of the risks associated with FDA approval discussed above and
may also include additional risks.
Orphan Drug Designation
The Orphan Drug Act provides incentives to
manufacturers to develop and market drugs for rare diseases and conditions affecting fewer than 200,000 persons in the United States
at the time of application for orphan drug designation. The first developer to receive FDA marketing approval for an orphan drug
is entitled to a seven-year exclusive marketing period in the United States for the orphan drug indication. However, a drug that
the FDA considers to be clinically superior to, or different from, another approved orphan drug, even though for the same indication,
may also obtain approval in the United States during the seven-year exclusive marketing period.
Under the FDA Modernization Act of 1997, designation
as a Fast Track product for a new drug or biological product means that the FDA will take such actions as are appropriate to expedite
the development and review of the application for approval of such product.
Legislation similar to the Orphan Drug Act
has been enacted in other countries outside of the United States, including the EU. The orphan legislation in the EU is available
for therapies addressing conditions that affect five or fewer out of 10,000 persons, are life-threatening or chronically debilitating
conditions and for which no satisfactory treatment is authorized. The market exclusivity period is for ten years, although that
period can be reduced to six years if, at the end of the fifth year, available evidence establishes that the product does not justify
maintenance of market exclusivity.
Disclosure of Clinical Trial Information
Sponsors of human clinical trials of FDA-regulated
products, including biological products, are required to register and disclose certain clinical trial information. Information
related to the product, patient population, phase of investigation, trial sites and investigators, and other aspects of the clinical
trial is then made public as part of the registration. Sponsors are also obligated to discuss the results of their clinical trials
after completion. Disclosure of the results of these trials can be delayed until the new product or new indication being studied
has been approved. Competitors may use this publicly available information to gain knowledge regarding the progress of development
programs.
Pediatric Information
Under the Pediatric Research Equity Act, or
PREA, NDAs or BLAs or supplements to NDAs or BLAs must contain data to assess the safety and effectiveness of the biological product
for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric
subpopulation for which the biological product is safe and effective. The FDA may grant full or partial waivers, or deferrals,
for submission of data. Unless otherwise required by regulation, PREA does not apply to any biological product for an indication
for which orphan designation has been granted.
Additional Controls for Biologics
To help reduce the increased risk of the introduction
of adventitious agents, the Public Health Service Act (“PHSA”) emphasizes the importance of manufacturing controls
for products whose attributes cannot be precisely defined. The PHSA also provides authority to the FDA to immediately suspend licenses
in situations where there exists a danger to public health, to prepare or procure products in the event of shortages and critical
public health needs, and to authorize the creation and enforcement of regulations to prevent the introduction or spread of communicable
diseases in the United States and between states.
After a BLA is approved, the product may also
be subject to official lot release as a condition of approval. As part of the manufacturing process, the manufacturer is required
to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official
release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing
a summary of the history of manufacture of the lot and the results of all manufacturer’s tests performed on the lot. The
FDA may also perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for
distribution by the manufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on the
safety, purity, potency, and effectiveness of biological products. As with drugs, after approval of biologics, manufacturers must
address any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection
after approval.
Regulation of Manufacturing Process
Even when NDA or BLA approval is obtained,
a marketed product, its manufacturer and its manufacturing facilities are subject to continual review and periodic inspections
by the FDA. The manufacturing process for pharmaceutical products is highly regulated and regulators may shut down manufacturing
facilities that they believe do not comply with regulations. Discovery of previously unknown problems with a product, manufacturer
or facility may result in restrictions on the product, manufacturer or facility, including costly recalls or withdrawal of the
product from the market. Manufacturing facilities are always subject to inspection by the applicable regulatory authorities.
We and our third-party manufacturers are subject
to current Good Manufacturing Practices (“GMP”), which are extensive regulations governing manufacturing processes,
including but not limited to stability testing, record-keeping and quality standards as defined by the FDA and the European Medicines
Agency. Similar regulations are in effect in other countries. Manufacturing facilities are subject to inspection by the applicable
regulatory authorities. These facilities, whether our own or our contract manufacturers, must be inspected before we can use them
in commercial manufacturing of our related products. We or our contract manufacturers may not be able to comply with applicable
GMP and FDA or other regulatory requirements. If we or our contract manufacturers fail to comply, we or our contract manufacturers
may be subject to legal or regulatory action, such as suspension of manufacturing, seizure of product, or voluntary recall of product.
Furthermore, continued compliance with applicable Good Manufacturing Practices will require continual expenditure of time, money
and effort on the part of us or our contract manufacturers in the areas of production and quality control and record keeping and
reporting to ensure full compliance.
Post-Approval Regulation
Any products manufactured or distributed by
us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including record-keeping requirements,
reporting of adverse experiences with the drug and other reporting, advertising and promotion restrictions. The FDA’s rules
for advertising and promotion require, among other things, that our promotion be fairly balanced and adequately substantiated by
clinical studies, and that we not promote our products for unapproved uses. We must also submit appropriate new and supplemental
applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. On
its own initiative, the FDA may require changes to the labeling of an approved drug if it becomes aware of new safety information
that the agency believes should be included in the approved drug’s labeling. The FDA also enforces the requirements of the
Prescription Drug Marketing Act (“PDMA”) which, among other things, imposes various requirements in connection with
the distribution of product samples to physicians.
In addition to inspections related to manufacturing,
we may be subject to periodic unannounced inspections by the FDA and other regulatory bodies related to the other regulatory requirements
that apply to marketed drugs manufactured or distributed by us. The FDA also may conduct periodic inspections regarding our review
and reporting of adverse events, or related to compliance with the requirements of the PDMA concerning the handling of drug samples.
When the FDA conducts an inspection, the inspectors will identify any deficiencies they believe exist in the form of a notice of
inspectional observations. The observations may be more or less significant. If we receive a notice of inspectional observations,
we likely will be required to respond in writing, and may be required to undertake corrective and preventive actions in order to
address the FDA’s concerns.
There are a variety of state laws and regulations
that apply in the states or localities where our drug candidates may be marketed. For example, we must comply with state laws that
require the registration of manufacturers and wholesale distributors of pharmaceutical products in that state, including, in certain
states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place
of business within the state. Some states also impose requirements on manufacturers and distributors to establish the pedigree
of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable
of tracking and tracing product as it moves through the distribution chain. Any applicable state or local regulations may hinder
our ability to market, or increase the cost of marketing, our products in those states or localities.
The FDA’s policies may change and additional
government regulations may be enacted which could impose additional burdens or limitations on our ability to market products after
approval. Moreover, increased attention to the containment of health care costs in the United States and in foreign markets could
result in new government regulations which could have a material adverse effect on our business. We cannot predict the likelihood,
nature or extent of adverse governmental regulation which might arise from future legislative or administrative action, either
in the United States or abroad.
Marketing Exclusivity
The FDA may grant five years of exclusivity
in the United States for the approval of NDAs for new chemical entities, and three years of exclusivity for supplemental NDAs,
for among other things, new indications, dosages or dosage forms of an existing drug if new clinical investigations that were conducted
or sponsored by the applicant are essential to the approval of the supplemental application. Additionally, six months of marketing
exclusivity in the United States is available if, in response to a written request from the FDA, a sponsor submits and the agency
accepts requested information relating to the use of the approved drug in the pediatric population. The six-month pediatric exclusivity
is added to any existing patent or non-patent exclusivity period for which the drug is eligible. Orphan drug products are also
eligible for pediatric exclusivity if the FDA requests and the company completes pediatric clinical trials. Under the Biologics
Price Competition and Innovation Act, the FDA may grant 12 years of data exclusivity for innovative biological products.
Health Law Compliance
In addition to FDA laws and regulations, we
must also comply with various federal and state laws and regulations pertaining to healthcare “fraud and abuse” laws
which govern, among other things, our relationships with healthcare providers, and organizations such as specialty pharmacies,
wholesalers and group purchasing organizations relating to the marketing and pricing of prescription drug products. Such laws
include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security, and physician
payment sunshine laws.
The federal Anti-Kickback Statute makes it
illegal for any person or entity, including a prescription drug manufacturer (or a party acting on its behalf) to knowingly and
willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is intended to induce the referral of
business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal
healthcare program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything
of value. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement
involving remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated.
Federal false claims and false statement laws,
including the federal civil False Claims Act, prohibit, among other things, any person or entity from knowingly presenting, or
causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or
services, including drugs, that are false or fraudulent or not provided as claimed. Entities can be held liable under these laws
if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing
or coding information to customers, promoting a product off-label, or for providing medically unnecessary services or items.
The federal Health Insurance Portability and
Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit among other actions, knowingly
and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party
payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation
of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially
false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
HIPAA, as amended by the Health Information
Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, require certain types of individuals
and entities to protect the privacy, security, and electronic exchange of certain patient data.
The federal Physician Payments Sunshine Act
requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare,
Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare &
Medicaid Services, or CMS, information related to payments or other transfers of value made to physicians and teaching hospitals,
and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests
held by the physicians and their immediate family members.
Analogous state and foreign laws and regulations,
such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare
items or services reimbursed by non-governmental third-party payors, including private insurers. Additionally, we may be subject
to state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines
and the relevant compliance guidance promulgated by the federal government. Further, we may be subject to state laws that require
drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers
or marketing expenditures, as well as state and foreign laws governing the privacy and security of health information in some circumstances,
many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
If our operations are found to be in violation of any of these federal, state or foreign laws or regulations, we may be subject
to penalties, including without limitation, administrative or civil penalties, imprisonment, damages, fines, disgorgement, exclusion
from participation in government healthcare programs, contractual damages, reputational harm, diminished profits and future earnings,
or the curtailment or restructuring of our operations.
There are also an increasing number of state
laws that require manufacturers to make reports to those states on certain pricing and marketing information. Many of these laws
contain ambiguities as to what is required to comply with the laws. Given the lack of clarity in laws and their implementation,
our reporting actions could be subject to the penalty provisions of the state authorities.
Healthcare Reform and Reimbursement and
Pricing Controls
There has been an increased focus on drug pricing
in recent years in the United States. Although there are no direct government price controls over private sector purchases in the
United States, there are rebates and other financial requirements for federal and state health care programs. The Medicare Modernization
Act, enacted in December 2003, established the Medicare Part D outpatient prescription drug benefit, which is provided primarily
through private entities that attempt to negotiate price concessions from pharmaceutical manufacturers. The health care reform
legislation enacted in 2010, known as the Affordable Care Act, requires drug manufacturers to pay 50% of the Medicare Part D
coverage gap, also known as the “donut hole,” on prescriptions for branded products filled when the beneficiary reaches
this coverage. The Deficit Reduction Act of 2005 resulted in changes to the way drug prices are reported to the government and
the formula using such information to calculate the required Medicaid rebates. The Affordable Care Act increased the minimum basic
Medicaid rebate for branded prescription drugs from 15.1% to 23.1% and requires pharmaceutical manufacturers to pay states rebates
on prescription drugs dispensed to Medicaid managed care enrollees. In addition, the Affordable Care Act increased the additional
Medicaid rebate on “line extensions” (such as extended release formulations) of solid oral dosage forms of branded
products, revised the definition of average manufacturer price by changing the classes of purchasers included in the calculation,
and expanded the entities eligible for discounted pricing under the federal 340B drug pricing program. Current orphan drugs are
excluded from the expanded 340B hospitals eligible for discounts.
The Affordable Care Act imposes a significant
annual fee on companies that manufacture or import branded prescription drug products. The fee (which is not deductible for federal
income tax purposes) is based on the manufacturer’s market share of sales of branded drugs and biologics (excluding orphan
drugs) to, or pursuant to coverage under, specified U.S. government programs. The Affordable Care Act also contains a number of
provisions, including provisions governing the way that health care is financed by both governmental and private insurers, enrollment
in federal health care programs, reimbursement changes, the increased use of comparative effectiveness research in health care
decision-making, and enhancements to fraud and abuse requirements and enforcement, that are affecting existing government health
care programs and will result in the development of new programs. The Affordable Care Act also contains requirements for manufacturers
to publicly report certain payments or other transfers of value made to physicians and teaching hospitals. We are unable to predict
the future course of federal or state health care legislation and regulations, including regulations that will be issued to implement
provisions of the Affordable Care Act. The Affordable Care Act and further changes in the law or regulatory framework that reduce
our revenues or increase our costs could also have a material adverse effect on our business, financial condition and results of
operations and cash flows.
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. Payors may require physicians to seek approval from them before a product will be reimbursed
or covered, commonly referred to as prior authorization. In particular, many public and private health care payors limit reimbursement
and coverage to the uses of a drug that is either approved by the FDA or appears 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 Part D coverage for oncology drugs, the Medicare Modernization Act, with certain exceptions, provides for
Medicare coverage of unapproved uses of an FDA-approved drug if the unapproved use is reasonable and necessary and is supported
by one or more citations in CMS-approved compendia, such as the National Comprehensive Cancer Network Drugs and Biologics Compendium.
Different pricing and reimbursement schemes exist in other countries. For example, in the European Union, governments influence
the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems
that fund a large part of the cost of such products to consumers. The approach taken varies from member state to member state.
Some jurisdictions operate positive or negative list systems under which products may only be marketed once a reimbursement price
has been agreed. Other member states allow companies to fix their own prices for medicines but monitor and control company profits
and may limit or restrict reimbursement. The downward pressure on health care costs in general, and prescription drugs in particular,
has become very intense. As a result, increasingly high barriers are being erected to the entry of new products, as exemplified
by the actions of the National Institute for Clinical Excellence in the United Kingdom, which evaluates the data supporting new
medicines and passes reimbursement recommendations to the government. In addition, in some countries, cross-border imports from
low-priced markets (parallel imports) exert a commercial pressure on pricing within a country.
Other Federal and State Regulatory Requirements
The Centers for Medicare & Medicaid
Services, or CMS, has issued a final rule that implements a statutory requirement under the Healthcare Reform Act that requires
applicable manufacturers of drugs, devices, biologicals, or medical supplies that are covered under Medicare, Medicaid, or the
Children’s Health Insurance Program, or CHIP, to begin collecting and reporting annually information on payments or transfers
of value to physicians and teaching hospitals, as well as investment interests held by physicians and their immediate family members.
Manufacturers had to begin collecting information in 2013, with the first reports due in 2014. On September 30, 2014, CMS
posted the first round of data in searchable form on a public website. Failure to submit required information may result in civil
monetary penalties.
In addition, several states now require prescription
drug companies to report expenses relating to the marketing and promotion of drug products and to report gifts and payments to
individual physicians in these states. Other states prohibit various other marketing-related activities. Still other states require
the posting of information relating to clinical trials and their outcomes. In addition, California, Connecticut, Nevada, and Massachusetts
require pharmaceutical companies to implement compliance programs and/or marketing codes. Several additional states are considering
similar proposals. Compliance with these laws is difficult and time consuming, and companies that do not comply with these state
laws face civil penalties.
Product Liability and Insurance
We face an inherent risk of product liability
as a result of the clinical testing of our product candidates and will face an even greater risk if we commercialize any products.
We have not experienced any product liability claims to date. We currently carry products and clinical trial liability insurance
policies. There can be no assurance that liability claims will not exceed such insurance coverage limits, which could have a materially
adverse effect on our business, financial condition or results of operations or that such insurance will continue to be available
on commercially reasonable terms, if at all.
Human Resources
Employees
As of December 31, 2018, we had 11 full-time
employees. Three were in research and development and eight were in finance, legal, human resources or administrative support.
None of our employees is subject to a collective bargaining agreement. We consider our relationship with our employees to be good.
Consultants
We have consulting agreements with a number
of leading academic scientists, clinicians and regulatory experts. They serve as important contacts for us throughout the broader
scientific and clinical communities. They are distinguished individuals with expertise in numerous fields, including cellular biology,
molecular biology, oncology, clinical, manufacturing and regulatory.
We retain each consultant according to the
terms of a consulting agreement. Under such agreements, we pay them a consulting fee and reimburse them for out-of-pocket expenses
incurred in performing their services for us. In addition, some consultants hold options to purchase our common stock, subject
to the vesting requirements contained in separate award agreements. Our consultants may be employed by other entities and therefore
may have commitments to their employer or may have other consulting or advisory agreements that may limit their availability to
us.
Available Information
Our website is located at
www.markertherapeutics.com
. We
make available free of charge on our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file or furnish
such materials to the Securities and Exchange Commission. Our website and the information contained therein or connected thereto
are not intended to be incorporated into this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS
An investment in our common stock involves
a high degree of risk. You should carefully consider the risks described below before making an investment decision in our securities.
These risk factors are effective as of the date of this Form 10-K and shall be deemed to be modified or superseded to the extent
that a statement contained in our future filings modifies or replaces such statement. All of these risks may impair our business
operations. The forward-looking statements in this Form 10-K involve risks and uncertainties and actual results may differ materially
from the results we discuss in the forward-looking statements. If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In that case, the trading price of our stock could decline,
and you may lose all or part of your investment
Risks Related to our Business and Intellectual
Property
We are a development stage company with a history of operating
losses.
We are a clinical-stage immunotherapy company
with a history of losses, and it may always operate at a loss. We expect that we will continue to operate at a loss throughout
our development stage, and as a result, we may exhaust our financial resources and be unable to complete the development of our
products. We anticipate that our ongoing operational costs will increase significantly as we continue conducting our clinical development
program. Our deficit will continue to grow during our drug development period. We have no sources of revenue to provide incoming
cash flows to sustain our future operations. As outlined above, our ability to pursue our planned business activities depends upon
our successful efforts to raise additional financing.
We have sustained losses from operations in
each fiscal year since our inception, and we expect losses to continue for the indefinite future due to the substantial investment
in research and development. As of December 31, 2018, we had an accumulated deficit of approximately $306.1 million since inception.
We expect to spend substantial additional sums on the continued administration and research and development of licensed and proprietary
products and technologies with no certainty that our approach and associated technologies will become commercially viable or profitable
as a result of these expenditures. If we fail to raise a significant amount of capital, we may need to significantly curtail operations,
allocate limited financial resources among our product candidates, or cease operations in the near future. If any of our product
candidates fail in clinical trials or does not gain regulatory approval, we may never generate revenue. Even if we generate revenue
in the future, we may not be able to become profitable or sustain profitability in subsequent periods.
Our future success is highly dependent
upon our key personnel, and our ability to attract, retain, and motivate additional qualified personnel.
Our ability to compete in the highly competitive
biotechnology and pharmaceutical industries depends upon our ability to attract and retain highly qualified managerial, scientific,
and medical personnel. We are highly dependent on our management, scientific, and medical personnel and consultants, including
Peter Hoang, our President and Chief Executive Officer, Ann Leen, Ph.D., our Chief Scientific Officer, Juan Vera, M.D., our Chief
Development Officer, and Mythili Koneru, M.D., Ph.D. our Senior Vice President, Clinical Development, as well as others. The loss
of the services of any of our executive officers, other key employees, and other scientific and medical advisors, and our inability
to find suitable replacements could result in delays in product development and harm to our business. We have a priority to quickly
train additional qualified scientific and medical personnel to ensure the ability to maintain business continuity. Any delays in
training such personnel could delay the development, manufacture, and clinical trials of our product candidates.
Our ability to attract and retain highly skilled
personnel is critical to our operations and expansion. We face competition for these types of personnel from other biotechnology
companies and more established organizations, many of which have significantly larger operations and greater financial, technical,
human and other resources than us. We may not be successful in attracting and retaining qualified personnel on a timely basis,
on competitive terms, or at all. If we are not successful in attracting and retaining these personnel, or integrating them into
our operations, our business, prospects, financial condition and results of operations will be materially adversely affected. In
such circumstances, we may be unable to conduct certain research and development programs, unable to adequately manage our clinical
trials and other products, and unable to adequately address our management needs.
Our strategic relationship with Baylor
College of Medicine, or BCM, is dependent, in part, upon our relationship with key medical and scientific personnel and advisors.
Our MultiTAA T cell therapy has been developed
through our collaboration with the Center for Cell and Gene Therapy at BCM, founded by Malcolm K. Brenner, M.D., Ph.D., a recognized
pioneer in immuno-oncology. In addition to Dr. Brenner, Marker Cell’s founders include Ann Leen, Ph.D., Juan Vera, M.D.,
Helen Heslop, M.D., DSc (Hon) and Cliona Rooney, Ph.D., who all have significant experience in this field and are all affiliated
with the Center for Cell and Gene Therapy at BCM. Dr. Leen and Dr. Vera are our Chief Scientific Officer and Chief Development
Officer, respectively. In addition, Dr. Brenner, Dr. Heslop and Dr. Rooney have joined our newly-formed Scientific Advisory Board.
Our strategic relationship with BCM is dependent,
in part, on our relationship with these key employees and advisors, and in particular Dr. Leen and Dr. Vera, who are also employed
with the Center for Cell and Gene Therapy at BCM. If we lose Dr. Leen or Dr. Vera, or if either leaves their position at BCM, our
relationship with BCM may deteriorate, and our business could be harmed.
We, and certain of our key medical and
scientific personnel, will need additional agreements in place with BCM to expand our development, manufacture, and clinical trial
efforts.
Although we have an exclusive license agreement
with BCM under which we received a worldwide, exclusive license to BCM’s rights in and to three patent families to develop
and commercialize the MultiTAA product candidates, we will need to enter into additional agreements with BCM with respect to (i)
a strategic alliance to advance pre-clinical research, early stage clinical trials, and Phase II clinical trials with respect to
our product candidates, as well as continued access to our clinical data, and (ii) product manufacturing and support, including
personnel and space at the institution for the foreseeable future. Any delays in entering into new strategic agreements with BCM
related to our product candidates could delay the development, manufacture, and clinical trials of our product candidates.
The multiple roles of certain of our
officers and directors could limit their time and availability to us, and create, or appear to create, conflicts of interest.
Dr. Leen and Dr. Vera are employees of BCM
and are contractually obligated to spend a significant portion of their time with BCM. In addition, Dr. Leen and Dr. Vera are co-founders
and members of ViraCyte and perform services from time to time for ViraCyte LLC (“ViraCyte”). ViraCyte is owned by
the same principal stockholder group as Marker Cell prior to the Merger and has technology which is being developed under a license
agreement with BCM by the same research group at BCM. ViraCyte is a clinical-stage biopharmaceutical company, which is investigating
and developing virus-specific T cell therapy technology for the prevention and/or treatment of viral infections. Accordingly, Dr.
Leen and Dr. Vera may have other commitments that would, at times, limit their availability to us. Other research being conducted
by Dr. Leen and Dr. Vera may, at times, receive higher priority than research on our programs, which may, in turn, delay the development
or commercialization of our product candidates.
In addition, John Wilson is a member, director
and officer of ViraCyte and is a director of the Company. Dr. Leen and Dr. Vera are also co-founders and members of ViraCyte, and
perform services for ViraCyte from time to time, and Dr. Vera is a director of the Company. All of these individuals have certain
fiduciary or other obligations to us and certain fiduciary or other obligations to ViraCyte and, in the case of Dr. Leen and Dr.
Vera, to BCM. Such multiple obligations may in the future result in a conflict of interest with respect to presenting other potential
business opportunities to us or to ViraCyte. A conflict of interest also may arise concerning the timing of the parties’
planned and ongoing clinical trials, investigational new drug application filings and the parties’ opportunities for marketing
their respective product candidates. In addition, they may be faced with decisions that could have different implications for us
than for ViraCyte. Consequently, there is no assurance that these members of our board and management will always act in our best
interests in all situations should a conflict arise.
We have not yet sold any products or
received regulatory approval to sell our products.
We have no approved products or products pending
approval. As a result, we have not derived any revenue from the sales of products and have not yet demonstrated ability to obtain
regulatory approval, formulate and manufacture commercial-scale products, or conduct sales and marketing activities necessary for
successful product commercialization. Without revenue, we can only finance our operations through debt and equity financings.
Product development involves a lengthy
and expensive process with an uncertain outcome, and results of earlier pre-clinical and clinical trials may not be predictive
of future clinical trial results.
Clinical testing is expensive and generally
takes many years to complete, and the outcome is inherently uncertain. Failure can occur at any time during the clinical trial
process. The results of pre-clinical testing and early clinical trials of our product candidates may not be predictive of the results
of larger, later-stage controlled clinical trials. Product candidates that have shown promising results in early-stage clinical
trials may still suffer significant setbacks in subsequent clinical trials. Our clinical trials to date have been conducted on
a small number of patients in a single clinical site for a limited number of indications. We will have to conduct larger, well-controlled
trials in our proposed indications at multiple sites to verify the results obtained to date and to support any regulatory submissions
for further clinical development of our product candidates. Our assumptions related to our products, such as with respect to lack
of toxicity and manufacturing cost estimates, are based on early limited clinical trials and current manufacturing processes at
BCM and may prove to be incorrect. In addition, the initial estimates of the clinical cost of development may prove to be inadequate,
particularly if clinical trial timing or outcome is different than predicted or regulatory agencies require further testing before
approval. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials
due to lack of efficacy or adverse safety profiles despite promising results in earlier, smaller clinical trials. Moreover, clinical
data are often susceptible to varying interpretations and analyses. We do not know whether any Phase II, Phase III, or other clinical
trials we may conduct will demonstrate consistent or adequate efficacy and safety with respect to the proposed indication for use
sufficient to receive regulatory approval or market our product candidates.
The biotechnology and immunotherapy industries
are characterized by rapid technological developments and a high degree of competition. We may be unable to compete with more substantial
enterprises.
The biotechnology and biopharmaceutical industries
are characterized by rapid technological developments and a high degree of competition. As a result, our actual or proposed immunotherapies
could become obsolete before we recoup any portion of our related research and development and commercialization expenses. Competition
in the biopharmaceutical industry is based significantly on scientific and technological factors. These factors include the availability
of patent and other protection for technology and products, the ability to commercialize technological developments and the ability
to obtain governmental approval for testing, manufacturing and marketing. We compete with specialized biopharmaceutical firms in
the United States, Europe and elsewhere, as well as a growing number of large pharmaceutical companies that are applying biotechnology
to their operations. Many biopharmaceutical companies have focused their development efforts in the human therapeutics area, including
cancer. Many major pharmaceutical companies have developed or acquired internal biotechnology capabilities or made commercial arrangements
with other biopharmaceutical companies. These companies, as well as academic institutions, governmental agencies and private research
organizations, also compete with us in recruiting and retaining highly qualified scientific personnel and consultants. Our ability
to compete successfully with other companies in the pharmaceutical field will also depend to a considerable degree on the continuing
availability of capital to us.
We are aware of certain investigational new
drugs under development or approved products by competitors that are used for the prevention, diagnosis, or treatment of certain
diseases we have targeted for drug development. Various companies are developing biopharmaceutical products that have the potential
to directly compete with our immunotherapies even though their approach may be different. The competition comes from both biotechnology
firms and from major pharmaceutical companies. Many of these companies have substantially greater financial, marketing, and human
resources than us. We also experience competition in the development of our immunotherapies from universities, other research institutions
and others in acquiring technology from such universities and institutions.
In addition, certain of our immunotherapies
may be subject to competition from investigational new drugs and/or products developed using other technologies, some of which
have completed numerous clinical trials.
We are subject to numerous risks inherent
in conducting clinical trials.
We outsource some of the management of our
clinical trials to third parties. Agreements with clinical investigators and medical institutions for clinical testing and with
other third parties for data management services, place substantial responsibilities on these parties that, if unmet, could result
in delays in, or termination of, our clinical trials. If any of our clinical trial sites fail to comply with FDA-approved good
clinical practices, we may be unable to use the data gathered at those sites. If these clinical investigators, medical institutions
or other third parties do not carry out their contractual duties or obligations or fail to meet expected deadlines, or if the quality
or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols or for other
reasons, our clinical trials may be extended, delayed or terminated, and we may be unable to obtain regulatory approval for, or
successfully commercialize, agents. We cannot be certain that we will successfully recruit enough patients to complete our clinical
trials nor that we will reach our primary endpoints. Delays in recruitment, lack of clinical benefit or unacceptable side effects
would delay our clinical trials.
We, or our regulators, may suspend or terminate
our clinical trials for a variety of reasons. We may voluntarily suspend or terminate our clinical trials at any time if we believe
they present an unacceptable risk to the patients enrolled in our clinical trials or do not demonstrate clinical benefit. In addition,
regulatory agencies may order the temporary or permanent discontinuation of our clinical trials at any time if they believe that
the clinical trials are not being conducted in accordance with applicable regulatory requirements or that they present an unacceptable
safety risk to the patients enrolled in our clinical trials.
Our clinical trial operations are subject to
regulatory inspections at any time. If regulatory inspectors conclude that we or our clinical trial sites are not in compliance
with applicable regulatory requirements for conducting clinical trials, we may receive reports of observations or warning letters
detailing deficiencies, and we will be required to implement corrective actions. If regulatory agencies deem our responses to be
inadequate, or are dissatisfied with the corrective actions we or our clinical trial sites have implemented, our clinical trials
may be temporarily or permanently discontinued, and we may be fined, we or our investigators may be precluded from conducting any
ongoing or any future clinical trials, the government may refuse to approve our marketing applications or allow us to manufacture
or market our products, and we may be criminally prosecuted.
The lengthy approval process, as well as the
unpredictability of future clinical trial results, may result in us failing to obtain regulatory approval for our product candidates,
which would materially harm our business, results of operations and prospects.
The successful development of immunotherapies
is highly uncertain.
Successful development of biopharmaceuticals
is highly uncertain and depends on numerous factors, many of which are beyond our control. Immunotherapies that appear promising
in the early phases of development may fail to reach the market for several reasons including:
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clinical study results that may show the immunotherapy
to be less effective than expected (e.g., the study failed to meet its primary endpoint) or to have unacceptable side
effects;
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failure to receive the necessary regulatory approvals or
a delay in receiving such approvals. Among other things, such delays may be caused by slow enrollment in clinical studies, length
of time to achieve study endpoints, additional time requirements for data analysis, or Biologics License Application (“BLA”)
preparation, discussions with the FDA, an FDA request for additional preclinical or clinical data, or unexpected safety or manufacturing
issues;
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manufacturing costs, formulation issues, pricing or reimbursement
issues, or other factors that make the immunotherapy uneconomical; and
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the proprietary rights of others and their competing products
and technologies that may prevent the immunotherapy from being commercialized.
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Success in preclinical and early clinical studies
does not ensure that large-scale clinical studies will be successful. Clinical results are frequently susceptible to varying interpretations
that may delay, limit or prevent regulatory approvals. The length of time necessary to complete clinical studies and to submit
an application for marketing approval for a final decision by a regulatory authority varies significantly from one immunotherapy
to the next and may be difficult to predict.
Even if we are successful in getting market
approval, commercial success of any of our product candidates will also depend in large part on the availability of coverage and
adequate reimbursement from third-party payors, including government payors such as the Medicare and Medicaid programs and managed
care organizations, which may be affected by existing and future health care reform measures designed to reduce the cost of health
care. Third-party payors could require us to conduct additional studies, including post-marketing studies related to the cost effectiveness
of a product, to qualify for reimbursement, which could be costly and divert our resources. If government and other health care
payors were not to provide adequate coverage and reimbursement levels for any of our products once approved, market acceptance
and commercial success would be reduced.
In addition, if one of our products is approved
for marketing, we will be subject to significant regulatory obligations regarding the submission of safety and other post-marketing
information and reports and registration, and will need to continue to comply (or ensure that our third-party providers comply)
with current Good Manufacturing Practices (“cGMPs”) and current Good Clinical Practices (“cGCPs”) for any
clinical trials that we conduct post-approval. In addition, there is always the risk that we or a regulatory authority might identify
previously unknown problems with a product post-approval, such as adverse events of unanticipated severity or frequency. Compliance
with these requirements is costly, and any failure to comply or other issues with our product candidates’ post-market approval
could have a material adverse effect on our business, financial condition and results of operations.
It may take longer and cost more to complete
our clinical trials than we project, or we may not be able to complete them at all.
For budgeting and planning purposes, we have
projected the dates for the commencement, continuation, and completion of our various clinical trials. However, a number of factors,
including scheduling conflicts with participating clinicians and clinical institutions, difficulties in identifying and enrolling
patients who meet trial eligibility criteria, and competition for such eligible patents from other clinical trials, may cause significant
delays. We may not commence or complete clinical trials involving any of our products as projected or may not conduct them successfully.
During the second half of 2012, BCM began enrollment
of the investigator-sponsored, Phase 1 clinical trial to establish the feasibility of one of our lead products, MAPP, and to assess
its overall safety, inclusion of multiple antigens, and dosage tolerance in patients with lymphoma. During the second quarter of
2016, BCM began enrollment of the investigator-sponsored Phase 1 clinical trial to establish the feasibility of one of our lead
products, LAPP, and to assess its overall safety, inclusion of multiple antigens, and dosage tolerance in patients with acute myeloid
leukemia (“AML”)/myelodysplastic syndromes (“MDS”). However, we may experience difficulties in patient
enrollment in our future clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with
their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the study until
its conclusion. In addition, our clinical trials will compete with other clinical trials for product candidates that are in the
same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients available to
us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by
one of our competitors. Accordingly, we cannot guarantee that our clinical trials will progress as planned or as scheduled. Delays
in patient enrollment may result in increased costs or may affect the timing or outcome of our ongoing clinical trial and planned
clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of
our product candidates.
We rely on medical institutions, academic institutions,
and clinical research organizations to conduct, supervise, or monitor some or all aspects of clinical trials involving our products.
We may have less control over the timing and other aspects of these clinical trials than if we conducted them entirely on our own.
If we fail to commence or complete, or experiences delays in, any of our planned clinical trials, we may experience delays in our
clinical development and/or commercialization plans.
In particular, while BCM will continue to support
our trials with production of MAPP and LAPP T cells under contract, we anticipate that we will have to rely on third parties (contract
manufacturing organizations or “CMOs”) or internal facilities yet to be developed for the commercial manufacture of
our multi-antigen specific T cell therapy products for clinical trials and eventual licensure. If they fail to commence or complete,
or experience delays in, manufacturing our multi-antigen specific T cell therapy products, our planned clinical trials with respect
to such products will be delayed, and we may experience delays in our clinical development and/or commercialization plans.
Clinical trials are expensive, time-consuming,
and difficult to design and implement, and our clinical trial costs may be higher than for more conventional therapeutic technologies
or drug products.
Clinical trials are expensive and difficult
to design and implement, in part because they are subject to rigorous regulatory requirements. Because our product candidates are
based on new technologies and manufactured on a patient-by-patient basis for our MultiTAA T cell product candidates we expect that
they will require extensive research and development and have substantial manufacturing costs. In addition, costs to treat patients
with relapsed/refractory cancer and to treat potential side effects that may result from our product candidates can be significant.
Some clinical trial sites may not bill, or obtain coverage from, Medicare, Medicaid, or other third-party payors for some or all
of these costs for patients enrolled in our clinical trials, and we may be required by those trial sites to pay such costs. Accordingly,
our clinical trial costs may be significantly higher per patient than those of more conventional therapeutic technologies or drug
products. In addition, our proposed personalized product candidates involve several complex manufacturing and processing steps,
the costs of which will be borne by us. Depending on the number of patients we ultimately enroll in our trials, and the number
of trials we may need to conduct, our overall clinical trial costs may be higher than for more conventional treatments.
Our clinical trials may fail to demonstrate
adequately the safety and efficacy of our product candidates, which would prevent or delay regulatory approval and commercialization.
The clinical trials of our product candidates
are, and the manufacturing and marketing of our products will be, subject to extensive and rigorous review and regulation by numerous
government authorities in the United States and in other countries where we intend to test and market our product candidates. Before
obtaining regulatory approvals for the commercial sale of any of our product candidates, we must demonstrate through lengthy, complex,
and expensive preclinical testing and clinical trials that our product candidates are both safe and effective for use in each target
indication. In particular, because our product candidates are subject to regulation as biological drug products, we will need to
demonstrate that they are safe, pure and potent for use in their target indications. Each product candidate must demonstrate an
adequate risk versus benefit profile in its intended patient population and for its intended use. The risk/benefit profile required
for product licensure will vary depending on these factors and may include not only the ability to show tumor shrinkage, but also
adequate duration of response, a delay in the progression of the disease, and/or an improvement in survival. For example, response
rates from the use of our product candidates may not be sufficient to obtain regulatory approval unless we can also show an adequate
duration of response. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain.
Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of
our product candidates may not be predictive of the results of later-stage clinical trials. The results of studies in one set of
patients or line of treatment may not be predictive of those obtained in another. In addition, we expect that there may be greater
variability in results for products processed and administered on a patient-by-patient basis, as anticipated for our MultiTAA T
cell product candidates, than for “off-the-shelf” products, like many other drugs. There is typically an extremely
high rate of attrition from the failure of product candidates proceeding through clinical trials. Product candidates in later stages
of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies
and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced
clinical trials due to lack of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials. Most
product candidates that begin clinical trials are never approved by regulatory authorities for commercialization.
In addition, even if such trials are successfully
completed, we cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as we do, and more trials
could be required before we submit our product candidates for approval. To the extent that the results of the trials are not satisfactory
to the FDA or foreign regulatory authorities for support of a marketing application, we may be required to expend significant resources,
which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.
If we encounter difficulties enrolling
patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
The timely completion of clinical trials in
accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain
in the trial until its conclusion. We may experience difficulties in patient enrollment in our clinical trials for a variety of
reasons, including:
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the size and nature of the patient population;
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the patient eligibility criteria defined in the protocol;
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the size of the study population required for analysis of the trial’s primary endpoints;
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the proximity of patients to trial sites;
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the design of the trial;
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our ability to recruit clinical trial investigators with the appropriate competencies and experience;
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competing clinical trials for similar therapies or other new therapeutics not involving cell-based
immunotherapy;
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clinicians’ and patients’ perceptions of the potential advantages and side effects
of the product candidate being studied in relation to other available therapies, including any new drugs or treatments that may
be approved for the indications we are investigating;
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our ability to obtain and maintain patient consents; and
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the risk that patients enrolled in clinical trials will not complete a clinical trial.
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In addition, our clinical trials will compete
with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates. This competition
will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials
may instead opt to enroll in a trial being conducted by one of our competitors. Because the number of qualified clinical investigators
is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use,
which will reduce the number of patients who are available for our clinical trials at such clinical trial sites. Moreover, because
our product candidates represent a departure from more commonly used methods of cancer treatment, potential patients and their
doctors may be inclined to use conventional therapies, such as chemotherapy and approved immunotherapies, rather than enroll patients
in any future clinical trial. In addition, potential enrollees in our MultiTAA T cell product clinical trials may opt to participate
in alternate clinical trials because of the length of time between the time that the patient’s or the donor’s blood
is drawn and the time when the product is infused back into the patient.
Even if we can enroll a sufficient number of
patients in our clinical trials, delays in patient enrollment may result in increased costs or may affect the timing or outcome
of the planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the
development of our product candidates.
Our product candidates may cause undesirable
side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their
commercial potential, or result in significant negative consequences.
Undesirable side effects caused by our product
candidates could cause us or regulatory authorities to interrupt, delay, or halt clinical trials and could result in a more restrictive
label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities. Results of our
trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics.
If unacceptable toxicities arise in the development
of our product candidates, we or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or
deny approval of our product candidates for any or all targeted indications. Treatment-related side effects could also affect patient
recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims. In addition,
these side effects may not be appropriately recognized or managed by the treating medical staff, as toxicities resulting from personalized
cell therapy, as with our MultiTAA T cell therapy products, are not normally encountered in the general patient population and
by medical personnel. Any of these occurrences may harm our business, financial condition and prospects significantly.
Our MultiTAA T cell therapy research
and development efforts are to a large extent dependent upon BCM’s investigators.
It will take time to fully develop our research
and development infrastructure. We currently depend upon and will continue to depend upon independent investigators and collaborators,
such as BCM, and which in the future may include other universities, medical institutions, and strategic partners, to conduct our
preclinical studies and clinical trials. If we need to enter into alternative arrangements, our product development activities
would be delayed. Agreements with such third parties might terminate for a variety of reasons, including a failure to perform by
the third parties.
We expect to use the results of BCM’s
research to support the filing with the FDA of IND applications to conduct more advanced clinical trials of our products. However,
we have limited control over the nature or timing of BCM’s clinical trials and limited visibility into their day-to-day activities.
The research we are funding constitutes only a small portion of BCM’s overall research. Other research being conducted by
Dr. Ann Leen and Dr. Juan Vera may at times receive higher priority than research on our programs. These factors could adversely
affect the timing of our IND filings and our ability to conduct future planned clinical trials.
We will be unable to commercialize our
products if our trials are not successful.
Our research and development programs are at
an early stage. We must demonstrate our products’ safety and efficacy in humans through extensive clinical testing. We may
experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization
of our products, including but not limited to the following:
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safety and efficacy results in various human clinical trials reported in scientific and medical
literature may not be indicative of results we obtain in our clinical trials;
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after reviewing trial results, we or our collaborators may abandon products that we might previously
have believed to be promising;
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we, our collaborators or regulators, may suspend or terminate clinical trials if the participating
subjects or patients are being exposed to unacceptable health risks; and
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the effects our potential products have may not be the desired effects or may include undesirable
side effects or other characteristics that preclude regulatory approval or limit their commercial use if approved.
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Clinical testing is very expensive, can take
many years, and the outcome is uncertain. For example, it can take as much as 12 months or more before we learn the results from
any clinical trial using our MultiTAA T cell therapy. The data collected from our clinical trials may not be sufficient to support
approval by the FDA of our MultiTAA T cell therapy-based product candidates for the treatment of hematological malignancies, or
our Folate Receptor Alpha (TPIV200) product for breast and ovarian cancers, HER2/neu peptide antigen product (TPIV100/110) or possible
future clinical trials utilizing our DNA expression PolyStart™ product. The clinical trials for our products under development
may not be completed on schedule and the FDA may not ultimately approve any of our product candidates for commercial sale. If we
fail to adequately demonstrate the safety and efficacy of any product candidate under development, we may not receive regulatory
approval for those products, which would prevent us from generating revenues or achieving profitability.
We may not be able to expand our manufacturing
processes to other third-party manufacturing facilities or successfully create our own manufacturing infrastructure for supply
of our requirements of product candidates for use in clinical trials and for commercial sale.
We do not own any facility that may be used
as our clinical-scale manufacturing and processing facility. We currently rely on third-party Contract Manufacturing Organizations,
or CMOs, for manufacture of our vaccine products. We anticipate we will initially rely solely on the Good Manufacturing Practices
(“cGMP”) manufacturing facility within BCM for the manufacturing of our MultiTAA T cell therapy-based product candidates.
If the cGMP manufacturing facility of BCM, which does manufacture for itself and other parties, experiences capacity constraints,
disruptions, or delays in manufacturing our MultiTAA T cell therapy-based product candidate products, our planned clinical trials
and necessary manufacturing capabilities will be disrupted or delayed, which will adversely affect our ability to conduct and further
develop our business as currently planned. Further, the cGMP manufacturing facility is most likely too small to conduct the pivotal
clinical studies being planned by us, so we will need to develop our own cGMP manufacturing capacity that will be adequate for
such clinical trials with respect to our MultiTAA T cell therapy-based product candidates.
In 2019 or in 2020, we intend to begin developing
additional cGMP manufacturing capacity of our own that would be capable of supporting our manufacturing needs with respect to our
clinical trials, particularly with respect to pivotal studies. Our manufacturing strategy going forward will involve the use of
one or more CMOs or we will establish our own capabilities and infrastructure, including a manufacturing facility. Establishment
of our own manufacturing facility is subject to many risks. For example, the establishment of a cell-therapy manufacturing facility
is a complex endeavor requiring knowledgeable individuals. Creating an internal manufacturing infrastructure will rely upon building
out a complex facility and finding personnel with an appropriate background and training to staff and operate the facility. Should
we be unable to find these individuals, we may need to rely on external contractors or train additional personnel to fill needed
roles. There are a small number of individuals with experience in cell therapy, and the competition for these individuals is high.
We expect that development of our own manufacturing
facility could provide us with enhanced control of material supply for both clinical trials and the commercial market, enable the
more rapid implementation of process changes, and allow for better long-term margins. However, we do not have any experience in
developing a manufacturing facility and may never be successful in developing our own manufacturing facility or capability. We
may establish multiple manufacturing facilities as we expand our commercial footprint to multiple geographies, which may lead to
regulatory delays or prove costly. Even if we are successful, our manufacturing capabilities could be affected by cost-overruns,
unexpected delays, equipment failures, labor shortages, natural disasters, power failures, transportation difficulties and numerous
other factors that could prevent us from realizing the intended benefits of our manufacturing strategy and have a material adverse
effect on our clinical development and/or commercialization plans.
In addition, the manufacturing process for
any products that we may develop is subject to the FDA and foreign regulatory authority approval process, and we will need to contract
with manufacturers who can meet all applicable FDA and foreign regulatory authority requirements on an ongoing basis. If we or
our CMOs are unable to reliably produce products to specifications acceptable to the FDA, or other regulatory authorities, we may
not obtain or maintain the approvals we need to commercialize such products. Even if we obtain regulatory approval for any of our
product candidates, there is no assurance that either we or our CMOs will be able to manufacture the approved product to specifications
acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities to meet the requirements for the
potential launch of the product, or to meet potential future demand. Any of these challenges could delay completion of clinical
trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay
approval of our product candidate, impair commercialization efforts, increase our cost of goods, and have an adverse effect on
our clinical development and/or commercialization plans.
Regardless of whether we engage additional
CMOs to manufacture our products or establish our own manufacturing facility, in order to transfer our MultiTAA T cell manufacturing
from or expand our manufacturing capabilities beyond BCM pursuant to our development plans, whether through additional third parties
or by developing our own manufacturing capabilities, we will need access to the Standard Operating Procedures (“SOPs”)
and the specific Batch Production Records that are used to manufacture the product candidates. If BCM fails to transfer our manufacturing
processes or impedes our ability to transfer the manufacturing processes of its products to us or third-party manufacturers, our
planned clinical trials and additional necessary manufacturing capabilities will be delayed, which will adversely affect our ability
to conduct and further develop our business as currently planned.
We will be dependent on third-party vendors
to design, build, maintain and support our manufacturing and cell processing facilities.
As a result of our strategy to outsource our
manufacturing, we will rely very heavily on BCM and other third-party manufacturers to perform the manufacturing of our products
for our clinical trials. We license our technology from others. We intend to rely on our contract manufacturers to produce large
quantities of materials needed for clinical trials and potential product commercialization. Third-party manufacturers may not be
able to meet our needs concerning timing, quantity, or quality. If we are unable to contract for a sufficient supply of needed
materials on acceptable terms, or if we should encounter delays or difficulties in our relationships with manufacturers, our clinical
trials may be delayed, thereby delaying the submission of products for regulatory approval or the market introduction and subsequent
sales of our products. Any such delay may lower our revenues and potential profitability. If any third party breaches or terminates
its agreement with us or fails to conduct its activities in a timely manner, the commercialization of our products under development
could be slowed down or blocked completely. It is possible that third parties relied upon by us will change their strategic focus,
pursue alternative technologies, or develop alternative products, either on their own or in collaboration with others, as a means
for developing treatments for the diseases targeted by our collaborative programs, or for other reasons. The effectiveness of these
third parties in marketing their own products may also affect our revenues and earnings.
We intend to continue to enter into additional
third-party agreements in the future. However, we may not be able to negotiate any additional agreements successfully. Even if
established, these relationships may not be scientifically or commercially successful.
Our manufacturing process is reliant
upon the specialized equipment, and other specialty materials, which may not be available to us on acceptable terms or at all.
For some of this equipment and materials, we rely or may rely on sole-source vendors or a limited number of vendors, which could
impair our ability to manufacture and supply our products.
We will depend on a limited number of vendors
for supply of certain materials and equipment used in the manufacture of our MultiTAA T cell therapy-based product candidates.
For example, we will purchase equipment and reagents critical for the manufacture of our product candidates from Wilson Wolf (a
company controlled by John Wilson, who is a director of the Company), JPT Peptide Technologies and other suppliers. Some of our
suppliers may not have the capacity to support commercial products manufactured under cGMP by biopharmaceutical firms or may otherwise
be ill-equipped to support our needs. We also may not have supply contracts with many of these suppliers and may not be able to
obtain supply contracts with them on acceptable terms or at all. Accordingly, we may not be able to obtain key materials and equipment
to support clinical or commercial manufacturing.
For some of this equipment and materials, we
may rely, and may now and/or in the future rely, on sole-source vendors or a limited number of vendors. An inability to continue
to source product from any of these suppliers, which could be due to regulatory actions or requirements affecting the supplier,
adverse financial, or other strategic developments experienced by a supplier, labor disputes or shortages, unexpected demands,
or quality issues, could adversely affect our ability to satisfy demand for our product candidates, which could adversely and materially
affect our operating results or our ability to conduct clinical trials, either of which could significantly harm our business.
As we continue to develop and scale our manufacturing
process, we may need to obtain rights to and supplies of specific materials and equipment to be used as part of that process. For
example, our MultiTAA T cell manufacturing process is based, in part, upon the G-Rex® cell culture device manufactured by Wilson
Wolf, which is used by many cell therapy developers, both in commercial and academic settings. We do not own any exclusive rights
to the G-Rex® that could be used to prevent third parties from developing similar and competing processes. We may not be able
to obtain rights to such materials and equipment on commercially reasonable terms, or at all, and if we are unable to alter our
process in a commercially viable manner to avoid the use of such materials or find a suitable substitute, it would have a material
adverse effect on our business.
The manufacture of our product candidates
is complex, and we may encounter difficulties in production, particularly with respect to process development or scaling up of
our manufacturing capabilities. If we, or any of our third-party manufacturers encounter such difficulties, our ability to supply
our product candidates for clinical trials, or our products for patients, if approved, could be delayed or stopped, or we may be
unable to maintain a commercially viable cost structure.
Our product candidates are biologics, and the
process of manufacturing our products is complex, highly regulated and subject to multiple risks. For example, the manufacture
of our MultiTAA T cell therapy-based product candidates involves complex processes, including drawing blood from patients/donors,
manufacturing the clinical product, and ultimately infusing the product into a patient. As a result of the complexities, the cost
to manufacture biologics is generally higher than traditional small molecule chemical compounds, and the manufacturing process
is less reliable and is more difficult to reproduce. Our manufacturing processes will be susceptible to product loss or failure
due to any of the following: logistical issues associated with the collection of blood cells, or starting material, from the patient
or a donor, shipping such material to the manufacturing site, shipping the final product back to the patient, and infusing the
patient with the product; manufacturing issues associated with the differences in patients’ or donor’s starting cells;
interruptions in the manufacturing process; contamination; equipment failure; improper installation or operation of equipment,
vendor or operator error; inconsistency in cell growth; and variability in product characteristics. Even minor deviations from
normal manufacturing processes could result in reduced production yields, product defects, and other supply disruptions. If for
any reason we lose a patient’s or a donor’s cells, or later-developed product at any point in the process, the manufacturing
process for that patient will need to be restarted and the resulting delay may adversely affect that patient’s outcome and/or
the results of clinical trials. If microbial, viral, or other contaminations are discovered in our product candidates or in the
manufacturing facilities in which our product candidates are made, such manufacturing facilities may need to be closed for an extended
period of time to investigate and remedy the contamination.
Because our MultiTAA T cell therapy-based product
candidates are manufactured for each particular patient, we will be required to maintain a chain of identity with respect to the
patient’s/donor’s blood cells as it moves from the patient to the manufacturing facility, through the manufacturing
process, and back to the patient. Maintaining such a chain of identity is difficult and complex, and failure to do so could result
in adverse patient outcomes, loss of product, or regulatory action including withdrawal of our products from the market. Further,
as product candidates are developed through preclinical to late stage clinical trials towards approval and commercialization, it
is common that various aspects of the development program, such as manufacturing methods, are altered along the way in an effort
to optimize processes and results. Such changes carry the risk that they will not achieve these intended objectives, and any of
these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other
future clinical trials.
Currently, our product candidates are manufactured
using processes by BCM, our third-party research institution collaborator. Although we are working to develop our own commercially
viable processes, doing so is a difficult and uncertain task, and there are risks associated with scaling to the level required
for advanced clinical trials or commercialization, including, among others, cost overruns, potential problems with process scale
up, process reproducibility, stability issues, lot consistency, and timely availability of raw materials. As a result of these
challenges, we may experience delays in our clinical development and/or commercialization plans. We may ultimately be unable to
reduce the cost of goods for our product candidates to levels that will allow for an attractive return on investment if and when
those product candidates are commercialized.
No assurance can be given that we will
be able to develop a new, FDA-compliant, more efficient, lower cost manufacturing process upon which our business plan to commercialize
MultiTAA-based products is dependent.
In cooperation with our potential contract
manufacturers, we intend to develop improved methods for generating and selecting T cells, and to develop methods for large-scale
production of our current product candidates that are in accordance with current cGMP procedures. Developing a new, scaled-up,
pharmaceutical manufacturing process that can more efficiently and cost effectively, and in a more automated manner produce, measure
and control the physical and/or chemical attributes of our products in a cGMP facility is subject to many uncertainties and difficulties.
We have never manufactured our adoptive T cell therapy product candidate on any scale, commercially or otherwise. As a result,
we cannot give any assurance that we will be able to establish a manufacturing process that can produce our products at a cost
or in quantities necessary to make them commercially viable. Moreover, our third-party manufacturers will have to continually adhere
to current cGMP regulations enforced by the FDA through its facilities inspection program. If the facilities of these manufacturers
cannot pass a pre-approval plant inspection, the FDA premarket approval of our products will not be granted. In complying with
cGMP and foreign regulatory requirements, we and any of our third-party manufacturers will be obligated to expend time, money and
effort in production, record-keeping and quality control to assure that our products meet applicable specifications and other requirements.
If we or any of our third-party manufacturers fail to comply with these requirements, we may be subject to regulatory action. No
assurance can be given that we will be able to develop such manufacturing process, or that our partners will thereafter be able
to establish and operate such a production facility.
The deviations in our proposed new MultiTAA-based
products from existing products may require us to perform additional testing, which will increase the cost, and extend the time
for obtaining approval.
Our MultiTAA T cell therapy platform is based
on the adoptive T cell therapy technology that we licensed from BCM and that is presently available as a physician-sponsored investigational
therapy at BCM for the treatment of lymphoma, AML/MDS, multiple myeloma and select solid tumors in the U.S. The current method
of treatment is labor intensive and expensive. We are performing process optimization that we anticipate will enable more efficient
manufacturing of our products. We may have difficulty demonstrating that the products produced from our new processes are identical
to the existing products. The FDA may require additional clinical testing before permitting a larger clinical trial with the new
processes, and the product may not be as efficacious in the new clinical trials. Cellular products are not considered to be well
characterized products because there are hundreds of markers present on T cells, and even small changes in manufacturing processes
could alter the cell subtypes. It is unclear at this time which of those markers are critical for success of T cells to combat
cancer, so our ability to predict the outcomes with newer manufacturing processes is limited. The changes that we may make to the
existing manufacturing process may require additional testing, which may increase costs and timelines associated with these developments.
In addition to developing a multi-antigen T cell-based therapy on existing adoptive T cell therapy technology, we are currently
evaluating the desirability of conducting clinical trials of our products in combination with other existing drugs. These combination
therapies will require additional testing, and clinical trials will require additional FDA regulatory approval and will increase
our future cost of development.
We may enter into one or more transactions
with entities controlled by one of our directors, which could pose a conflict of interest.
John Wilson, a director of the Company, is
also CEO and co-founder of Wilson Wolf, which is the sole source vendor that provides us with the G-Rex® cell culture device
for the large-scale production of T cells used in our manufacturing process. We do not currently have a supply contract with Wilson
Wolf for the G-Rex®. We plan to negotiate a supply contract with Wilson Wolf for the purchase of G-Rex® devices. We have
engaged Wilson Wolf in discussions to customize the G-Rex® further to optimally match our manufacturing requirements, as well
as to develop a scalability plan to drive efficiencies for a commercial product. There may be conflicts of interest between us
and Wilson Wolf. There can be no assurance that Wilson Wolf will agree to enter into any contract with us, or that the terms of
any such agreements will be in the best interests of us or will have terms no less favorable to us than could have been obtained
from unaffiliated third parties.
We may not be able to develop products
successfully or develop them on a timely basis.
Our immunotherapy product candidates are at
various stages of research and development. Further development and extensive testing will be required to determine their technical
feasibility and commercial viability. We will need to complete significant additional clinical trials demonstrating that our product
candidates are safe and effective to the satisfaction of the FDA and other non-U.S. regulatory authorities. The drug approval process
is time-consuming, which involves substantial expenditures of resources, and depends upon a number of factors, including the severity
of the disease indication in question, the availability of alternative treatments, and the risks and benefits demonstrated in the
clinical trials. Our success depends on our ability to achieve scientific and technological advances and to translate such advances
into licensable, FDA-approvable, commercially-competitive products on a timely basis. Failure can occur at any stage of the process.
If such programs are not successful, we may be unable to develop revenue-producing products. As we enter a more extensive clinical
program for our product candidates, the data generated in these studies may not be as compelling as the earlier results.
Immunotherapies that we may develop are not
likely to be commercially available for at least five years. Any delay in obtaining FDA and/or other necessary regulatory approvals
in the United States and in countries outside the United States for any investigational new drug and failure to receive such
approvals would have an adverse effect on the investigational new drug’s potential commercial success and on our business,
prospects, financial condition and results of operations. The time required to obtain approval by the FDA and non-U.S. regulatory
authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous
factors, including the substantial discretion of the regulatory authorities. For example, the FDA or non-U.S. regulatory authorities
may disagree with the design or implementation of our clinical trials or study endpoints; or we may be unable to demonstrate that
a product candidate’s clinical and other benefits outweigh its safety risks. In addition, the FDA or non-U.S. regulatory
authorities may disagree with our interpretation of data from preclinical studies or clinical trials or the data collected from
clinical trials of our product candidates may not be sufficient to support the submission of a new drug application (“NDA”)
or other submission or to obtain regulatory approval in the United States or elsewhere. The FDA or non-U.S. regulatory authorities
may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical
and commercial supplies; and the approval policies or regulations of the FDA or non-U.S. regulatory authorities may significantly
change in a manner rendering our clinical data insufficient for approval. In addition, approval policies, regulations, or the type
and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development
and may vary among jurisdictions. The proposed development schedules for our immunotherapy product candidates may be affected by
a variety of other factors, including technological difficulties, clinical trial failures, regulatory hurdles, competitive products,
intellectual property challenges and/or changes in governmental regulation, many of which will not be within our control.
Any delay in the development, approval, introduction
or marketing of our products could result either in such products being marketed at a time when their cost and performance characteristics
would not be competitive in the marketplace or in the shortening of their commercial lives. In light of the long-term nature of
our projects, the unproven technology involved and the other factors described elsewhere in this section, we might not be able
to successfully complete the development or marketing of any new products, and as a result, our business, prospects, financial
condition and results of operations could be materially and adversely affected. We may be required to reduce our staff, discontinue
certain research or development programs of our future products and cease to operate.
We may encounter substantial delays in
our clinical trials or may not be able to conduct our trials on the timelines we expect.
Clinical testing is expensive, time-consuming,
and subject to uncertainty. We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule,
if at all. BCM has submitted INDs to the FDA, which allow the use of MAPP T cells and LAPP T cells for human clinical testing.
BCM initiated its first clinical trials for our product candidate, MAPP, in 2012, and clinical trials for LAPP in 2016. Issues
may yet arise that could suspend or terminate such clinical trials. We intend to file one or more new INDs to advance these products
into Phase II clinical trials, and any delay in filing these INDs may have a material adverse impact on our ability to advance
clinical studies in accordance with management’s plans. A failure of one or more clinical studies can occur at any stage
of testing, and our future clinical studies may not be successful. Events that may prevent successful or timely completion of clinical
development include:
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inability to generate sufficient preclinical data to support the initiation of clinical studies;
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delays in reaching a consensus with regulatory agencies on study design;
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the FDA may not allow us to use the clinical trial data from a research institution to support
an IND, if we cannot demonstrate the comparability of our product candidates with the product candidate used by the relevant research
institution in our clinical studies;
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delays in reaching agreement on acceptable terms with prospective contract research organizations,
or CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among
different CROs and clinical study sites;
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delays in obtaining required Institutional Review Board (“IRB”) approval at each clinical
study site;
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the departure of a principal investigator from a clinical site, which could cause delays in conducting
the clinical trial at a particular clinical site;
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imposition of a temporary or permanent clinical hold by regulatory agencies;
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delays in recruiting suitable patients to participate in our clinical studies;
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failure by our CROs, other third parties, or us to adhere to clinical study requirements;
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failure to perform in accordance with the FDA’s current good clinical practices (“cGCPs”)
requirements, or applicable regulatory guidelines in other countries;
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patients dropping out of a study;
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occurrence of adverse events associated with the product candidate that are viewed to outweigh
its potential benefits;
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changes in regulatory requirements and guidance that require amending or submitting new clinical
protocols;
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changes in the standard of care on which a clinical development plan was based, which may require
new or additional trials;
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the cost of clinical studies of our product candidates being greater than we anticipate;
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clinical studies of our product candidates producing negative or inconclusive results, which may
result in our deciding, or regulators requiring us, to conduct additional clinical studies or abandon product development programs;
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delays in transfer of manufacturing processes for MultiTAA T cells from BCM to our contract manufacturers
or other larger-scale facilities operated by a CMO, delays or failure by our CMOs or us to make any necessary changes to such manufacturing
process, and any inability to obtain all necessary reagents for manufacturing the product;
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any shutdown of our sole manufacturing site at BCM for MultiTAA T cells, which would render us
unable to produce such products for clinical trials;
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disruptions in transportation between the clinical site and manufacturing facility; and
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delays in manufacturing, testing, release, validating, or import/export of sufficient stable quantities
of our product candidates for use in clinical studies or the inability to do any of the foregoing, including any quality issues
associated with the contract manufacturer.
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We also may conduct clinical and preclinical
research in collaboration with other biotechnology and biologics entities in which we combine our technologies with those of our
collaborators. Such collaborations may be subject to additional delays because of the management of the trials and the necessity
of obtaining additional approvals for therapeutics used in the combination trials. These combination therapies will require additional
testing and clinical trials will require additional FDA regulatory approval and will increase our future expenses.
Any inability to successfully complete preclinical
and clinical development could result in additional costs to us or impair our ability to generate revenue. In addition, if we make
manufacturing or formulation changes to our product candidates, we may be required, or may elect, to conduct additional studies
to bridge our modified product candidates to earlier versions. Clinical study delays could also shorten any periods during which
our products have patent protection and may allow our competitors to bring products to market before we do, which could impair
our ability to commercialize our product candidates successfully and may harm our business and the results of our operations.
Our commercial success depends upon attaining
significant market acceptance of our product candidates, if approved, among physicians, patients, healthcare payors and the medical
community.
Even if we obtain regulatory approval for our
product candidates, they may not gain market acceptance among physicians, healthcare payors, patients or the medical community.
Market acceptance of our product candidates, if we receive approval, depends on a number of factors, including the:
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efficacy and safety of our product candidates as demonstrated in clinical trials and post-marketing
experience;
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clinical indications for which our product candidates may be approved;
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acceptance by physicians and patients of our product candidates as safe and effective;
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potential and perceived advantages of our product candidates over alternative treatments;
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safety of our product candidates seen in a broader patient group, including our use outside the
approved indications should physicians choose to prescribe for such uses;
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prevalence and severity of any side effects;
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product labeling, or product insert requirements of the FDA or other regulatory authorities;
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timing of market introduction of our product candidates as well as competitive products;
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cost in relation to alternative treatments;
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availability of coverage and adequate reimbursement and pricing by third-party payors and government
authorities;
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relative convenience and ease of administration; and
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effectiveness of any sales and marketing efforts.
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Moreover, if our product candidates are approved
but fail to achieve market acceptance among physicians, patients, healthcare payors and the medical community, we may not be able
to generate significant revenues, which would compromise our ability to become profitable.
We may not be able to establish or maintain
the third-party relationships that are necessary to develop or potentially commercialize some or all of our product candidates.
We expect to depend on collaborators, partners,
licensees, clinical research organizations and other third parties to support our discovery efforts, to formulate product candidates,
to manufacture our product candidates, and to conduct clinical trials for some or all of our product candidates. We cannot guarantee
that we will be able to successfully negotiate agreements for or maintain relationships with collaborators, partners, licensees,
clinical investigators, vendors and other third parties on favorable terms, if at all. Our ability to successfully negotiate such
agreements will depend on, among other things, potential partners’ evaluation of the superiority of our technology over competing
technologies and the quality of the preclinical and clinical data that it has generated, and the perceived risks specific to developing
our product candidates. If we are unable to obtain or maintain these agreements, we may not be able to clinically develop, formulate,
manufacture, obtain regulatory approvals for or commercialize our product candidates.
Issued patents covering our product candidates
could be found invalid or unenforceable if challenged in court or with the USPTO.
If we, our licensing partners, or any potential
future collaborator initiates legal proceedings against a third party to enforce a patent directed to one of our product candidates,
the defendant could counterclaim that the patent is invalid and/or unenforceable in whole or in part. In patent litigation in the
United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge
include an alleged failure to meet any of several statutory requirements, including lack of novelty, non-obviousness or enablement.
Grounds for an unenforceability assertion could include an allegation that someone connected with prosecution of the patent withheld
relevant information from the USPTO or made a misleading statement during prosecution. Third parties may also raise similar claims
before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination,
post grant review, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result
in revocation or amendment to our patents in such a way that they are no longer directed to our product candidates. The outcome
following legal assertions of invalidity and unenforceability is unpredictable, and prior art could render our patents or those
of our licensors invalid or could prevent a patent from issuing from one or more of our pending patent applications. There is no
assurance that all potentially relevant prior art relating to our patents and patent applications has been found. There is also
no assurance that there is not prior art of which we are aware, but which we do not believe affects the validity or enforceability
of a claim in our patents and patent applications, which may, nonetheless, ultimately be found to affect the validity or enforceability
of a claim. Furthermore, even if our patents are unchallenged, they may not adequately protect our intellectual property, provide
exclusivity for our product candidates, prevent others from designing around our claims or provide us with a competitive advantage.
If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps
all, of the patent protection on our product candidates. In addition, if the breadth or strength of protection provided by our
patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize
current or future product candidates. Such a loss of patent protection could have a material adverse impact on our business development.
If we are unable to protect our proprietary
rights, we may not be able to compete effectively or operate profitably.
Our commercial success is dependent in part
on our ability to obtain, maintain, and enforce the patents and other proprietary rights that we have licensed and may develop,
and on our ability to avoid infringing the proprietary rights of others. We generally seek to protect our proprietary position
by filing patent applications in the United States and abroad related to our product candidates, proprietary technologies and their
uses that are important to our business. Our patent applications cannot be enforced against third parties practicing the technology
claimed in such applications unless, and until, patents issue from such applications, and then only to the extent the issued claims
are directed to the technology. There can be no assurance that our patent applications or those of our licensor will result in
additional patents being issued or that issued patents will afford sufficient protection against competitors with similar technology,
nor can there be any assurance that the patents issued will not be infringed, designed around or invalidated by third parties.
Even issued patents may later be found invalid or unenforceable or may be modified or revoked in proceedings instituted by third
parties before various patent offices or in courts. The degree of future protection for our proprietary rights is uncertain. Only
limited protection may be available and may not adequately protect our rights or permit us to gain or keep any competitive advantage.
This failure to properly protect the intellectual property rights relating to our product candidates could have a material adverse
effect on our financial condition and results of operations.
We seek to protect our proprietary technology
and processes, in part, by entering into confidentiality agreements with relevant employees, consultants, scientific advisors,
and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical
security of the premises and physical and electronic security of the information technology systems. While we have confidence in
these individuals, organizations, and systems, agreements or security measures may be breached, and we may not have adequate remedies
for any breach. In addition, trade secrets may otherwise become known or be independently discovered by competitors. To the extent
that the consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may
arise as to the rights in related or resulting know-how and inventions.
Although we have patents and patent applications
in other countries, we cannot be certain that the claims in other pending U.S. or European patent applications, international patent
applications, and patent applications in certain other foreign territories directed to methods of generating multi-antigen specific
T cell products, or our other product candidates, will be considered patentable by the USPTO, courts in the United States or by
the patent offices and courts in foreign countries, nor can we be certain that the claims in our issued European patent will not
be found invalid or unenforceable if challenged.
Most of our intellectual property rights are
currently licensed from BCM and the Mayo Foundation, so that the preparation and prosecution of these patents and patent applications
was not performed by us or under our control. Furthermore, patent law relating to the scope of claims in the biotechnology field
in which we operate is still evolving and, consequently, patent positions in our industry may not be as strong as in other more
well-established fields. The patent positions of biotechnology companies can be highly uncertain and involve complex legal and
factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims
allowed in biotechnology patents has emerged to date. The patent application process is subject to numerous risks and uncertainties,
and there can be no assurance that we or any of our potential future collaborators will be successful in protecting our product
candidates by obtaining and defending patents. These risks and uncertainties include the following:
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the USPTO and various foreign governmental patent agencies require compliance with a number of
procedural, documentary, fee payment and other provisions during the patent process, the noncompliance with which can result in
abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction;
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patent applications may not result in any patents being issued;
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patents that may be issued or in-licensed may be challenged, invalidated, modified, revoked, circumvented,
found to be unenforceable or otherwise may not provide any competitive advantage;
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our competitors, many of whom have substantially greater resources than us, and many of whom have
made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere
with or eliminate our ability to make, use and sell our potential product candidates;
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there may be significant pressure on the U.S. government and international governmental bodies
to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful,
as a matter of public policy regarding worldwide health concerns; and
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countries other than the United States may have patent laws less favorable to patentees than those
upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop and market competing product candidates.
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The patent prosecution process is also expensive
and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable
cost or in a timely manner or in all jurisdictions where protection may be commercially advantageous. It is also possible that
we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.
Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications,
or to maintain the patents, directed to technology that we license from third parties. We may also require the cooperation of one
of our licensors in order to enforce the licensed patent rights, and such cooperation may not be provided. Therefore, these patents
and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. We cannot be
certain that patent prosecution and maintenance activities by our licensor have been or will be conducted in compliance with applicable
laws and regulations, which may affect the validity and enforceability of such patents or any patents that may issue from such
applications. If they fail to do so, this could cause us to lose rights in any applicable intellectual property that we in-license,
and as a result our ability to develop and commercialize products or product candidates may be adversely affected and we may be
unable to prevent competitors from making, using and selling competing products.
In addition, identification of third-party
patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology
among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. The issuance of a patent is not
conclusive as to its inventorship, scope, validity or enforceability and it is uncertain how much protection, if any, will be given
to the patents we have licensed from a licensor if either the licensor or we attempt to enforce the patents and/or if they are
challenged in court or in other proceedings, such as oppositions, which may be brought in foreign jurisdictions to challenge the
validity of a patent. A third party may challenge our patents, if issued, or the patent rights that we license from others in the
courts or patent offices in the United States and abroad. It is possible that a competitor may successfully challenge our patents
or that a challenge will result in loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, which
could limit our ability to stop others from using or commercializing similar or identical products, or limit the duration of the
patent protection of our products and product candidates. Moreover, the cost of litigation to uphold the validity of patents and
to prevent infringement can be substantial. If the outcome of litigation is adverse to us, third parties may be able to use our
patented invention without payment to us. Moreover, it is possible that competitors may infringe our patents or successfully avoid
them through design innovation. To stop these activities, we may need to file a lawsuit. These lawsuits are expensive and would
consume time and other resources, even if we were successful in stopping the violation of our patent rights. In addition, there
is a risk that a court would decide that our patents are not valid and that we do not have the right to stop the other party from
using the inventions. There is also the risk that, even if the validity of our patents were upheld, a court would refuse to stop
the other party on the ground that its activities are not covered by, that is, do not infringe, our patents.
Should third parties file patent applications,
or be issued patents claiming technology also used or claimed by our licensor(s) or by us in any future patent application, we
may be required to participate in interference proceedings in the USPTO to determine priority of invention for those patents or
patent applications that are subject to the first-to-invent law in the United States, or may be required to participate in derivation
proceedings in the USPTO for those patents or patent applications that are subject to the “first-inventor-to-file”
law in the United States. We may be required to participate in such interference or derivation proceedings involving our issued
patents and pending applications. We may be required to cease using the technology or to license rights from prevailing third parties
as a result of an unfavorable outcome in an interference proceeding or derivation proceeding. A prevailing party in that case may
not offer us a license on commercially acceptable terms or on any terms.
The use of our technologies could potentially
conflict with the rights of others.
Our potential competitors or other entities
may have or acquire patent or proprietary rights that they could enforce against our licensors. There is a substantial amount of
litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology
and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, reexaminations,
inter partes
review proceedings and post-grant review, or PGR, proceedings before the USPTO and/or corresponding foreign patent offices.
Numerous third-party U.S. and foreign issued patents and pending patent applications exist in the fields in which we are developing
product candidates. There may be third-party patents or patent applications with claims to materials, formulations, methods of
manufacture or methods for treatment related to the use or manufacture of our product candidates. If they do so, then they could
limit our ability to make, use, sell, offer for sale or import our product candidates and products that may be approved in the
future, or impair our competitive position by requiring us to alter our products, pay licensing fees or cease activities.
As the biotechnology industry expands and more
patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights
of third parties. Because patent applications are maintained as confidential for a certain period of time, until the relevant application
is published us may be unaware of third-party patents that may be infringed by commercialization of any of our product candidates,
and we cannot be certain that we were the first to file a patent application related to a product candidate or technology. Moreover,
because patent applications can take many years to issue, there may be currently-pending patent applications that later issue as
patents that our product candidates may infringe. If our products conflict with patent rights of others, third parties could bring
legal actions against us or our collaborators, licensees, suppliers or customers, claiming damages and seeking to enjoin manufacturing
and marketing of the affected products. If these legal actions are successful, in addition to any potential liability for damages,
we could be required to obtain a license in order to continue to manufacture or market the affected products. We may not prevail
in any legal action and a required license under the patent may not be available on acceptable terms or at all.
Changes in U.S. patent law could diminish
the value of patents in general, thereby impairing our ability to protect our products.
As is the case with other biopharmaceutical
companies, our success is dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical
industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. Changes
in either the patent laws or in the interpretations of patent laws in the United States and other countries may diminish the value
of our intellectual property. We cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party
patents. For example, on September 16, 2011, the Leahy-Smith America Invents Act, or Leahy-Smith Act, was signed into law. The
Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent
applications will be prosecuted and may also affect patent litigation. In particular, under the Leahy-Smith Act, the United States
transitioned in March 2013 to a “first inventor to file” system in which the first inventor to file a patent application
will be entitled to the patent. Third parties are allowed to submit prior art before the issuance of a patent by the USPTO and
may become involved in post-grant proceedings including post grant review, derivation, reexamination,
inter-partes
review
or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such
submission, proceeding or litigation could reduce the scope or enforceability of, or invalidate, our patent rights, which could
adversely affect our competitive position. In addition, recent U.S. Supreme Court rulings on several patent cases have narrowed
the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations.
In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has
created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal
courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability
to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. While we do not believe
that any of the patents owned or licensed by us will be found invalid based on these decisions, we cannot predict how future decisions
by the courts, the U.S. Congress or the USPTO may impact the value of our patents.
We have limited foreign intellectual
property rights and may not be able to protect our intellectual property rights throughout the world.
We have limited intellectual property rights
outside the United States. Filing, prosecuting and defending patents on product candidates in all countries throughout the world
would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less
extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property
rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties
from practicing its inventions in all countries outside the United States, or from selling or importing products made using its
inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we
have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories
where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with
our products and patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant
problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries,
particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property
protection, particularly those relating to biopharmaceutical products, which could make it difficult for us to stop the infringement
of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our
patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects
of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk
of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate,
and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our
intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual
property that we develop or license.
We may be subject to claims that our
employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.
As is common in the biotechnology and pharmaceutical
industries, in addition to our employees, we engage the services of consultants to assist us in the development of our product
candidates. We have received confidential and proprietary information from third parties. We employ individuals or engage consultants
who were previously employed at other biotechnology or pharmaceutical companies. We may be subject to claims that we or our employees,
consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of these third
parties or our employees’ former employers. Litigation may be necessary to defend against these claims. Even if we are successful
in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees.
If we fail to comply with any obligations
under our existing license agreements or any future license agreements, or disputes arise with respect to those agreements, it
could have a negative impact on our business and our intellectual property rights.
We are a party to license agreements with BCM
and the Mayo Foundation that impose, and we may enter into additional licensing arrangements with third parties that may impose,
diligence, development and commercialization timelines, milestone payment, royalty, insurance and other obligations on us. Our
rights to use the licensed intellectual property are subject to the continuation of and our compliance with the terms of these
agreements. Disputes may arise regarding our rights to intellectual property licensed to us from a third party, including but not
limited to:
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the scope of rights granted under the license agreement and other interpretation-related issues;
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the extent to which our technology and processes infringe on intellectual property of the licensor
that is not subject to the licensing agreement;
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the sublicensing of patent and other rights;
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our diligence obligations under the license agreement and what activities satisfy those diligence
obligations;
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the ownership of inventions and know-how resulting from the creation or use of intellectual property
by us, alone or with our licensors and collaborators;
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the scope and duration of our payment obligations;
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our rights upon termination of such agreement; and
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the scope and duration of exclusivity obligations of each party to the agreement.
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If disputes over intellectual property and
other rights that we have licensed or acquired from third parties prevent or impair our ability to maintain our current licensing
arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates. If
we fail to comply with our obligations under current or future licensing agreements, these agreements may be terminated or the
scope of our rights under them may be reduced and we might be unable to develop, manufacture or market any product that is licensed
under these agreements.
We may be subject to claims challenging
the inventorship or ownership of our patents and other intellectual property.
We may be subject to claims that former employees,
collaborators or other third parties have an ownership interest in our patents or other intellectual property. Litigation may be
necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims,
in addition to paying monetary damages, we may lose valuable intellectual property rights. Such an outcome could have a material
adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial
costs and distraction to management and other employees.
Patent terms may be inadequate to protect
our competitive position on our product candidates for an adequate amount of time.
Patents have a limited lifespan. In the United
States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S.
non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited.
Even if patents covering our product candidates are obtained, once the patent life has expired, we may be subject to competition
from competitive products, including biosimilars. Given the amount of time required for the development, testing and regulatory
review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
As a result, our owned and licensed patent portfolio may not provide sufficient rights to exclude others from commercializing products
similar or identical to our products.
Certain of our technologies are in-licensed
from third parties, and the protection of those technologies is not entirely within our control.
We have world-wide exclusive licenses from
the Mayo Foundation on (i) a novel set of Class II HER2/neu peptide antigens, (ii) a novel Class I HER2/neu antigen, and (iii)
a novel set of Class II Folate Receptor Alpha peptide antigens. We have a world-wide exclusive license from BCM of the rights in
and to three patent families to develop and commercialize MultiTAA product candidates. As a result of these in-licenses, we could
lose the right to develop each of the technologies if:
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the owners of the patent rights underlying the technologies
that we license do not properly maintain or enforce the patents and intellectual property underlying those properties,
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the Mayo Foundation or BCM seeks to terminate our license in contravention of the license agreements;
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we fail to make all payments due and owing under any of the licenses; or
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we fail to obtain on commercially reasonable terms, if at all, in-licenses from the Mayo Foundation
or BCM or others for other rights that are necessary to develop the technology that we have already in-licensed.
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If any of the above occurs, we could lose the
right to use the in-licensed intellectual property, which would adversely affect our ability to commercialize our technologies,
products or services. The loss of any current or future licenses from Mayo Foundation or BCM, or the exclusivity rights provided
by such license agreements, could materially harm our financial condition and operating results.
We rely upon patents and licensed technologies
to protect our technology. We may be unable to protect our intellectual property rights, and we may be liable for infringing the
intellectual property rights of others.
Our ability to compete effectively depends
on our ability to maintain the proprietary nature of our technologies and the proprietary technology of others with whom we have
entered into collaboration and licensing agreements. We own or hold licenses to a number of issued patents and U.S. pending patent
applications, as well as foreign patents and foreign counterparts. Our success depends in part on our ability to obtain patent
protection both in the United States and abroad for our product candidates, as well as the methods for treating patients in the
product indications using these product candidates. Such patent protection is costly to obtain and maintain, and sufficient funds
might not be available. Our ability to protect our product candidates from unauthorized or infringing use by third parties depends
in substantial part on our ability to obtain and maintain valid and enforceable patents. Due to evolving legal standards relating
to the patentability, validity and enforceability of patents covering pharmaceutical inventions and the scope of claims made under
these patents, our ability to obtain, maintain and enforce patents is uncertain and involves complex legal and factual questions.
Even if our product candidates, as well as methods for treating patients for prescribed indications using these product candidates
are covered by valid and enforceable patents and have claims with sufficient scope, disclosure and support in the specification,
the patents will provide protection only for a limited amount of time. Accordingly, rights under any issued patents may not provide
us with sufficient protection for our product candidates or provide sufficient protection to afford us a commercial advantage against
competitive products or processes.
In addition, we cannot guarantee that any patents
will be issued from any pending or future patent applications owned by or licensed to us. Even if patents have been issued or will
be issued, we cannot guarantee that the claims of these patents are or will be valid or enforceable or will provide us with any
significant protection against competitive products or otherwise be commercially valuable to us. The laws of some foreign jurisdictions
do not protect intellectual property rights to the same extent as in the United States and many companies have encountered significant
difficulties in protecting and defending such rights in foreign jurisdictions. Furthermore, different countries have different
procedures for obtaining patents, and patents issued in different countries offer different degrees of protection against use of
the patented invention by others. If we encounter such difficulties in protecting or are otherwise precluded from effectively protecting
our intellectual property rights in foreign jurisdictions, our business prospects could be substantially harmed.
The patent positions of biotechnology and pharmaceutical
companies, including our patent positions, involve complex legal and factual questions, and, therefore, validity and enforceability
cannot be predicted with certainty. Patents may be challenged, deemed unenforceable, invalidated, or circumvented. Our patents
can be challenged by our competitors who can argue that our patents are invalid, unenforceable, lack sufficient written description
or enablement, or that the claims of the issued patents should be limited or narrowly construed. Patents also will not protect
our product candidates if competitors devise ways of making or using these product candidates without infringing our patents.
We will be able to protect our proprietary
rights from unauthorized use by third parties only to the extent that our technologies, methods of treatment, product candidates,
and any future products are covered by valid and enforceable patents or are effectively maintained as trade secrets and we have
the funds to enforce our rights, if necessary.
The expiration of our owned or licensed patents
before completing the research and development of our product candidates and receiving all required approvals in order to sell
and distribute the products on a commercial scale can adversely affect our business and results of operations.
We may be involved in lawsuits to protect
or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.
Competitors may infringe our intellectual property
rights or those of our licensors. To counter infringement or unauthorized use, we may be required to file infringement claims,
which can be expensive and time-consuming. In addition, in a patent infringement proceeding, a court may decide that one or more
of the patents which we own or in-license is not valid or is unenforceable, and/or is not infringed. An adverse result in any litigation
or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly
and could put our patent applications at risk of not issuing. Defense of these claims, regardless of their merit, would involve
substantial litigation expense and would be a substantial diversion of employee resources from our business. We may not prevail
in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. In the
event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’
fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our infringing products,
which may be impossible or require substantial time and monetary expenditure.
Periodic maintenance fees, renewal fees, annuity
fees and various other governmental fees on any issued patent and/or pending patent applications will be due to the USPTO and foreign
patent agencies in several stages over the lifetime of our patents and/or applications. The USPTO and various foreign governmental
patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the
patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent
lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction.
However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting
in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment
or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed
time limits, non-payment of fees and failure to properly legalize and submit formal documents. In such an event, our competitors
might be able to enter the market, which would have a material adverse effect on our business development.
Interference or derivation proceedings provoked
by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions with respect
to our patents or patent applications or those of our licensors. Should third parties file patent applications or be issued patents
claiming technology also used or claimed by us, we may be required to participate in interference or derivation proceedings in
the USPTO to determine priority of invention. We may be required to participate in interference or derivation proceedings involving
our issued patents and pending applications. An unfavorable outcome could require us to cease using the related technology or to
attempt to license rights from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license
on commercially acceptable terms.
We may be unable to adequately prevent
disclosure of trade secrets and other proprietary information.
We also rely on trade secrets to protect our
proprietary technologies, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets
are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants, outside scientific collaborators,
sponsored researchers, and other advisors to protect our trade secrets and other proprietary information. These agreements may
not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized
disclosure of confidential information. In addition, others may independently discover our trade secrets and proprietary information.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure
to obtain or maintain trade secret protection could adversely affect our competitive business position.
If we are unable to obtain licenses needed
for the development of our product candidates, or if we breach any of the agreements under which we license rights to patents or
other intellectual property from third parties, we could lose license rights that are important to our business.
If we are unable to maintain and/or obtain
licenses needed for the development of our product candidates in the future, we may have to develop alternatives to avoid infringing
on the patents of others, potentially causing increased costs and delays in drug development and introduction or precluding the
development, manufacture, or sale of planned products. Some of our licenses provide for limited periods of exclusivity that require
minimum license fees and payments and/or may be extended only with the consent of the licensor. We might not meet these minimum
license fees in the future or these third parties might not grant extensions on any or all such licenses. This same restriction
may be contained in licenses obtained in the future.
Additionally, the patents underlying the licenses
might not be valid and enforceable. To the extent any products developed by us are based on licensed technology, royalty payments
on the licenses will reduce our gross profit from such product sales and may render the sales of such products uneconomical. In
addition, the loss of any current or future licenses or the exclusivity rights provided therein could materially harm our business
financial condition and our operations.
We may face legal claims; litigation
is expensive and we may not be able to afford the costs.
We may face legal claims involving stockholders,
consumers, competitors, entities from whom we license technology, entities with whom we collaborate, persons claiming that we are
infringing on their intellectual property and others. The biotechnology and pharmaceutical industries have been characterized by
extensive litigation regarding patents and other intellectual property rights, and companies have employed intellectual property
litigation to gain a competitive advantage. We may initiate or become subject to infringement claims or litigation arising out
of patents and pending applications of our competitors, or we may become subject to proceedings initiated by our competitors or
other third parties or the USPTO or applicable foreign bodies to reexamine the patentability of our licensed or owned patents.
In addition, litigation may be necessary to enforce our issued patents, to protect our trade secrets and know-how, or to determine
the enforceability, scope, and validity of the proprietary rights of others.
The costs of litigation or any proceeding relating
to our intellectual property or contractual rights could be substantial even if resolved in our favor. Some of our competitors
or financial funding sources have far greater resources than we do and may be better able to afford the costs of complex legal
procedures. Also, in a law suit for infringement or contractual breaches, even if frivolous, we will require considerable time
commitments on the part of management, our attorneys and consultants. Defending these types of proceedings or legal actions involve
considerable expense and could negatively affect our financial results.
Our research and development programs
are subject to uncertainty.
Factors affecting our research and development
programs include, but are not limited to:
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limited financial resources from which to budget and allocate among our product candidates;
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competition from companies that are substantially and financially stronger than us;
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the need for acceptance of our immunotherapies;
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our ability to anticipate and adapt to a competitive market and rapid technological developments;
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the amount and timing of operating costs and capital expenditures relating to expansion of our
business, operations and infrastructure;
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the need to rely on multiple levels of outside funding due to the length of drug development cycles
and governmental approved protocols associated with the pharmaceutical industry; and
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the dependence upon key personnel including key independent consultants and advisors.
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Our research and development expenses may not
be consistent from time to time. We may be required to accelerate or delay incurring certain expenses depending on the results
of our studies and the availability of adequate funding.
If we are unable to establish sales and
marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable
to generate any revenue.
We do not currently have an organization for
the sale, marketing and distribution of products and the cost of establishing and maintaining such an organization may exceed the
cost-effectiveness of doing so. In order to market any products approved by the FDA or comparable foreign regulatory authorities,
we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to
perform these services. If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently
or with third parties, we may not be able to generate product revenue and may not become profitable. We will be competing with
many companies that currently have extensive and well-funded sales and marketing operations. Without an internal commercial organization
or the support of a third party to perform sales and marketing functions, we may be unable to compete successfully against these
more established companies.
If we are unable to establish or manage
strategic collaborations in the future, our revenue and drug development may be limited.
Our strategy includes eventual substantial
reliance upon strategic collaborations for marketing and commercialization of our product candidates, and we may rely even more
on strategic collaborations for research, development, marketing and commercialization of our other immunotherapies. If we are
unsuccessful in securing such strategic collaborations, we may be unable to commercialize our products as we have not yet licensed,
marketed or sold any of our immunotherapies or entered into successful collaborations for these services in order to ultimately
commercialize our immunotherapies. Establishing strategic collaborations is difficult and time-consuming. Our discussions with
potential collaborators may not lead to the establishment of collaborations on favorable terms, if at all. Potential collaborators
may reject collaborations based upon their assessment of our financial, clinical, regulatory or intellectual property position.
If we successfully establish new collaborations, these relationships may never result in the successful development or commercialization
of our immunotherapies or the generation of sales revenue. To the extent that we enter into co-promotion or other collaborative
arrangements, our product revenues are likely to be lower than if it directly marketed and sold any products that we may develop.
Management of our relationships with our collaborators
will require:
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significant time and effort from our management team;
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coordination of our research and development programs with the research and development priorities
of our collaborators; and
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effective allocation of our resources to multiple projects.
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If we continue to enter into research and development
collaborations at the early phases of drug development, our success will in part depend on the performance of our corporate collaborators.
We will not directly control the amount or timing of resources devoted by our corporate collaborators to activities related to
our immunotherapies. Our corporate collaborators may not commit sufficient resources to its research and development programs or
the commercialization, marketing or distribution of its immunotherapies. If any corporate collaborator fails to commit sufficient
resources, our preclinical or clinical development programs related to this collaboration could be delayed or terminated. Also,
our collaborators may pursue existing or other development-stage products or alternative technologies in preference to those being
developed in collaboration with us. Finally, if we fail to make required milestones or royalty payments to our collaborators or
to observe other obligations in our agreements with them, our collaborators may have the right to terminate those agreements.
We may not be able to license newly developed
MultiTAA T cell technology from BCM and others.
An important element of our intellectual property
portfolio is to license additional rights and technologies from BCM. Our inability to license the rights and technologies that
we have identified, or newly developed MultiTAA T cell technology that we may in the future identify, could have a material adverse
impact on our ability to complete the development of our products or to develop additional products. No assurance can be given
that we will be successful in licensing any additional rights or technologies from BCM and others. Failure to obtain additional
rights and licenses may detrimentally affect our planned development of additional product candidates and could increase the cost,
and extend the timelines associated with our development of such other products.
The market opportunities for our product
candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small.
The FDA often approves new oncology therapies
initially only for use in patients with relapsed or refractory metastatic disease. We expect to initially seek approval of our
product candidates in this setting. Subsequently, for those products that prove to be sufficiently beneficial, if any, we would
expect to seek approval in earlier lines of treatment and potentially as a first line therapy. There is no guarantee, however,
that our product candidates, even if approved, would be approved for earlier lines of therapy, and, prior to any such approvals,
we may have to conduct additional clinical trials.
Our projections of both the number of people
who have the cancers we are targeting, as well as the subset of people with these cancers in a position to receive second or third-line
therapy, and who have the potential to benefit from treatment with our product candidates, are based on our research and estimates.
These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations,
or market research by third parties, and may prove to be incorrect. Further, new studies may change the estimated incidence or
prevalence of these cancers. The number of treatable patients may turn out to be lower than expected. Additionally, the potentially
addressable patient population for our product candidates may be limited or may not be amenable to treatment with our product candidates
and may also be limited by the cost of our treatments and the reimbursement of those treatment costs by third-party payors. For
instance, we expect our lead product candidate, LAPP, to initially target a small patient population that suffers from AML. Even
if we obtain significant market share for our product candidates, because the potential target populations are small, we may never
achieve profitability without obtaining regulatory approval for additional indications.
We are required to pay substantial royalties
and lump sum milestone payments under our license agreement with BCM, and we must meet certain milestones to maintain our license
rights.
Under our license agreement with BCM for our
MultiTAA T cell therapy technologies, we are currently required to pay both substantial milestone payments and royalties to BCM
based on our revenues from sales of our products utilizing the licensed technologies, and these payments could adversely affect
the overall profitability for us of any products that we may seek to commercialize. In order to maintain our license rights under
the BCM license agreement, we will need to meet certain specified milestones, subject to certain cure provisions, in the development
of our product candidates. There is no assurance that we will be successful in meeting all of the milestones in the future on a
timely basis or at all.
In addition, upon a liquidity event (as defined
in our BCM license agreement with BCM, but shall not include the “Merger”) of the licensee under the BCM license agreement
(which, the licensee shall be the Company), BCM will receive a liquidity incentive payment of 0.5% of the liquidity event proceeds
(as defined in the BCM license agreement) received by such licensee or its stockholders in the liquidity event, thereby diluting
the amount of proceeds available to the licensee or its stockholders in a liquidity event.
Because our current products represent,
and our other potential product candidates will represent novel approaches to the treatment of disease, there are many uncertainties
regarding the development, the market acceptance, third-party reimbursement coverage and the commercial potential of our product
candidates.
There is no assurance that the approaches offered
by our products will gain broad acceptance among doctors or patients or that governmental agencies or third-party medical insurers
will be willing to provide reimbursement coverage for proposed product candidates. Moreover, we do not have verifiable internal
marketing data regarding the potential size of the commercial market for our product candidates, nor have we obtained independent
marketing surveys to verify the potential size of the commercial markets for our current product candidates or any future product
candidates. Since our current product candidates and any future product candidates will represent new approaches to treating various
conditions, it may be difficult, in any event, to accurately estimate the potential revenues from these product candidates. Accordingly,
we may spend large amounts of money trying to obtain approval for product candidates that have an uncertain commercial market.
The market for any products that we successfully develop will also depend on the cost of the product. We do not yet have sufficient
information to reliably estimate what it will cost to commercially manufacture our current product candidates, and the actual cost
to manufacture these products could materially and adversely affect the commercial viability of these products. Our goal is to
reduce the cost of manufacturing our therapies. However, unless we are able to reduce those costs to an acceptable amount, we may
never be able to develop a commercially viable product. If we do not successfully develop and commercialize products based upon
our approach or find suitable and economical sources for materials used in the production of our products, we will not become profitable.
Our MultiTAA T cell therapy may be provided
to patients in combination with other agents provided by third parties. The cost of such combination therapy may increase the overall
cost of MultiTAA T cell therapy and may result in issues regarding the allocation of reimbursements between our therapy and the
other agents, all of which may adversely affect our ability to obtain reimbursement coverage for the combination therapy from third-party
medical insurers.
If product liability lawsuits are brought
against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.
We face an inherent risk of product liability
as a result of the clinical testing of our product candidates and will face an even greater risk if we commercialize any products.
For example, we may be sued if our product candidates cause or are perceived to cause injury or are found to be otherwise unsuitable
during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects
in manufacturing, defects in design, a failure to warn of dangers inherent to the product, negligence, strict liability or a breach
of warranties. Claims could also be asserted under state consumer protection laws. If we cannot successfully defend ourselves against
product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates.
Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome,
liability claims may result in:
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decreased demand for our product candidates;
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injury to our reputation;
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withdrawal of clinical trial participants;
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initiation of investigations by regulators;
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costs to defend the related litigation;
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a diversion of management’s time and our resources;
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substantial monetary awards to trial participants or patients;
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product recalls, withdrawals or labeling, marketing or promotional restrictions;
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exhaustion of any available insurance and our capital resources; and
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the inability to commercialize any product candidate.
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Our inability to obtain sufficient product
liability insurance at an acceptable cost to protect against potential product liability claims could inhibit or prevent the commercialization
of products we develop, alone or with collaborators. Our insurance policies may also have various exclusions, and we may be subject
to a product liability claim for which we have no insurance coverage. While we obtained clinical trial insurance for our Phase
II clinical trials, we may have to pay amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations
or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Even
if our agreements with any future collaborators entitle us to indemnification against losses, such indemnification may not be available
or adequate should any claim arise.
We face significant competition from
other biotechnology and pharmaceutical companies and from non-profit institutions.
Competition in the field of cancer therapy
is intense and is accentuated by the rapid pace of technological development. Research and discoveries by others may result in
breakthroughs that may render our products obsolete even before they generate any revenue. There are products currently under development
by others that could compete with the products that we are developing. Many of our potential competitors have substantially greater
research and development capabilities and manufacturing, marketing, financial and managerial resources than we have. Our competitors
may:
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develop safer or more effective immunotherapies and other therapeutic products;
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reach the market more rapidly, reducing the potential sales of our products; or
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establish superior proprietary positions.
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Potential competitors in the market for
treating hematological malignancies are companies such as Juno Therapeutics/Celgene/Bristol-Myers Squibb, Roche/Genentech,
Merck, Novartis, Kite Pharma/Gilead, Amgen, Pfizer, and GlaxoSmithKline, which already have products on the market or in
development. Other companies, such as Cellectis and AdaptImmune, which are focused on genetically engineered T cell
technologies to treat cancer, may also be competitors. Furthermore, companies such as Iovance, Immatics, WindMIL
Therapeutics, Mana Therapeutics and Torque Therapeutics are developing non-genetically modified T cell therapies such as
Tumor Infiltrating Lymphocytes (“TIL”) and Marrow Infiltrating Lymphocytes (“MIL”) therapies that may
compete with our products. All of these companies, and most of our other current and potential competitors have substantially
greater research and development capabilities and financial, scientific, regulatory, manufacturing, marketing, sales, human
resources, and experience than we do. Many of our competitors have several therapeutic products that have already been
developed, approved and successfully commercialized, or are in the process of obtaining regulatory approval for their
therapeutic products in the United States and internationally.
Universities and public and private research
institutions in the U.S. and around the world are also potential competitors. While these universities and public and private research
institutions primarily have educational objectives, they may develop proprietary technologies that lead to other FDA approved therapies
or that secure patent protection that we may need for the development of our technologies and products.
Our lead product candidate, LAPP, is a therapy
for the treatment of refractory AML. Currently, there are numerous companies that are developing various alternate treatments for
AML. Accordingly, LAPP faces significant competition in the AML treatment space from multiple companies. Even if we obtain regulatory
approval for LAPP, the availability and price of competitors’ products could limit the demand and the price we will be able
to charge for our therapy. We may not be able to implement our business plan if the acceptance of our products is inhibited by
price competition or the reluctance of physicians to switch from other methods of treatment to our product, or if physicians switch
to other new therapies, drugs or biologic products or choose to reserve our products for use in limited circumstances.
Our business and operations would suffer
in the event of cybersecurity/information systems risk.
Despite the implementation of security measures,
our internal computer systems, and those of our manufacturers and other third parties on which we rely, are vulnerable to damage
from computer viruses, unauthorized access, natural disasters, fire, terrorism, successful breaches, employee malfeasance, or human
or technological error, war and telecommunication and electrical failures. In addition, our systems safeguard important confidential
personal data regarding our subjects. If a disruption event were to occur and cause interruptions in our operations, it could result
in a material disruption of our drug development programs. For example, the loss of clinical trial data from completed, ongoing
or planned clinical trials 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,
or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of
our product candidates could be delayed.
We maintain cybersecurity insurance, however,
an incident may exceed our coverage premiums.
We have cybersecurity insurance
for a breach event covering expenses for notification, credit monitoring, investigation, crisis management, public relations and
legal advice. We also maintain property and casualty insurance that may cover restoration of data, certain physical damage or third-party
injuries caused by potential cybersecurity incidents. However, damage and claims arising from such incidents may not be covered
or may exceed the amount of any insurance available.
We may incur costs of addressing a cybersecurity
incident.
Cybersecurity incidents have
increased in number and severity recently and it is expected that these trends will continue. Should we be affected by such an
incident, we may incur substantial costs and suffer other negative consequences, which may include:
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investigation costs and costs to engage specialized consultants;
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remediation costs, such as liability for stolen assets or information, repairs of system damage,
and incentives to customers or business partners in an effort to maintain relationships after an attack; and
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litigation and legal risks, including regulatory actions by state and federal regulators.
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Risks Related to Government Regulation
We are subject to extensive regulation,
which can be costly, time consuming and can subject us to unanticipated delays; even if we obtain regulatory approval for some
of our products, those products may still face regulatory difficulties.
All of our potential products, cell processing
and manufacturing activities, are subject to comprehensive regulation by the FDA in the United States and by comparable authorities
in other countries. The process of obtaining FDA and other required regulatory approvals, including foreign approvals, is expensive
and often takes many years and can vary substantially based upon the type, complexity and novelty of the products involved. In
addition, regulatory agencies may lack experience with our technologies and products, which may lengthen the regulatory review
process, increase our development costs and delay or prevent their commercialization.
No adoptive T cell therapy using MultiTAA T
cells has been approved for marketing in the U.S. by the FDA. Consequently, there is no precedent for the successful commercialization
of products based on our technologies. In addition, we have had only limited experience in filing and pursuing applications necessary
to gain regulatory approvals, which may impede our ability to obtain timely FDA approvals, if at all. We have not yet sought FDA
approval for any adoptive T cell therapy product. We will not be able to commercialize any of our potential products until we obtain
FDA approval, and so any delay in obtaining, or inability to obtain, FDA approval would harm our proposed business.
If we violate regulatory requirements at any
stage, whether before or after marketing approval is obtained, we may be fined, forced to remove a product from the market and
experience other adverse consequences including delay, which could materially harm our business development. Additionally, we may
not be able to obtain the labeling claims necessary or desirable for the promotion of our products. We may also be required to
undertake post-marketing trials. In addition, if we or others identify side effects after any of our adoptive T cell therapy products
are on the market, or if manufacturing problems occur, regulatory approval may be withdrawn, and reformulation of our products
may be required.
The FDA regulatory approval process is
lengthy and time-consuming, and we may experience significant delays in the clinical development and regulatory approval of our
product candidates.
We have not previously submitted a Biologics
License Application (“BLA”) to the FDA, or similar approval filings to comparable foreign authorities. A BLA must include
extensive preclinical and clinical data and supporting information to establish the product candidate’s safety and effectiveness
for each desired indication. The BLA must also include significant information regarding the CMC for the product. We expect the
novel nature of our product candidates to create further challenges in obtaining regulatory approval. For example, the FDA has
limited experience with commercial development of cell therapies for cancer. Accordingly, the regulatory approval pathway for our
product candidates may be uncertain, complex, expensive and lengthy, and approval may not be obtained. We may also experience delays
in completing planned clinical trials for a variety of reasons, including delays related to:
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the availability of financial resources to commence and complete the planned trials;
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reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms
of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
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obtaining approval by an independent IRB at each clinical trial site;
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recruiting suitable patients to participate in a trial;
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having patients complete a trial or return for post-treatment follow-up;
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clinical trial sites deviating from trial protocol or dropping out of a trial;
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adding new clinical trial sites; or
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manufacturing sufficient quantities of qualified materials under cGMPs and applying them on a subject
by subject basis for use in clinical trials.
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We could also encounter delays if physicians
face unresolved ethical issues associated with enrolling patients in clinical trials of our product candidates in lieu of prescribing
existing treatments that have established safety and efficacy profiles. Further, a clinical trial may be suspended or terminated
by us, the IRB for the institutions in which such trials are being conducted, the Data and Safety Monitoring Board or Committee
for such trial, or by the FDA or other regulatory authorities due to a number of factors. Those factors could include failure to
conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial
operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen
safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental
regulations or administrative actions or lack of adequate funding to continue the clinical trial. If we experience termination
of, or delays in the completion of, any clinical trial of our product candidates, the commercial prospects for our product candidates
will be harmed, and our ability to generate product revenue will be delayed. In addition, any delays in completing our clinical
trials will increase our costs, slow down our product development and approval process and jeopardize our ability to commence product
sales and generate revenue.
Obtaining and maintaining regulatory
approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval
of our product candidates in other jurisdictions.
Obtaining and maintaining regulatory approval
of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval
in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect
on the regulatory approval process in others. For example, even if the FDA grants marketing approval of a product candidate, comparable
regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate
in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods
different from, and greater than, those in the United States, including additional preclinical studies or clinical trials as clinical
studies conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions
outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction.
In some cases, the price that we intend to charge for our products is also subject to approval.
We may also submit marketing applications in
other countries. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of product
candidates with which we must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory approvals and compliance
with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent
the introduction of our products in certain countries. If we fail to comply with the regulatory requirements in international markets
and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential
of our product candidates will be harmed.
Even if we receive regulatory approval
of our product candidates, we will be subject to ongoing quality and regulatory obligations and continued regulatory review, which
may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements
or experience unanticipated problems with our product candidates.
Any regulatory approvals that we receive for
our product candidates will require surveillance to monitor the safety and efficacy of the product candidate. The FDA may also
require a risk evaluation and mitigation strategy in order to approve our product candidates, which could entail requirements for
a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods,
patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves
our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising,
promotion, import, export and recordkeeping for our product candidates will be subject to extensive and ongoing regulatory requirements.
These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued
compliance with cGMPs and cGCPs for any clinical trials that we conduct post-approval. Later discovery of previously unknown problems
with our product candidates, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers
or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:
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restrictions on the marketing or manufacturing of our product candidates, withdrawal of the product
from the market, or voluntary or mandatory product recalls;
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fines, warning letters or holds on clinical trials;
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refusal by the FDA to approve pending applications or supplements to approved applications filed
by us or suspension or revocation of license approvals;
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product seizure or detention, or refusal to permit the import or export of our product candidates;
and
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injunctions or the imposition of civil or criminal penalties.
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The FDA’s and other regulatory authorities’
policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval
of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future
legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing
requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose
any marketing approval that we may have obtained, and we may not achieve or sustain profitability.
Recently enacted and future legislation
in the United States and other countries may affect the prices we may obtain for our product candidates and increase the difficulty
and cost to commercialize our product candidates.
In the United States and many other countries,
rising healthcare costs have been a concern for governments, patients and the health insurance sector, which has resulted in a
number of changes to laws and regulations, and may result in further legislative and regulatory action regarding the healthcare
and health insurance systems that could affect our ability to profitably sell any product candidates for which we have obtained
marketing approval.
For example, the Patient Protection and Affordable
Care Act, as amended by the Health Care and Education Reconciliation Act (“ACA”) was enacted in the United States in
March 2010, with the stated goals of containing healthcare costs, improving quality and expanding access to healthcare, and includes
measures to change health care delivery, increase the number of individuals with insurance, ensure access to certain basic health
care services, and contain the rising cost of care. Since January 2017, President Trump has signed two executive orders and other
directives designed to delay, circumvent, or loosen certain requirements mandated by the ACA. Concurrently, Congress has considered
legislation that would repeal or repeal and replace all or part of the ACA. While Congress has not passed repeal legislation, two
bills affecting the implementation of certain taxes under the ACA have been signed into law. The Tax Cuts and Jobs Act of 2017
includes a provision that repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on
certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the
“individual mandate”. Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations
for fiscal year 2018 that delayed the implementation of certain ACA-mandated fees, including the so-called “Cadillac”
tax on certain high cost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based
on market share, and the medical device excise tax on non-exempt medical devices. Further, the Bipartisan Budget Act of 2018, among
other things, amended the ACA, effective January 1, 2019, to increase from 50% to 70% the point-of-sale discount that is owed by
pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly
referred to as the “donut hole.” Congress may consider other legislation to repeal or replace elements of the ACA.
These executive orders and legislative actions may result in increased health insurance premiums and reduce the number of people
with health insurance in the United States and have other effects that could adversely affect U.S. health insurance markets and
the ability of patients to have access to therapies that our product candidates can provide.
In addition, other federal health reform measures
have been proposed and adopted in the United States. For example, as a result of the Budget Control Act of 2011, providers are
subject to Medicare payment reductions of 2% per fiscal year through 2027 unless additional Congressional action is taken. Further,
the American Taxpayer Relief Act of 2012 reduced Medicare payments to several providers and increased the statute of limitations
period for the government to recover overpayments to providers from three to five years. The Medicare Access and CHIP Reauthorization
Act of 2015 also introduced a quality payment program under which certain individual Medicare providers will be subject to certain
incentives or penalties based on new program quality standards. Payment adjustments for the Medicare quality payment program will
begin in 2019. At this time, it is unclear how the introduction of the quality payment program will impact overall physician reimbursement
under the Medicare program. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction
in payments from private payors. Further, there has been heightened governmental scrutiny in the United States of pharmaceutical
pricing practices in light of the rising cost of prescription drugs and biologics.
The combination of healthcare cost containment
measures, increased health insurance costs, reduction of the number of people with health insurance coverage, as well as future
legislation and regulations focused on reducing healthcare costs by reducing the cost of, or reimbursement and access to, pharmaceutical
products, may limit or delay our ability to commercialize our products, generate revenue or attain profitability.
Our employees, independent contractors,
consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with
regulatory standards and requirements.
We are exposed to the risk of employee fraud
or other illegal activity by our employees, independent contractors, consultants, commercial partners and vendors. Misconduct by
these parties could include intentional, reckless and/or negligent conduct that fails to: comply with the laws of the FDA and other
similar foreign regulatory bodies, provide true, complete and accurate information to the FDA and other similar foreign regulatory
bodies, comply with manufacturing standards we have established, comply with healthcare fraud and abuse laws in the United States
and similar foreign fraudulent misconduct laws, or report financial information or data accurately or to disclose unauthorized
activities to us. If we obtain FDA approval of any of our product candidates and begin commercializing those products in the United
States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such
laws are also likely to increase. These laws may impact, among other things, our current activities with principal investigators
and research patients, as well as proposed and future sales, marketing and education programs. In particular, the promotion, sales
and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject
to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may
restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer
incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of
information obtained in the course of patient recruitment for clinical trials.
Efforts to ensure that our business arrangements
comply with applicable healthcare laws may involve substantial costs. It is possible that governmental and enforcement authorities
will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting
applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against us, and we are
not successful in defending ourselves or in asserting our rights, those actions could have a significant impact on our business,
including the imposition of civil, criminal and administrative penalties, damages, disgorgement, monetary fines, possible exclusion
from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished
profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to develop our
business. In addition, the approval and commercialization of any of our product candidates outside the United States will also
likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.
We may not obtain or maintain the benefits
associated with orphan drug designation, including market exclusivity.
On December 9, 2015, we announced that we received
Orphan Drug Designation from the FDA’s Office of Orphan Products Development (“OOPD”) for our cancer vaccine
TPIV200 in the treatment of ovarian cancer. The TPIV200 ovarian cancer clinical program will now receive benefits including tax
credits on clinical research and seven-year market exclusivity upon receiving marketing approval. Even though we were granted orphan
drug designation, we may not receive the benefits associated with orphan drug designation. This may result from a failure to maintain
orphan drug status or result from a competing product reaching the market that has an orphan designation for the same disease indication.
Under U.S. regulations for orphan drugs, if such a competing product reaches the market before ours does, the competing product
could potentially obtain a scope of market exclusivity that limits or precludes our product from being sold in the United States
for seven years. Even if we obtain exclusivity, the FDA could subsequently approve a drug for the same condition if the FDA concludes
that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient
care. A competitor also may receive approval of different products for the same indication for which our orphan product has exclusivity
or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.
In addition, if and when we request orphan
drug designation in Europe, the European exclusivity period is ten years but can be reduced to six years if the drug no longer
meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer
justified. Orphan drug exclusivity may be lost if the FDA or European Medicines Evaluation Agency (“EMEA”) determines
that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the
drug to meet the needs of patients with the rare disease or condition.
New regulatory pathways for biosimilar
competition could reduce the duration of market exclusivity for our products.
Under the federal Patient Protection and Affordable
Care Act (“PPACA”) enacted in 2010, there is an abbreviated path in the United States for regulatory approval of products
that are demonstrated to be “biosimilar” or “interchangeable” with an FDA-approved biological product.
The PPACA provides a regulatory mechanism that allows for FDA approval of biologic drugs that are similar to (but not generic copies
of) innovative drugs on the basis of less extensive data than is required by a full BLA. Under this regulation, an application
for approval of a biosimilar may be filed four years after approval of the innovator product. However, qualified innovative biological
products will receive 12 years of regulatory exclusivity, meaning that the FDA may not approve a biosimilar version until 12 years
after the innovative biological product was first approved by the FDA. However, the term of regulatory exclusivity may not remain
at 12 years in the United States and could be shortened. A number of jurisdictions outside of the United States have also established
abbreviated pathways for regulatory approval of biological products that are biosimilar to earlier versions of biological products.
For example, the European Union has had an established regulatory pathway for biosimilars since 2005.
The increased likelihood of biosimilar competition
has increased the risk of loss of innovators’ market exclusivity. Due to this risk, and uncertainties regarding patent protection,
if one of our late-stage product candidates or other clinical candidates are approved for marketing, it is not possible to predict
the length of market exclusivity for any particular product with certainty based solely on the expiration of the relevant patent(s)
or the current forms of regulatory exclusivity. It is also not possible to predict changes in United States regulatory law
that might reduce biological product regulatory exclusivity. The loss of market exclusivity for a product would likely materially
and negatively affect revenues from product sales of that product and thus our financial results and condition.
Changes in laws and regulations affecting
the healthcare industry could adversely affect our business.
As described above, the PPACA and potential
regulations thereunder easing the entry of competing follow-on biologics into the marketplace, other new legislation or implementation
of existing statutory provisions on importation of lower-cost competing drugs from other jurisdictions, and legislation on comparative
effectiveness research are examples of previously enacted and possible future changes in laws that could adversely affect our business.
The current U.S. administration and Congress could carry out significant
changes in legislation, regulation, and government policy (including with respect to the possible repeal of all or portions of
the PPACA, possible changes in the existing treaty and trade relationships with other countries, and tax reform). While it is not
possible to predict whether and when any such changes will occur, changes in the laws, regulations, and policies governing the
development and approval of our product candidates and the commercialization, importation, and reimbursement of our product candidates
could adversely affect our business.
Risks Related to our Securities
The price of our stock may be
volatile.
The trading price of our common stock may fluctuate
substantially. The price of our common stock that will prevail in the market may be higher or lower than the price at which our
shares of common stock, depending on many factors, some of which are beyond our control and may not be related to our operating
performance. These fluctuations could cause you to lose part or all of your investment in our common stock. Those factors that
could cause fluctuations include, but are not limited to, the following:
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price and volume of fluctuations in the overall stock market from time to time;
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fluctuations in stock market prices and trading volumes of similar companies;
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actual or anticipated changes in our net loss or fluctuations in our operating results or in the
expectations of securities analysts;
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results of our preclinical studies and clinical trials or delays in anticipated timing;
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the issuance of new equity securities pursuant to a future offering, including issuances of preferred
stock;
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announcements of new collaboration agreements with strategic partners or developments by our existing
collaboration partners;
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announcements of acquisitions, mergers or business combinations;
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announcements of technological innovations, new commercial products, failures of products, or progress
toward commercialization by our competitors or peers;
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general economic conditions and trends;
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positive and negative events relating to healthcare and the overall pharmaceutical and biotechnology
sectors;
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major catastrophic events;
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sales of large blocks of our stock and sales by insiders and our institutional investors;
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departures of key personnel;
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changes in the regulatory status of our immunotherapies, including results of our clinical trials;
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events affecting BCM, Mayo Clinic, Mayo Foundation for Medical Education and Research or any future
collaborators;
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announcements of new products or technologies, commercial relationships or other events by us or
our competitors;
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regulatory developments in the United States and other countries;
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failure of our common stock to maintain listing requirements on the Nasdaq Capital Market;
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changes in accounting principles; and
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discussion of the Company or our stock price by the financial and scientific press and in online
investor communities.
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In the past, following periods of volatility
in the market price of a company’s securities, securities class action litigation has often been brought against that company.
Due to the potential volatility of our stock price, we may therefore be the target of securities litigation in the future. Securities
litigation could result in substantial costs and divert management’s attention and resources from our business.
A limited public trading market may cause
volatility in the price of our common stock.
The listing of our common stock on the Nasdaq
Capital Market does not assure that a meaningful, consistent and liquid trading market currently exists or will exist in the future.
In recent years, the stock market has experienced extreme price and volume fluctuations that have particularly affected the market
prices of many smaller companies like us. Our common stock is thus subject to this volatility. Sales of substantial amounts of
common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock
and our stock price may decline substantially in a short time and our stockholders could suffer losses or be unable to liquidate
their holdings. Our stock is thinly traded due to the limited number of shares available for trading thus causing large swings
in price. There is no established trading market for our warrants.
The market prices for our common stock
may be adversely impacted by future events.
Market prices for our common stock will be
influenced by a number of factors, including:
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the issuance of new equity securities pursuant to a future offering, including issuances of shares
upon the exercise of outstanding warrants or the issuance of preferred stock;
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changes in interest rates;
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competitive developments, including announcements by competitors of new products or services or
significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;
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variations in quarterly operating results;
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change in financial estimates by securities analysts;
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the depth and liquidity of the market for our common stock and warrants;
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investor perceptions of us and the pharmaceutical and biotech industries generally; and
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general economic and other national conditions.
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If we fail to remain current with our
listing requirements, we could be removed from the Nasdaq Capital Market which would limit the ability of broker-dealers to sell
its securities and the ability of stockholders to sell its securities in the secondary market.
Companies listed for trading on the Nasdaq
Capital Market must be reporting issuers under Section 12 of the Exchange Act. If we fail to file such reports in a timely manner,
or if we fail to meet any other listing requirements, the shares of our common stock would eventually cease to be listed on the
Nasdaq Capital Market, and the market liquidity for our securities could be severely adversely affected by limiting the ability
of broker-dealers to sell its securities and the ability of stockholders to sell their securities in the secondary market.
Sales of additional equity securities
may adversely affect the market price of our common stock and your rights may be reduced.
We expect to continue to incur drug development
and sale, general and administrative costs, and to satisfy our funding requirements, we will need to sell additional equity securities,
which may be subject to registration rights and warrants with anti-dilutive protective provisions. The sale or the proposed sale
of substantial amounts of our common stock or other equity securities in the public markets may adversely affect the market price
of our common stock and our stock price may decline substantially. Our stockholders may experience substantial dilution and a reduction
in the price that they are able to obtain upon sale of their shares. Also, new equity securities issued may have greater rights,
preferences or privileges than our existing common stock.
Because we have a significant number
of additional authorized shares of common stock available for issuance and outstanding warrants to purchase our common stock, our
stockholders may experience dilution in the future and it may adversely affect the market price of our securities.
We are currently authorized to issue 150 million
shares of our common stock. As of December 31, 2018, we had 45,440,704 million shares of our common stock issued and outstanding.
Those outstanding shares represent a minority of our authorized shares, meaning that the ownership position of the current stockholders
could be diluted significantly were we to issue a large number of additional shares. In addition, as of December 31, 2018, there
were outstanding warrants to purchase up to approximately 23.0 million shares of our common stock at a weighted average exercise
price of $4.78 per share, and options exercisable for an aggregate of approximately 4.1 million shares of common stock at
a weighted average exercise price of $8.69 per share. We have registered the resale of the shares issuable upon exercise
of our outstanding warrants, and as a result the shares issued upon exercise will be tradable by the exercising party. Upon such
registration, the holders may sell these shares in the public markets from time to time, without limitations on the timing, amount,
or method of sale. If our stock price rises, the holders may exercise their warrants and options and sell a large number of shares.
This could cause the market price of our common stock to decline and cause existing stockholders to experience significant further
dilution.
The accounting treatment for certain
of our warrants is complex and subject to judgments concerning the valuation of embedded derivative rights within the applicable
securities. Fluctuations in the valuation of these rights could cause us to take charges to our statement of operations and make
our financial results unpredictable.
Certain of our outstanding warrants contain
or contained prior to being amended, or may be deemed to contain from time to time, embedded derivative rights in accordance with
U.S. Generally Accepted Accounting Principles (“GAAP”). There is a risk that questions could arise from investors or
regulatory authorities concerning the appropriate accounting treatment of these instruments, which could require us to restate
previous financial statements, which in turn could adversely affect our reputation, as well as our results of operations. These
derivative rights, or similar rights in securities we may issue in the future, need to be, or may need to be, separately valued
as of the end of each accounting period in accordance with GAAP. We record these embedded derivatives as liabilities at issuance,
valued using the Black Scholes Option Pricing Model and are subject to revaluation at each reporting date. Any change in fair value
between reporting periods is reported on our statement of operations. At December 31, 2018, the fair value of the derivative liability-warrants
was $49,000. Changes in the valuations of these rights, the valuation methodology or the assumptions on which the valuations are
based could cause us to take charges to our earnings, which would adversely impact our results of operations. Moreover, the methodologies,
assumptions and related interpretations of accounting or regulatory authorities associated with these embedded derivatives are
complex and, in some cases uncertain, which could cause our accounting for these derivatives, and as a result, our financial results,
to fluctuate.
We do not intend to pay cash dividends.
We have not declared or paid any cash dividends on our common stock,
and we do not anticipate declaring or paying cash dividends for the foreseeable future. Any future determination as to the payment
of cash dividends on our common stock will be at our board of directors’ discretion and depends on our financial condition,
operating results, capital requirements and other factors that our board of directors considers to be relevant.