As filed with the Securities and Exchange Commission on April 1,
2021
Registration No.
333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NeuBase Therapeutics, Inc.
(Exact name of registrant as
specified in its charter)
|
Delaware |
46-5622433 |
(State or other jurisdiction
of
incorporation or organization) |
(I.R.S. Employer
Identification Number) |
350 Technology Drive
Pittsburgh, PA 15219
(646) 450-1790
(Address, including zip code, and
telephone number, including area code, of registrant’s principal
executive offices)
Dr. Dietrich Stephan
President and Chief Executive Officer
NeuBase Therapeutics, Inc.
350 Technology Drive
Pittsburgh, PA 15219
(646) 450-1790
(Name, address including zip code,
and telephone number, including area code, of agent for
service)
With copies to:
Jeffrey T. Hartlin, Esq.
Paul Hastings LLP
1117 S. California Avenue
Palo Alto, CA 94304
(650) 320-1804 |
Approximate date of commencement of proposed sale to the
public: From time to time after the effective date of this
registration statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. ¨
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. x
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
¨
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that shall
become effective upon filing with the Commission pursuant to
Rule 462(e) under the Securities Act, check the following box.
¨
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed to
register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the
following box. ¨
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
| Large accelerated filer |
¨ |
|
Accelerated filer |
¨ |
|
Non-accelerated filer |
x |
|
Smaller reporting company |
x |
|
|
|
Emerging growth company |
¨ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of Securities
Act. ¨
Title of Each Class of
Securities to be Registered |
Amount to be Registered
(1) |
Proposed
Maximum
Offering Price Per Unit |
Proposed
Maximum
Aggregate
Offering Price (2) |
Amount of Registration Fee
(3) |
|
Common Stock, $0.0001 par value per
share |
— |
— |
— |
— |
|
Preferred Stock, $0.0001 par value
per share |
— |
— |
— |
— |
|
Debt Securities |
|
|
|
|
|
Warrants |
— |
— |
— |
— |
|
Units(4) |
— |
— |
— |
— |
|
Total |
— |
— |
$250,000,000 |
$27,275 |
|
(1) |
There are being registered hereunder such indeterminate number
of shares of common stock and preferred stock; such indeterminate
principal amount of debt securities; such indeterminate number of
warrants to purchase common stock, preferred stock and/or debt
securities and such indeterminate number of units consisting of any
combination of common stock, preferred stock, debt securities
and/or warrants as may be sold by the Registrant as shall have an
aggregate initial offering price not to exceed $250,000,000. Any
securities registered hereunder may be sold separately or in
combination with other securities registered hereunder. The
proposed maximum offering price of the securities will be
determined, from time to time, by the Registrant in connection with
the issuance by the Registrant of the securities registered
hereunder. If any debt securities are issued at an original issue
discount, then the offering price of such debt securities shall be
in such greater principal amount as shall result in an aggregate
offering price not to exceed $250,000,000, less the aggregate
dollar amount of all securities previously issued hereunder. The
securities registered hereunder also include such indeterminate
number of shares of common stock and preferred stock and amount of
debt securities as may be issued upon conversion of or exchange for
preferred stock or debt securities that provide for conversion or
exchange, or upon exercise of warrants or units or pursuant to
anti-dilution provisions of any such securities. In addition,
pursuant to Rule 416 under the Securities Act of 1933, as amended,
the shares of common stock and preferred stock being registered
hereunder include such indeterminate number of shares of common
stock and preferred stock as may be issuable with respect to such
shares being registered hereunder as a result of stock splits,
stock dividends or similar transactions, as applicable. |
|
(2) |
The proposed maximum aggregate offering price per class of
security will be determined from time to time by the Registrant in
connection with the issuance by the Registrant of the securities
registered hereunder and is not specified as to each class of
security pursuant to General Instruction II.D. of Form S-3 under
the Securities Act of 1933, as amended. |
|
(3) |
Calculated pursuant to Rule 457(o) under the Securities Act
based on the proposed maximum aggregate offering price of all
securities listed. |
|
(4) |
Each unit will represent an interest in two or more other
securities, which may or may not be separable from one
another. |
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment that specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933, as amended, or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED APRIL 1, 2021
$250,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
We may offer and sell, from time to time in one or more offerings,
up to $250,000,000 in the aggregate of any combination of the
securities identified above from time to time in one or more
offerings, either individually or in combination with other
securities. We may also offer common stock or preferred stock upon
conversion of debt securities, common stock upon conversion of
preferred stock, or common stock, preferred stock or debt
securities upon the exercise of warrants.
Each time we offer and sell securities, we will provide a
supplement to this prospectus that contains specific information
about the offering and the amounts, prices and terms of the
securities. We may also authorize one or more free writing
prospectuses to be provided to you in connection with these
offerings. The prospectus supplement and any related free writing
prospectuses may also add, update or change information contained
in this prospectus with respect to that offering. You should
carefully read this prospectus and the applicable prospectus
supplement and any related free writing prospectus, as well as any
documents incorporated by reference, before you invest in any of
our securities.
We may offer and sell the securities described in this prospectus
and any prospectus supplement to or through one or more
underwriters, dealers and agents, or directly to purchasers, or
through a combination of these methods. If any underwriters,
dealers or agents are involved in the sale of any of the
securities, their names and any applicable purchase price, fee,
commission or discount arrangement between or among them will be
set forth, or will be calculable from the information set forth, in
the applicable prospectus supplement. See the sections of this
prospectus entitled “About this Prospectus” and “Plan of
Distribution” for more information. No securities may be sold
without delivery of this prospectus and the applicable prospectus
supplement describing the method and terms of the offering of such
securities.
Investing in our securities involves a high degree of risk.
You should review carefully the risks and uncertainties described
under the heading “Risk Factors” on page 7 of this prospectus, the
applicable prospectus supplement and in any applicable free writing
prospectuses, and under similar headings in the documents that are
incorporated by reference into this prospectus.
Our common stock is currently listed on the Nasdaq Capital Market
under the symbol “NBSE.” On March 31, 2021, the last reported sale
price of our common stock was $7.39 per share. Our stock price is
subject to fluctuation. There has been no change recently in our
financial condition or results of operations that is consistent
with a recent change in our stock price.
The applicable prospectus supplement will contain information,
where applicable, as to any other listing on the Nasdaq Capital
Market or any securities market or other exchange of the
securities, if any, covered by the applicable prospectus
supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities, or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is
,
2021.
Table of
Contents
Page
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on
Form S-3 that we filed with the Securities and Exchange
Commission (the “SEC”) utilizing a “shelf” registration process.
Under this shelf registration process, we may offer and sell shares
of our common stock and preferred stock, various series of debt
securities, warrants to purchase any of such securities and/or
units consisting of any combination of such securities, either
individually or in combination with other securities, in one or
more offerings, up to a total dollar amount of $250,000,000. This
prospectus provides you with a general description of the
securities we may offer.
Each time we offer securities under this prospectus, we will
provide a prospectus supplement that will contain more specific
information about the terms of that offering. We may also authorize
one or more free writing prospectuses to be provided to you that
may contain material information relating to these offerings. The
prospectus supplement and any related free writing prospectus we
have authorized for use in connection with a specific offering may
also add, update or change any of the information contained in this
prospectus or in the documents that we have incorporated by
reference into this prospectus. We urge you to read carefully this
prospectus, the applicable prospectus supplement and any free
writing prospectuses we have authorized for use in connection with
a specific offering, together with the information incorporated
herein by reference as described under the section entitled
“Incorporation of Documents by Reference,” before buying any of the
securities being offered.
This prospectus may not
be used to consummate a sale of securities unless it is accompanied
by a prospectus supplement.
You should rely only on the information contained in, or
incorporated by reference into, this prospectus, the applicable
prospectus supplement and any free writing prospectuses, along with
the information contained in any free writing prospectuses we have
authorized for use in connection with a specific offering. We have
not authorized anyone to provide you with different or additional
information. This prospectus is an offer to sell only the
securities offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so.
The information appearing in this prospectus, the applicable
prospectus supplement or any related free writing prospectus is
accurate only as of the date on the front of the document and any
information we have incorporated by reference is accurate only as
of the date of the document incorporated by reference, regardless
of the time of delivery of this prospectus, the applicable
prospectus supplement or any related free writing prospectus, or
any sale of a security. Our business, financial condition, results
of operations and prospects may have changed since those dates.
This prospectus contains summaries of certain provisions contained
in some of the documents described herein, but reference is made to
the actual documents for complete information. All of the summaries
are qualified in their entirety by the actual documents. Copies of
some of the documents referred to herein have been filed, will be
filed or will be incorporated by reference as exhibits to the
registration statement of which this prospectus is a part, and you
may obtain copies of those documents as described below under the
heading “Where You Can Find More Information.”
We own or have rights to use the trademarks and trade names that we
use in conjunction with the operation of our business. Solely for
convenience, our trademarks and trade names referred to in this
prospectus may appear without the ® or ™ symbols, but those
references are not intended to indicate, in any way, that we will
not assert, to the fullest extent under applicable law, our rights
or the right of the applicable licensor to these trademarks and
trade names.
INDUSTRY AND MARKET DATA
Unless otherwise indicated, we have based the information
concerning our industry contained in this prospectus and
incorporated by reference herein on our general knowledge of and
expectations concerning the industry, which involve risks and
uncertainties and are subject to change based on various factors,
including those discussed in the “Risk Factors” section of this
prospectus and in the other information contained or incorporated
by reference in this prospectus. These and other factors could
cause the information concerning our industry to differ materially
from those expressed in this prospectus and incorporated by
reference herein.
SUMMARY
This summary highlights selected information that is presented
in greater detail elsewhere in this prospectus or incorporated by
reference in this prospectus. Because it is only a summary, it does
not contain all of the information you should consider before
investing in our common stock, preferred stock, debt securities,
warrants or units, and it is qualified in its entirety by, and
should be read in conjunction with, the more detailed information
included elsewhere in this prospectus. Before you decide whether to
purchase shares of our common stock or preferred stock, or our debt
securities, warrants or units, you should read this entire
prospectus, the applicable prospectus supplement and any related
free writing prospectus carefully, including the risks of investing
in our securities discussed under the heading “Risk Factors”
contained in the applicable prospectus supplement and any related
free writing prospectus, and under similar headings in the other
documents that are incorporated by reference into this prospectus.
You should also carefully read the information incorporated by
reference into this prospectus, including our financial statements,
and the exhibits to the registration statement of which this
prospectus is a part. Unless the context otherwise requires, the
terms “NeuBase,” the “Company,” “we,” “us” and “our” in this
prospectus refer to NeuBase Therapeutics, Inc. and its wholly owned
subsidiaries.
NeuBase Therapeutics, Inc.
We are a biotechnology company working towards accelerating the
genetic revolution by developing a new class of synthetic
medicines. Our modular peptide-nucleic acid antisense oligo
(“PATrOL™”) platform which outputs “anti-gene” candidate therapies
is designed to combine the specificity of genetic sequence-based
target recognition with a modularity that enables use of various
in vivo delivery technologies to enable broad and also
selective tissue distribution capabilities. Given that every human
disease may have a genetic component, we believe that our
differentiated platform technology has the potential for broad
impact by increasing, decreasing or changing gene function at
either the DNA or RNA levels to resolve the progression to disease,
as appropriate, in a particular indication. We plan to use our
platform to address diseases driven by genetic abnormalities, and
we are initially focused on Huntington’s disease (“HD”) and
myotonic dystrophy type 1 (“DM1”).
We are developing “anti-gene” therapies. Anti-genes are similar to,
but distinct from, antisense oligonucleotides (ASOs). ASOs are
short single strands of nucleic acids (traditionally thought of as
single-stranded DNA molecules) which bind to defective RNA targets
in cells and inhibit their ability to form defective proteins. We
believe we are a leader in the discovery and development of
anti-gene therapies, a new class of investigational therapies
derived from peptide-nucleic acids (“PNAs”). The key differentiator
between ASOs and anti-genes is that the scaffold is not derived
from a natural sugar-phosphate nucleic acid backbone, rather is a
synthetic polyamide which is charge-neutral and characterized by
high binding affinity to a nucleic acid target, high sequence
specificity, high stability, and is relatively immunologically
inert. These features provide potential advantages over ASOs and
other genetic therapies for modulating disease-causing genes
including increased unique disease target opportunities, improved
target specificity and a reduction in both sequence-dependent and
independent toxicities. In addition, as these anti-genes are
manufactured via standard peptide synthesis methods, they
efficiently leverage the advancements in the synthetic peptide
industry to enable modulation of pharmacophore delivery,
pharmacokinetics, sub-cellular placement and endosomal escape.
In addition to the scaffold, the Company has a kit of natural
nucleobases, chemically modified nucleobases which add further
precision to a nucleic acid target of interest, and proprietary
bi-specific nucleobases which can be added to the scaffold to allow
more precise target engagement. These bi-specific nucleobases, in
particular, have been shown to enable accessing double stranded RNA
targets comprised of secondary structures such as hairpins (double
stranded RNA targets which are folded upon themselves). This allows
us to potentially access regions of the target transcript which may
be unique in secondary structure to allow enhanced selectivity for
the target (mutant) RNA as compared to the normal RNA. Enhanced
selectivity for mutant RNAs as compared to normal RNAs is often
important as normal RNAs are often required for effective
functioning of the cell.
A third component of the modular platform is the ability to add
delivery technology to the anti-gene pharmacophores so as to reach
a desired cell or tissue upon in vivo administration. There
is flexibility to append various delivery technologies to the
pharmacophore to allow either broad tissue distribution or narrow
cell and/or tissue targeting if so desired based on targets. One
such technology is a chemical moiety that can be used to decorate
the scaffold directly and allows the anti-genes to penetrate cell
membranes and into subcellular compartments where they act as well
as to distribute throughout the body when administered
systemically.
Finally, in addition to the anti-gene scaffold, modified
nucleobases and delivery technology, the platform toolkit also
includes linker technology which, when added to both ends of the
anti-genes, has been shown in early pre-clinical studies to allow
cooperative binding between individual drug molecules once they are
engaged with the nucleic acid target to form longer and more
tightly bound drugs.
This toolkit of components forms the PATrOL™ platform and allows us
to manufacture gene and transcript-specific anti-genes.
We are currently focused on therapeutic areas in which we believe
our drugs will provide the greatest benefit with a significant
market opportunity. We intend to utilize our technology to build a
pipeline of custom designed therapeutics for additional high-value
disease targets. We are developing several preclinical programs
using our PATrOL™ platform, including the NT0100 program, targeted
at Huntington’s disease (“HD”), a repeat expansion disorder, and
the NT0200 program, targeted at myotonic dystrophy, type 1 (“DM1”),
a second repeat expansion. Preclinical studies are being conducted
to evaluate the PATrOL™ platform technology and program candidates
in the areas of pharmacokinetics, pharmacodynamics and
tolerability, and we reported results from certain of those studies
in the first calendar quarter of 2020 and have extended upon
certain of those studies in the fourth calendar quarter of 2020
which illustrated that our anti-gene technology can be administered
to human patient-derived cell lines and systemically (via
intravenous (IV) administration) into animals with DM1 (a
genetically modified model accepted as representative of the human
disease in skeletal muscle) and can address the causal genetic
defect. We expect to present additional results from ongoing
preclinical studies evaluating the PATrOLTM platform and
pipeline indications in the second quarter of calendar 2021, begin
IND enabling studies in one or more of our programs in calendar
year 2021 and begin a clinical trial in one or more of our programs
in calendar 2022. In addition, the emerging pipeline of other
investigational therapies that target primary and secondary RNA
structure and genomic DNA potentially allows a unique market
advantage across a variety of rare diseases and oncology
targets.
Overall, using our PATrOL™ platform, we believe we can create
anti-gene therapies that have distinct advantages over other
chemical entities currently in the market or in development for
genetic medicine applications to modulate mutant genes and improve
a clinical trait or disorder. These advantages may differ by
indication and can include, among others:
|
· |
increased unique target
opportunities, improved target specificity and a reduction in both
sequence-dependent and independent toxicities by virtue of a
synthetic polyamide scaffold which is charge-neutral and
characterized by high binding affinity to a nucleic acid target,
high sequence specificity, high stability, and is relatively
immunologically inert; |
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potential long durability by nature
of the relatively highly stable polyamide scaffold; |
|
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our anti-genes are manufactured via
standard peptide synthesis methods and thus they efficiently
leverage advances in the synthetic peptide industry to enable
facile addition of known moieties enabling modulating pharmacophore
delivery, pharmacokinetics, sub-cellular placement and endosomal
escape; and |
|
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our anti-genes can uniquely target
double stranded structures in RNA, which allow unique target
opportunities that standard ASOs cannot access. |
With these unique component parts and their advantages, our PATrOL™
platform-enabled anti-gene therapies can potentially address a
multitude of rare genetic diseases and cancer, among other
indications.
We employ a rational approach to selecting disease targets,
considering many scientific, technical, business and
indication-specific factors before choosing each indication. We
intend to build a diverse portfolio of therapies to treat a variety
of health conditions, with an initial emphasis on rare genetic
diseases and cancers. A key component of this strategy is
continuing to improve the scientific understanding and optimization
of our platform technology and programs, including how various
components of our platform technology perform, and how our
investigational therapies impact the biological processes of the
target diseases, so that we can utilize this information to reduce
risk in our future programs and indications. In addition, with our
expertise in discovering and characterizing novel anti-gene
investigational therapies, we believe that our scientists can
optimize the properties of our PATrOL™-enabled drug candidates for
use with particular targets that we determine to be of high
value.
The depth of our knowledge and expertise with PNAs, bi-facial and
engineered nucleotides, genetics and genomics and therapeutic
development of first-in-class modalities provides potential
flexibility to determine the optimal development and
commercialization strategy to maximize the near and longer-term
value of our therapeutic programs.
We have distinct partnering strategies that we plan to employ based
on the specific drug candidate, therapeutic area expertise and
resources potential partners may bring to a collaboration. For some
drug candidates, we may choose to develop and, if approved,
commercialize them ourselves or through our affiliates. For other
drug candidates, we may form single or multi-asset partnerships
leveraging our partners’ global expertise and resources needed to
support large commercial opportunities.
Globally, there are thousands of genetic diseases, most of which
lack any therapeutic options. In addition, rare genetic diseases
are often particularly severe, debilitating or fatal.
Traditionally, therapeutic development for each rare genetic
disorder has been approached with a unique strategy, which is
inefficient, as there are thousands of diseases that need treatment
solutions. The collective population of people with rare diseases
stands to benefit profoundly from the emergence of a scalable and
modular treatment development platform that allows for a more
efficient discovery of drug product candidates to address these
conditions cohesively.
Mutated proteins resulting from errors in deoxyribonucleic acid
(“DNA”) sequences cause many rare genetic diseases and cancer. DNA
in each cell of the body is transcribed into pre-RNA, which is then
processed (spliced) into mRNA which is exported into the cytoplasm
of the cell and translated into protein. This is termed the
“central dogma” of biology. Therefore, when errors in a DNA
sequence occur, they are propagated to RNAs and can become a
damaging protein.
The field has learned that ASOs can inactivate target RNAs before
they can produce harmful proteins by binding them in a
sequence-specific manner, which can delay disease progression or
even eliminate genetic disease symptoms. ASOs designed by others to
target known disease-related mutant RNA sequences have been shown
to be able to degrade these transcripts and have a positive
clinical impact. Similarly, applications in modifying splicing of
pre-RNA in the nucleus of the cell have been developed by others to
exclude damaging exons from the final mRNA product and have been
approved by the Food and Drug Administration (“FDA”). We plan to
extend upon these conceptual breakthroughs by utilizing our
first-in-class technology which we believe has significant benefits
in certain application areas to better resolve clinical disorders
with well tolerated therapies.
We believe the breadth of the PATrOL™ platform gives us the ability
to potentially address a multitude of inherited genetic diseases.
The technology may allow us to target and inactivate
gain-of-function and change-of-function mutations, and address
targets in recessive disease and haploinsufficiencies by altering
splicing to remove damaging exons/mutations or increasing
expression of wild-type alleles by various means.
Gamma-modified scaffolds, an optimized version of which we utilize,
have demonstrated preclinical in vivo efficacy in
several applications which we believe can be translated across many
targets and into humans. For example, in oncology such scaffolds
have reduced expression of an activated oncogene (the epidermal
growth factor receptor of the EGFR gene) and have modified
gene regulation by targeting microRNA to slow tumor growth. Such
scaffolds have also demonstrated in
vivo engagement with the double-stranded genome in studies
done by others to perform in vivo single-base
genome editing.
For a complete description of our business, financial condition,
results of operations and other important information, we refer you
to our filings with the SEC that are incorporated by reference in
this prospectus, including our Annual Report on Form 10-K for the
year ended September 30, 2020 and our Quarterly Report on Form 10-Q for
the quarter ended December 31, 2020. For instructions on
how to find copies of these documents, see the section of this
prospectus entitled “Where You Can Find More Information.”
See the section entitled “Risk Factors” in this prospectus for a
discussion of some of the risks relating to the execution of our
business strategy.
Corporate Information
We were incorporated under the laws of the State of Delaware on
August 4, 2009, as successor to BBM Holdings, Inc.
(formerly known as Prime Resource, Inc., which was organized
March 29, 2002 as a Utah corporation) pursuant to a
reincorporation merger. On August 4, 2009, we reincorporated
in Delaware as “Ohr Pharmaceutical, Inc.” On July 12, 2019, we
completed a reverse merger transaction (the “Merger”) with NeuBase
Corporation (formerly known as NeuBase Therapeutics, Inc.), a
Delaware corporation, and, upon completion of the Merger, we
changed our name to “NeuBase Therapeutics, Inc.” Shares of our
Common Stock commenced trading on the Nasdaq Capital Market under
the ticker symbol “NBSE” as of market open on July 15, 2019. Our
principal executive offices are located at 350 Technology Drive,
Pittsburgh, PA 15219, and our telephone number is (646) 450-1790.
Our website is located at www.neubasetherapeutics.com. Any
information contained on, or that can be accessed through, our
website is not incorporated by reference into, nor is it in any way
part of, this prospectus and should not be relied upon in
connection with making any decision with respect to an investment
in our securities. We are required to file annual, quarterly and
current reports, proxy statements and other information with the
SEC. You may obtain any of the documents filed by us with the SEC
at no cost from the SEC’s website at www.sec.gov.
We are a “smaller reporting company” as defined in Rule 12b-2 of
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and have elected to take advantage of certain of the scaled
disclosure available for smaller reporting companies in this
prospectus as well as our filings under the Exchange Act.
RISK FACTORS
Risk Factor Summary
Below is a summary of the principal factors that make an investment
in our securities speculative or risky. This summary does not
address all of the risks that we face. Additional discussion of the
risks summarized in this risk factor summary, and other risks that
we face, can be found below and should be carefully considered,
together with all of the other information appearing in or
incorporated by reference into this prospectus, the applicable
prospectus supplement and any related free writing prospectus
before making investment decisions regarding the offered
securities.
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· |
We have a limited operating history
and face significant challenges and expense as we build our
capabilities. |
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We have incurred net losses in
every period since our inception and anticipate that we will incur
substantial net losses in the future. |
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The approach we are taking to
discover and develop nucleic acid therapeutics is novel and may
never lead to marketable products. |
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Anti-gene technology is a
relatively new technology, and our revenue opportunities will be
materially limited if we are unable to use this technology in our
intended product pipeline. |
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We will need substantial additional
financing to develop our products and implement our operating plan.
If we fail to obtain additional financing, we will be unable to
complete the development and commercialization of our product
candidates. |
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If we fail to establish and
maintain proper and effective internal controls, our ability to
produce accurate financial statements on a timely basis could be
impaired, which would adversely affect our consolidated operating
results, our ability to operate our business, our ability to raise
capital, and our stock price. |
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The COVID-19 global pandemic is
adversely impacting our business, including our manufacturing and
preclinical studies. |
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We will likely be heavily reliant
on our partners for access to key resources for the manufacturing
and development of our product candidates. |
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Our product pipeline is based on
novel technologies, which makes it difficult to predict the time
and cost of product candidate development and obtaining regulatory
approval. |
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Our business is highly dependent on
the success of our platform and lead product candidates. If we are
unable to obtain approval for our lead product candidates and
effectively commercialize our lead product candidates for the
treatment of patients in approved indications, our business would
be significantly harmed. |
|
· |
The programs in our product
pipeline may cause undesirable side effects or have other
properties that could halt their preclinical or clinical
development, prevent their regulatory approval, limit their
commercial potential or result in significant negative
consequences. |
|
· |
Any potential clinical trials in
the future may fail to demonstrate the safety and efficacy of any
of our product candidates, which would prevent or delay regulatory
approval and commercialization. |
|
· |
We may encounter substantial delays
in our preclinical testing and in future clinical trials
(particularly given the effects of the COVID-19 global pandemic),
or may not be able to conduct such efforts on the timelines we
expect. |
|
· |
If we encounter difficulties
enrolling patients in our future clinical trials, our clinical
development activities could be delayed or otherwise adversely
affected. |
|
· |
We face significant competition
from other biotechnology and pharmaceutical companies, and our
operating results will suffer if we fail to compete
effectively. |
|
· |
We are highly dependent on our key
personnel, and if we are not successful in attracting and retaining
highly qualified personnel, we may not be able to successfully
implement our business strategy. |
|
· |
We will rely on third parties to
conduct our clinical trials and manufacture our product candidates
in the future. If these third parties do not successfully carry out
their contractual duties or meet expected deadlines, we may not be
able to obtain regulatory approval of or commercialize our product
candidates. |
|
· |
We depend on intellectual property
licensed from third parties and termination of any of these
licenses could result in the loss of significant rights, which
would harm our business. |
|
· |
If we fail to adequately protect or
enforce our intellectual property rights or secure rights to
patents of others, the value of those rights would diminish. Legal
proceedings to protect or enforce our patents, the patents of our
partners, or our other intellectual property rights could be
expensive, time consuming, and unsuccessful. |
|
· |
Any claims or lawsuits relating to
infringement of intellectual property rights brought by or against
us will be costly and time consuming and may adversely affect our
business, financial condition and results of operations. |
|
· |
We have never paid dividends on our
capital stock and we do not intend to pay dividends for the
foreseeable future. Consequently, any gains from an investment in
our common stock will likely depend on whether the price of our
common stock increases. |
|
· |
Our charter documents and Delaware
law could prevent a takeover that stockholders consider favorable
and could also reduce the market price of our stock. |
|
· |
The market price of our common
stock is likely to be volatile and could fluctuate or decline,
resulting in a substantial loss of your investment. |
|
· |
Future sales and issuances of our
common stock or rights to purchase common stock, including pursuant
to our equity incentive plans, could cause you to incur dilution
and could cause the market price of our common stock to fall. |
Risk Factors
Investing in any securities offered pursuant to this prospectus,
the applicable prospectus supplement and any related free writing
prospectus involves a high degree of risk. Before making an
investment decision, you should carefully consider the risks
described below, under “Risk Factors” in the applicable prospectus
supplement, any related free writing prospectus and in our most
recent Annual Report on Form 10-K, or in any updates in our
Quarterly Reports on Form 10-Q, together with all of the other
information appearing in or incorporated by reference into this
prospectus, the applicable prospectus supplement and any related
free writing prospectus, before deciding whether to purchase any of
the securities being offered. Our business, financial condition or
results of operations could be materially adversely affected by any
of these risks. The occurrence of any of these risks might cause
you to lose all or part of your investment in the offered
securities.
Risks Related to the Company
We are a preclinical-stage company, have a very limited
operating history, are not currently profitable, do not expect to
become profitable in the near future and may never become
profitable.
We are a preclinical-stage biotechnology company specializing in
the discovery and development of a class of deoxy-ribonucleic acid
and ribonucleic acid-targeting drugs called peptide nucleic acids
or anti-genes, which did not change as a result of the merger
between Ohr Pharmaceutical, Inc., a Delaware corporation (“Ohr”),
and NeuBase Therapeutics, Inc., a Delaware corporation (“Legacy
NeuBase”), in accordance with the terms of the Agreement and Plan
of Merger Reorganization entered into on January 2, 2019 (the
“Merger Agreement”). Since our incorporation, we have focused
primarily on the development of our
proprietary Peptide-nucleic
acid AnTisense OLigo (“PATrOL™”)
platform and preclinical-stage therapeutic candidates. Our platform
technology and all of our therapeutic candidates are in the
preclinical development stage, and we have not initiated clinical
trials for any of our product candidates, nor have any products
been approved for commercial sale and we have not generated any
revenue. To date, we have not completed a clinical trial (including
a pivotal clinical trial), obtained marketing approval for any
product candidates, manufactured a commercial scale product or
arranged for a third party to do so on our behalf, or conducted
sales and marketing activities necessary for successful product
commercialization. Drug development is also a highly uncertain
undertaking and involves a substantial degree of risk.
As a result, we have no meaningful historical operations upon which
to evaluate our business and prospects and have not yet
demonstrated an ability to obtain marketing approval for any of our
product candidates or successfully overcome the risks and
uncertainties frequently encountered by companies in the
pharmaceutical industry. We also have not generated any revenues
from collaboration and licensing agreements or product sales to
date and continue to incur research and development and other
expenses. Our prior losses, combined with expected future losses,
have had and will continue to have an adverse effect on our
stockholders’ equity and working capital, and our future success is
subject to significant uncertainty.
For the foreseeable future, we expect to continue to incur losses,
which we expect will increase significantly from recent historical
levels as we expand our drug development activities, seek
regulatory approvals for our product candidates and begin to
commercialize them if they are approved by the U.S. Food and Drug
Administration (the “FDA”), the European Medicines Agency (the
“EMA”) or comparable foreign authorities. Even if we succeed in
developing and commercializing one or more product candidates, we
may never become profitable.
The approach we are taking to discover and develop nucleic
acid therapeutics is novel and may never lead to marketable
products.
We have concentrated our efforts and research and development
activities on nucleic acid therapeutics and our synthetic chemistry
drug discovery and development platform comprised of peptide
nucleic acids with natural and engineered nucleotides and targeting
technology. Our future success depends on the successful
development and manufacturing of such therapeutics and the
effectiveness of our platform. The scientific discoveries that form
the basis for our efforts to discover and develop new drugs,
including our discoveries about the relationships between
oligonucleotide stereochemistry and pharmacology, are relatively
new. The scientific evidence to support the feasibility of
developing drugs based on these discoveries or peptide nucleic
acids (“PNAs”) in general is limited. Skepticism as to the
feasibility of developing nucleic acid therapeutics and PNAs
generally has been, and may continue to be, expressed in scientific
literature. In addition, decisions by, and negative results of,
other companies with respect to their oligonucleotide development
efforts may increase skepticism in the marketplace regarding the
potential for oligonucleotides and PNAs.
Relatively few nucleic acid therapeutic product candidates have
been tested in humans, and a number of clinical trials for such
therapeutics conducted by other companies have not been successful.
Few nucleic acid therapeutics have received regulatory approval.
The pharmacological properties ascribed to the investigational
compounds we are testing in laboratory studies may not be
positively demonstrated in clinical trials in patients, and they
may interact with human biological systems in unforeseen,
ineffective or harmful ways. If our nucleic acid product candidates
prove to be ineffective, unsafe or commercially unviable, our
entire platform and pipeline would have little, if any, value,
which would substantially harm our business, financial condition,
results of operations and prospects.
In addition, our approach, which focuses on using nucleic acid
therapeutics for drug development, as opposed to multiple or other,
more advanced proven technologies, may expose us to additional
development and financial risks and make it more difficult to raise
additional capital if we are not successful in developing a nucleic
acid therapeutic that is timely and cost effective to manufacture
and achieves proof of concept in animal models, desired tissue
distribution, selectivity for the target, and/or regulatory
approval. Because our programs are all in the preclinical stage, we
have not yet been able to assess safety in humans, and there may be
long-term effects from treatment with any product candidates that
we develop using our platform that we cannot predict at this time.
Any product candidates the Company may develop will act at the
level of deoxyribonucleic acid (“DNA”) or ribonucleic acid (“RNA”),
and because animal DNA and RNA often differs from human DNA or RNA
at the sequence level, in its regulation and degradation, secondary
and tertiary structural conformations and ultimately in being
translated into proteins with varying amino acid sequences
conformations and functions, testing of our product candidates in
animal models may not be predictive of the results we observe in
human clinical trials of our product candidates for either safety
or efficacy. Also, animal models may not exist for some of the
diseases we choose to pursue in our programs. As a result of these
factors, it is more difficult for us to predict the time and cost
of product candidate development, and we cannot predict whether the
application of our gene silencing technology, or any similar or
competitive gene silencing technologies, will result in the
identification, development and regulatory approval of any
products. There can be no assurance that any development problems
we experience in the future related to our gene silencing
technology or any of our research programs will not cause
significant delays or unanticipated costs, or that such development
problems can be solved. Should we encounter development problems,
including unfavorable preclinical or clinical trial results, the
FDA and foreign regulatory authorities may refuse to approve our
product candidates, or may require additional information, tests or
trials, which could significantly delay product development and
significantly increase our development costs. Moreover, even if we
are able to provide the requested information or trials to the FDA,
there would be no guarantee that the FDA would accept them or
approve our product candidates. We may also experience delays in
developing a sustainable, reproducible and scalable manufacturing
process or developing or qualifying and validating product release
assays, other testing and manufacturing methods, and our equipment
and facilities in a timely manner, which may prevent us from
completing our clinical trials or commercializing our product
candidates on a timely or profitable basis, if at all. Any of these
factors may prevent us from completing our preclinical studies or
any clinical trials that we may initiate or from commercializing
any product candidates we may develop on a timely or profitable
basis, if at all.
We are highly dependent on the success of our initial product
candidates targeting rare genetic diseases and our platform
technology in general, and we cannot be certain that any of them
will receive regulatory approval or be commercialized.
We have spent time, money and effort on the licensing and
development of our core asset: our PATrOL™ platform. To date, we
have not submitted an Investigational New Drug application (“IND”)
to the FDA, and no clinical trials have commenced for any of our
product candidates. All of our product candidates will require
additional development, including further preclinical studies and
bioanalytic method development as well as clinical trials to
evaluate their toxicology, carcinogenicity and pharmacokinetics,
efficacy, and optimize their formulation, and receive regulatory
clearances before they can be commercialized. Positive results
obtained during early development do not necessarily mean later
development will succeed or that regulatory clearances will be
obtained. Our drug development efforts may not lead to commercial
drugs, either because our product candidates or our PATrOL™
platform are not deemed safe and effective, because of competitive
or market forces, intellectual property issues or because we have
inadequate financial or other resources to advance our product
candidates through the clinical development and approval processes.
If any of our product candidates, or our PATrOL™ platform, fail to
demonstrate safety or efficacy at any time or during any phase of
development, we would experience potentially significant delays in,
or be required to abandon, development of the product
candidate.
We do not anticipate that any of our current product candidates
will be eligible to receive regulatory approval from the FDA, the
EMA or comparable foreign authorities and begin commercialization
for a number of years, if ever. Even if we ultimately receive
regulatory approval for any of these product candidates, we or our
potential future partners, if any, may be unable to commercialize
them successfully for a variety of reasons. These include, for
example, the availability of alternative treatments, lack of
cost-effectiveness, the cost of manufacturing the product on a
commercial scale and competition with other drugs. The success of
our product candidates and our PATrOL™ platform may also be limited
by the prevalence and severity of any adverse side effects. If we
fail to commercialize one or more of our current product
candidates, we may be unable to generate sufficient revenues to
attain or maintain profitability, and our financial condition may
decline.
If development of our candidates does not produce favorable
results, we and our collaborators, if any, may be unable to
commercialize these products.
To receive regulatory approval for the commercialization of the
PATrOL™ platform, or any product candidates that we may develop,
adequate and well-controlled clinical trials must be conducted to
demonstrate safety and efficacy in humans to the satisfaction of
the FDA, the EMA and comparable foreign authorities. In order to
support marketing approval, these agencies typically require
successful results in one or more Phase III clinical trials, which
our current product candidates have not yet reached and may never
reach. The development process is expensive, can take many years
and has an uncertain outcome. Failure can occur at any stage of the
process. We may experience numerous unforeseen events during, or as
a result of, the development process that could delay or prevent
commercialization of our current or future product candidates,
including the following:
|
· |
preclinical studies conducted with
product candidates for potential clinical development to evaluate
their toxicology, carcinogenicity and pharmacokinetics and optimize
their formulation, among other things, may produce unfavorable
results; |
|
· |
patient recruitment and enrollment
in clinical trials may be slower than we anticipate; |
|
· |
clinical trials may produce
negative or inconclusive results; |
|
· |
costs of development may be greater
than we anticipate; |
|
· |
the potential advantages of the
PATrOL™-enabled anti-gene drug candidates may not materialize and
thus would confer no benefits to patients over other parties’
products that may emerge; |
|
· |
our product candidates or our
PATrOL™ platform may cause undesirable side effects that delay or
preclude regulatory approval or limit their commercial use or
market acceptance, if approved; |
|
· |
collaborators who may be
responsible for the development of our product candidates may not
devote sufficient resources to these clinical trials or other
preclinical studies of these candidates or conduct them in a timely
manner; or |
|
· |
we may face delays in obtaining
regulatory approvals to commence one or more clinical trials. |
Additionally, because our technology potentially involves mutation
silencing via genome binding and/or editing across multiple cell
and tissue types, we are subject to many of the challenges and
risks that advanced therapies, such as gene therapies, face,
including:
|
· |
regulatory requirements governing
gene and cell therapy products have changed frequently and may
continue to change in the future; |
|
· |
improper modification of a gene
sequence in a patient’s genome could lead to lymphoma, leukemia or
other cancers, or other aberrantly functioning cells; and |
|
· |
the FDA recommends a follow-up
observation period of 15 years or longer for all patients who
receive treatment using gene therapies, and we may need to adopt
and support such an observation period for our product
candidates. |
Success in early development does not mean that later development
will be successful because, for example, product candidates in
later-stage clinical trials may fail to demonstrate sufficient
safety and efficacy despite having progressed through initial
clinical trials.
Furthermore, we have licensed or acquired virtually all of the
intellectual property related to our product candidates from
Carnegie Mellon University (“CMU”). Some of our preclinical studies
and other analyses performed to date with respect to our product
candidates have been conducted by their original owners or
collaborators. Therefore, as a company, we have limited experience
in conducting research on our platform technology and preclinical
trials for our product candidates. Since our experience with our
platform technology and product candidates is limited, we will need
to train our existing personnel or hire additional personnel in
order to successfully administer and manage our preclinical studies
and clinical trials as anticipated, which may result in delays in
completing such anticipated preclinical trials and clinical
studies.
We currently do not have strategic collaborations in place for
clinical development of our platform technology and any of our
current product candidates. Therefore, in the future, we or any
potential future collaborative partner will be responsible for
establishing the targeted endpoints and goals for development of
our product candidates. These targeted endpoints and goals may be
inadequate to demonstrate the safety and efficacy levels required
for regulatory approvals. Even if we believe data collected during
the development of our product candidates are promising, such data
may not be sufficient to support marketing approval by the FDA, the
EMA or comparable foreign authorities.
Further, data generated during development can be interpreted in
different ways, and the FDA, the EMA or comparable foreign
authorities may interpret such data in different ways than we or
our collaborators. Our failure to adequately demonstrate the safety
and efficacy of our platform technology and any of our product
candidates would prevent our receipt of regulatory approval, and
such failure would ultimately prevent the potential
commercialization of these product candidates.
Since we do not currently possess the resources necessary to
independently develop and commercialize our product candidates or
any other product candidates that we may develop, we may seek to
enter into collaborative agreements to assist in the development
and potential future commercialization of some or all of these
assets as a component of our strategic plan. Our discussions with
potential collaborators, however, may not lead to the establishment
of collaborations on acceptable terms, if at all, or it may take
longer than expected to establish new collaborations, leading to
development and potential commercialization delays, which would
adversely affect our business, financial condition and results of
operations.
We expect to continue to incur significant research and
development expenses, which may make it difficult for us to attain
profitability.
We expect to expend substantial funds in research and development,
including preclinical studies and clinical trials for our platform
technology and product candidates, and to manufacture and market
any product candidates in the event they are approved for
commercial sale. We will likely need additional funding to develop
or acquire complementary companies, technologies and assets, as
well as for working capital requirements and other operating and
general corporate purposes. Moreover, an increase in our headcount
would dramatically increase our costs in the near and
long-term.
Such spending may not yield any commercially viable products. Due
to our limited financial and managerial resources, we must focus on
a limited number of research programs and product candidates and on
specific indications. Our resource allocation decisions may cause
us to fail to capitalize on viable commercial products or
profitable market opportunities.
Because the successful development of our product candidates is
uncertain, we are unable to precisely estimate the actual funds we
will require to develop and potentially commercialize them. In
addition, we may not be able to generate sufficient revenue, even
if we are able to commercialize any of our product candidates, to
become profitable.
We may expend our limited resources to pursue a particular
product candidate or indication and fail to capitalize on product
candidates or indications that may be more profitable or for which
there is a greater likelihood of success.
Because we have limited financial and managerial resources, we will
initially develop our lead product candidates for particular rare
genetic diseases. As a result, we may forego or delay pursuit of
opportunities in other types of diseases that may prove to have
greater treatment potential. Likewise, we may forego or delay the
pursuit of opportunities with other potential product candidates
that may prove to have greater commercial potential.
Our resource allocation decisions may cause us to fail to
capitalize on viable commercial products or profitable market
opportunities. Our spending on current and future research and
development programs and product candidates for specific
indications may not yield any commercially viable product
candidates. If we do not accurately evaluate the commercial
potential or target market for a particular product candidate, we
may relinquish valuable rights to that product candidate through
collaboration, licensing or other similar arrangements in cases in
which it would have been more advantageous for us to retain sole
development and commercialization rights to the product
candidate.
Given our lack of current cash flow, we will need to raise
additional capital to achieve our goals; however, it may be
unavailable to us or, even if capital is obtained, may cause
dilution or place significant restrictions on our ability to
operate our business.
Since we will be unable to generate sufficient, if any, cash flow
to fund our operations for the foreseeable future, we will need to
seek additional equity or debt financing to provide the capital
required to maintain or expand our operations.
We believe that our existing balance of cash and cash equivalents
will enable us to fund our operations into the first calendar
quarter of 2022. In particular, we expect that these funds will
allow us to achieve certain preclinical milestones for our NT0100
program for HD and our NT0200 program for DM1, but we expect that
we will need to obtain additional funding to obtain clinical data
from the programs. We have based these estimates on assumptions
that may prove to be wrong, and we could use our capital resources
sooner than we currently expect. Our operating plans and other
demands on our cash resources may change as a result of many
factors currently unknown to us, and we may need to seek additional
funds sooner than planned, through public or private equity or debt
financings or other capital sources, including potentially
collaborations, licenses and other similar arrangements. In
addition, we may seek additional capital due to favorable market
conditions or strategic considerations even if we believe we have
sufficient funds for our current or future operating plans.
There can be no assurance that we will be able to raise sufficient
additional capital on acceptable terms or at all. If such
additional financing is not available on satisfactory terms, or is
not available in sufficient amounts, we may be required to delay,
limit or eliminate the development of business opportunities, and
our ability to achieve our business objectives, our
competitiveness, and our business, financial condition and results
of operations may be materially adversely affected. In addition, we
may be required to grant rights to develop and market product
candidates that we would otherwise prefer to develop and market
ourselves. Our inability to fund our business could lead to the
loss of your investment.
Our future capital requirements will depend on many factors,
including, but not limited to:
|
· |
the scope, rate of progress,
results and cost of our preclinical studies, clinical trials and
other related activities; |
|
· |
our ability to establish and
maintain strategic collaborations, licensing or other arrangements
and the financial terms of such arrangements; |
|
· |
the timing of, and the costs
involved in, obtaining regulatory approvals for any of our current
or future product candidates; |
|
· |
the number and characteristics of
the product candidates it seeks to develop or commercialize; |
|
· |
the cost of manufacturing clinical
supplies, and establishing commercial supplies, of our product
candidates; |
|
· |
the cost of commercialization
activities if any of our current or future product candidates are
approved for sale, including marketing, sales and distribution
costs; |
|
· |
the expenses needed to attract and
retain skilled personnel; |
|
· |
the costs associated with being a
public company; |
|
· |
the costs incurred in maintaining
appropriate facilities to be able to perform the necessary work to
develop our products; |
|
· |
the amount of revenue, if any,
received from commercial sales of our product candidates, should
any of our product candidates receive marketing approval; and |
|
· |
the costs involved in preparing,
filing, prosecuting, maintaining, defending and enforcing possible
patent claims, including litigation costs and the outcome of any
such litigation. |
Any additional capital efforts may divert our management from their
day-to-day activities, which may adversely affect our ability to
develop and commercialize our product candidates. Moreover, if we
raise additional capital by issuing equity securities, the
percentage ownership of our existing stockholders may be reduced,
and accordingly these stockholders may experience substantial
dilution. We may also issue equity securities that provide for
rights, preferences and privileges senior to those of our common
stock.
Given our need for cash and that equity issuances are the most
common type of fundraising for similarly situated companies, the
risk of dilution is particularly significant for our stockholders.
Furthermore, the incurrence of indebtedness would result in
increased fixed payment obligations and we may be required to agree
to certain restrictive covenants, such as limitations on our
ability to incur additional debt and other operating restrictions
that could adversely impact our ability to conduct our business. We
could also be required to seek funds through arrangements with
collaborators or otherwise at an earlier stage than otherwise would
be desirable and we may be required to relinquish rights to some of
our product candidates or otherwise agree to terms unfavorable to
us, any of which may have a material adverse effect on our
business, operating results and prospects.
Our efforts to discover product candidates beyond our current
product candidates may not succeed, and any product candidates we
recommend for clinical development may not actually begin clinical
trials.
We intend to use our technology, including our licensed technology,
knowledge and expertise, to develop novel drug candidates to
address some of the world’s most devastating and costly central
nervous system, muscular, and other disorders, including orphan
genetic and oncology indications. We intend to expand our existing
pipeline of core assets by advancing drug candidate compounds from
discovery programs into preclinical and clinical development.
However, the process of researching and discovering drug candidate
compounds is expensive, time-consuming and unpredictable. Data from
our current preclinical programs may not support the clinical
development of our lead compounds or other compounds from these
programs, and we may not identify any additional drug compounds
suitable for recommendation for clinical development. Moreover, any
drug compounds we recommend for clinical development may not
demonstrate, through preclinical studies, indications of safety and
potential efficacy that would support advancement into clinical
trials. Such findings would potentially impede our ability to
maintain or expand our clinical development pipeline. Our ability
to identify new drug compounds and advance them into clinical
development also depends upon our ability to fund our research and
development operations, and we cannot be certain that additional
funding will be available on acceptable terms, or at all.
We are significantly dependent on the success of our PATrOL™
platform and our product candidates based on this platform. A
failure of any product candidate based on this platform in clinical
development would adversely affect our business and may require us
to discontinue development of other product candidates based on the
same therapeutic approach.
We have invested, and we expect to continue to invest, significant
efforts and financial resources in the development of product
candidates based on our PATrOL™ platform. Our ability to generate
meaningful revenue, which may not occur for the foreseeable future,
if ever, will depend heavily on the successful development,
regulatory approval and commercialization of one or more of these
product candidates using our PATrOL™ platform. We will not be able
to develop new product candidates if it is found that the PATrOL™
platform does not work or creates product candidates that are not
safe for use in humans. Since all of our product candidates in our
current pipeline are based on our PATrOL™ platform, if any product
candidate fails in development as a result of an underlying problem
with our PATrOL™ platform, then we may be required to discontinue
development of all product candidates that are based on our
therapeutic approach. If we were required to discontinue the
development of such product candidates based on the PATrOL™
platform, or if any of them were to fail to receive regulatory
approval or achieve sufficient market acceptance, we could be
prevented from or significantly delayed in achieving profitability.
We can provide no assurance that we would be successful at
developing other product candidates based on an alternative
therapeutic approach from our PATrOL™ platform.
The pharmaceutical market and biotechnology industry are
intensely competitive and involve a high degree of risk. If we are
unable to compete effectively with existing drugs, new treatment
methods and new technologies, we may be unable to commercialize
successfully any drug candidates that we develop.
The pharmaceutical market and biotechnology industry are intensely
competitive and rapidly changing. Many large pharmaceutical and
biotechnology companies, academic institutions, governmental
agencies and other public and private research organizations, both
in the U.S. and worldwide, are pursuing the development of novel
drugs for the same diseases that we are targeting or expect to
target. Many of our competitors have, either alone or with
strategic partners:
|
· |
much greater financial, research,
technical and human resources than we have at every stage of the
discovery, development, manufacture and commercialization of
products and product candidates; |
|
· |
more extensive experience in
designing and conducting preclinical studies and clinical trials,
obtaining regulatory approvals, and in manufacturing, marketing and
selling pharmaceutical products and product candidates; |
|
· |
product candidates that are based
on previously tested or accepted technologies; |
|
· |
products and product candidates
that have been approved or are in late stages of development;
and |
|
· |
collaborative arrangements in our
target markets with leading companies and research
institutions. |
We will face intense competition from drugs that have already been
approved and accepted by the medical community for the treatment of
the conditions for which we may develop drug candidates. We also
expect to face competition from new drugs that enter the market. We
believe there are a significant number of drugs currently under
development that may become commercially available in the future,
for the treatment of conditions for which we may try to develop
drugs. These drugs may be more effective, safer, less expensive,
introduced to market earlier, or marketed and sold more effectively
or on a more cost-effective basis, than any product candidates we
develop. It is possible that the potential advantages of
PATrOL™-derived therapeutic candidates (including, among other
potential advantages, the ability to systemically deliver drugs and
get broad tissue distribution and penetration across the
blood-brain barrier, minimal to no innate or adaptive immune
responses after single dose or multiple-dose administration,
preferential selectivity to mutant targets, and dose schedules to
address the disease appropriately or that is viable in the
marketplace) do not materialize.
Our competitors may develop or commercialize products with
significant advantages over any product candidates we are able to
develop and commercialize based on many different factors,
including:
|
· |
the safety and effectiveness of our
product candidates relative to alternative therapies, if any; |
|
· |
the ease with which our product
candidates can be administered and the extent to which patients
accept relatively new routes of administration; |
|
· |
the timing and scope of regulatory
approvals for these product candidates; |
|
· |
the availability and cost of
manufacturing, marketing and sales capabilities; |
|
· |
reimbursement coverage from
governments and other third-party payors; and |
|
· |
patent position and intellectual
property protection. |
Our commercial opportunity could be reduced or eliminated if our
competitors develop and commercialize products that are viewed as
safer, more effective, more convenient or less expensive than any
products that we may develop. Our competitors may also obtain FDA
or other regulatory approval for their competing products more
rapidly than we may obtain approval for any of our product
candidates, which could result in our competitors establishing a
strong market position before we are able to enter the market.
Further, we expect that we will also compete with others when
recruiting clinical trial sites and subjects for our clinical
trials and when recruiting and retaining qualified scientific and
management personnel.
While there are currently no approved treatments available to slow
the progression of Huntington’s Disease or Myotonic Dystrophy Type
1, publicly available information shows that a number of companies
are pursuing product candidates seeking to address the root cause
of these indications. These include investigational drugs in
clinical development for HD, and several ongoing preclinical
programs targeting the underlying disease and symptoms in HD and
DM1. The success of any of these competitors could reduce or
eliminate our commercial opportunity.
Any collaboration arrangement that we may enter into in the
future may not be successful, which could adversely affect our
ability to develop and commercialize our current and potential
future product candidates.
We may seek collaboration arrangements with pharmaceutical
companies for the development or commercialization of our current
and potential future product candidates. To the extent that we
decide to enter into collaboration agreements, we will face
significant competition in seeking appropriate collaborators.
Moreover, collaboration arrangements are complex and time consuming
to negotiate, execute and implement. We may not be successful in
our efforts to establish and implement collaborations or other
alternative arrangements should we choose to enter into such
arrangements, and the terms of the arrangements may not be
favorable to us. If and when we collaborate with a third party for
development and commercialization of a product candidate, we can
expect to relinquish some or all of the control over the future
success of that product candidate to the third party. The success
of our collaboration arrangements will depend heavily on the
efforts and activities of our collaborators. Collaborators
generally have significant discretion in determining the efforts
and resources that they will apply to these collaborations. As
such, our inability to control our collaborators, and the
potentially adverse results of our collaborators, may materially
and adversely affect our product candidates and, more generally,
our PATrOL™ platform, and we may not be able to conduct our program
in the manner or on the time schedule it currently contemplates,
which could negatively impact our business.
If our potential future collaborations do not result in the
successful discovery, development and commercialization of products
or if one of our collaborators terminates our agreement with us, we
may not receive any future research funding or milestone or royalty
payments under the collaboration. If we do not receive the funding
we expect under these agreements, our development of our platform
technology and product candidates could be delayed and we may need
additional resources to develop product candidates and our
technology.
Finally, disagreements between parties to a collaboration
arrangement can lead to delays in developing or commercializing the
applicable product candidate and can be difficult to resolve in a
mutually beneficial manner. In some cases, collaborations with
biopharmaceutical companies and other third parties are terminated
or allowed to expire by the other party. Any such termination or
expiration could adversely affect our business, financial condition
and results of operations.
We, or any future collaborators, may not be able to obtain
orphan drug designation or orphan drug exclusivity for our product
candidates.
Regulatory authorities in some jurisdictions, including the U.S.
and Europe, may designate drugs for relatively small patient
populations as orphan drugs. Under the Orphan Drug Act, the FDA may
designate a product as an orphan drug if it is a drug intended to
treat a rare disease or condition, which is generally defined as a
patient population of fewer than 200,000 individuals annually in
the U.S. In the U.S. and Europe, obtaining orphan drug approval may
allow us to obtain financial incentives, such as an extended period
of exclusivity during which only we are allowed to market the
orphan drug for the orphan indications that we are developing.
While we may seek orphan drug designation from the FDA for any of
our product candidates, we, or any future collaborators, may not be
granted orphan drug designations for our product candidates in the
U.S. or in other jurisdictions.
Even if we or any future collaborators obtain orphan drug
designation for a product candidate, we or such collaborators may
not be able to obtain orphan drug exclusivity for that product
candidate. Generally, a product with orphan drug designation only
becomes entitled to orphan drug exclusivity if it receives the
first marketing approval for the indication for which it has such
designation, in which case the FDA or the EMA will be precluded
from approving another marketing application for the same drug for
that indication for the applicable exclusivity period. The
applicable exclusivity period is seven years in the U.S. and ten
years in Europe. The European exclusivity period can be reduced to
six years if a 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 the EMA 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.
Even if we or any future collaborators obtain orphan drug
exclusivity for a product, that exclusivity may not effectively
protect the product from competition because FDA has taken the
position that, under certain circumstances, another drug with the
same active chemical and pharmacological characteristics, or
moiety, can be approved for the same condition. Specifically, the
FDA’s regulations provide that it can approve another drug with the
same active moiety 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.
Our operations have been adversely affected by the
coronavirus outbreak, and we face risks that could impact our
business.
A novel strain of coronavirus, COVID-19, originated in Wuhan,
China, in December 2019. The virus has spread globally and includes
a significant number of cases in the U.S., Europe and Asia. We have
relationships with contract research organizations to conduct
certain pre-clinical programs and testing and other services in
Europe and certain of those business operations have been impacted
by the COVID-19 pandemic and are further subject to potential
business interruptions arising from new protective measures that
may be taken by the governmental or other agencies or governing
bodies. We also conduct limited operations within Asia through
third-party contract manufacturing organizations whose operations
have been and may continue to be negatively affected by the
coronavirus outbreak. In addition, certain of our collaborative
relationships with academic research institutions in the United
States have been and may continue to be materially and adversely
impacted by protective measures taken by those institutions or
federal and state agencies and governing bodies to restrict access
to, or suspend operations at, such facilities. Such protective
measures, including quarantines, travel restrictions and business
shutdowns, have impacted and may continue to negatively affect our
core operations. We have taken precautionary measures aligned with
CDC, state and local guidelines that are intended to help minimize
the risk of the virus to our employees, including the provision of
personal protective equipment, suspension of non-essential travel
worldwide for our employees, and we discourage employee attendance
at other gatherings. Several of our employees work remotely.
Business disruptions elsewhere in the world could also negatively
affect the sources and availability of components and materials
that are essential to the operation of our business.
Extended periods of interruption to our U.S. operations or those of
our contract research and manufacturing organizations due to the
coronavirus outbreak could adversely impact the growth of our
business and could cause us to cease or delay operations. For
example, one of our external contract research providers, was
forced to shut down its vivarium where the in
vivo testing for the NT0100 program was ongoing, and this
disruption in operations contributed to a delay and may also incur
additional future delays in that program. In such instances, we may
need to locate an appropriate replacement third-party facility and
establish a contractual relationship in connection with such
facilities, which may not be readily available or on acceptable
terms that would cause additional delay and increased expense,
including as a result of additional required FDA approvals, and may
have a material adverse effect on our business.
The extent to which the coronavirus impacts our business and
results of operations will depend on future developments, which are
highly uncertain and cannot be predicted. This includes new
information that may emerge concerning the severity of the
coronavirus, the spread and proliferation of the coronavirus around
the world, and the actions taken to contain the coronavirus or
treat its impact, among others.
We are subject to a multitude of manufacturing risks, any of
which could substantially increase our costs and limit supply of
our product candidates.
The process of manufacturing our product candidates is complex,
highly regulated, and subject to several risks. For example, the
process of manufacturing our product candidates is extremely
susceptible to product loss due to contamination, equipment failure
or improper installation or operation of equipment, low yielding
processes, or vendor or operator error. Even minor deviations from
normal manufacturing processes for any of our product candidates
could result in reduced production yields, product defects, and
other supply disruptions. 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. In
addition, the manufacturing facilities in which our product
candidates are made could be adversely affected by equipment
failures, labor shortages, natural disasters, public health crises,
pandemics and epidemics, such as a novel strain of coronavirus
(COVID-19), power failures and numerous other factors. For
instance, our therapeutic molecules are complex and comprised of
both peptides and nucleic acids, and it may be difficult or
impossible to find Good Laboratory Practice- (“GLP”) and Current
Good Manufacturing Practice- (“cGMP”) grade manufacturers,
manufacturing may be cost prohibitive, we or our third-party
manufacturers may not be able to manufacture product candidates in
a timely manner or within specification, or manufacturing may not
be available to fulfill regulatory requirements. In addition, we or
our third-party manufacturers may not be able to manufacture our
product candidates at the necessary scale to meet our development
and commercialization requirements.
In addition, any adverse developments affecting manufacturing
operations for our product candidates may result in shipment
delays, inventory shortages, lot failures, withdrawals or recalls,
or other interruptions in the supply of our product candidates. We
also may need to take inventory write-offs and incur other charges
and expenses for product candidates that fail to meet
specifications, undertake costly remediation efforts or seek
costlier manufacturing alternatives.
We rely, and will continue to rely, predominantly, on third
parties to manufacture our preclinical and clinical drug supplies
and our business, financial condition and results of operations
could be harmed if those third parties fail to provide us with
sufficient quantities of drug product, or fail to do so at
acceptable quality levels, prices, or timelines.
We have the capability internally to manufacture small quantities
of our drugs for preclinical studies. However, we do not currently
have, nor do we plan to acquire, the infrastructure or capability
internally to manufacture our clinical drug supplies for use in our
clinical trials, and we lack the resources and the capability to
manufacture any of our product candidates on a clinical or
commercial scale. We rely on our manufacturers to purchase from
third-party suppliers the materials necessary to produce our
product candidates for our clinical trials. There are a limited
number of suppliers for raw materials that we use to manufacture
our product candidates, and there may be a need to identify
alternate suppliers to prevent a possible disruption of the
manufacture of the materials necessary to produce our product
candidates for our clinical trials, and, if approved, ultimately
for commercial sale. We do not have any control over the process or
timing of the acquisition of these raw materials by our
manufacturers. Any significant delay or discontinuity in the supply
of a product candidate, or the raw material components thereof, for
an ongoing clinical trial due to the need to replace a third-party
manufacturer could considerably delay completion of our clinical
trials, product testing and potential regulatory approval of our
product candidates, which could harm our business, financial
condition and results of operations.
If we are unable to develop our own commercial organization
or enter into agreements with third parties to sell and market our
product candidates, we may be unable to generate significant
revenues.
We do not have a sales and marketing organization, and we have no
experience as a company in the sales, marketing and distribution of
pharmaceutical products. If any of our product candidates are
approved for commercialization, we may be required to develop our
own sales, marketing and distribution capabilities, or make
arrangements with a third party to perform sales and marketing
services. Developing a sales force for any resulting product or any
product resulting from any of our other product candidates is
expensive and time consuming and could delay any product launch. We
may be unable to establish and manage an effective sales force in a
timely or cost-effective manner, if at all, and any sales force we
do establish may not be capable of generating sufficient demand for
our product candidates. To the extent that we enter into
arrangements with collaborators or other third parties to perform
sales and marketing services, our product revenues are likely to be
lower than if we marketed and sold our product candidates
independently. If we are unable to establish adequate sales and
marketing capabilities, independently or with others, we may not be
able to generate significant revenues and may not become
profitable.
The commercial success of our product candidates depends upon
their market acceptance among physicians, patients, healthcare
payors and the medical community.
Even if our product candidates obtain regulatory approval, our
products, if any, may not gain market acceptance among physicians,
patients, healthcare payors and the medical community. The degree
of market acceptance of any of our approved product candidates will
depend on a number of factors, including:
|
· |
the effectiveness of our approved
product candidates as compared to currently available
products; |
|
· |
patient willingness to adopt our
approved product candidates in place of current therapies; |
|
· |
our ability to provide acceptable
evidence of safety and efficacy; |
|
· |
relative convenience and ease of
administration; |
|
· |
the prevalence and severity of any
adverse side effects; |
|
· |
restrictions on use in combination
with other products; |
|
· |
availability of alternative
treatments; |
|
· |
pricing and cost-effectiveness
assuming either competitive or potential premium pricing
requirements, based on the profile of our product candidates and
target markets; |
|
· |
effectiveness of our or our
partners’ sales and marketing strategy; |
|
· |
our ability to obtain sufficient
third-party coverage or reimbursement; and |
|
· |
potential product liability
claims. |
In addition, the potential market opportunity for our product
candidates is difficult to precisely estimate. Our estimates of the
potential market opportunity for our product candidates include
several key assumptions based on our industry knowledge, industry
publications, third-party research reports and other surveys.
Independent sources have not verified all of our assumptions. If
any of these assumptions proves to be inaccurate, then the actual
market for our product candidates could be smaller than our
estimates of our potential market opportunity. If the actual market
for our product candidates is smaller than we expect, our product
revenue may be limited, it may be harder than expected to raise
funds and it may be more difficult for us to achieve or maintain
profitability. If we fail to achieve market acceptance of our
product candidates in the U.S. and abroad, our revenue will be
limited, and it will be more difficult to achieve
profitability.
If we fail to obtain and sustain an adequate level of
reimbursement for our potential products by third-party payors,
potential future sales would be materially adversely
affected.
There will be no viable commercial market for our product
candidates, if approved, without reimbursement from third-party
payors. Reimbursement policies may be affected by future healthcare
reform measures. We cannot be certain that reimbursement will be
available for our current product candidates or any other product
candidate we may develop. Additionally, even if there is a viable
commercial market, if the level of reimbursement is below our
expectations, our anticipated revenue and gross margins will be
adversely affected.
Third-party payors, such as government or private healthcare
insurers, carefully review and increasingly question and challenge
the coverage of and the prices charged for drugs. Reimbursement
rates from private health insurance companies vary depending on the
company, the insurance plan and other factors. Reimbursement rates
may be based on reimbursement levels already set for lower cost
drugs and may be incorporated into existing payments for other
services. There is a current trend in the U.S. healthcare industry
toward cost containment.
Large public and private payors, managed care organizations, group
purchasing organizations and similar organizations are exerting
increasing influence on decisions regarding the use of, and
reimbursement levels for, particular treatments. Such third-party
payors, including Medicare, may question the coverage of, and
challenge the prices charged for, medical products and services,
and many third-party payors limit coverage of or reimbursement for
newly approved healthcare products. In particular, third-party
payors may limit the covered indications. Cost-control initiatives
could decrease the price we might establish for products, which
could result in product revenues being lower than anticipated. We
believe our drugs will be priced significantly higher than existing
generic drugs and consistent with current branded drugs. If we are
unable to show a significant benefit relative to existing generic
drugs, Medicare, Medicaid and private payors may not be willing to
provide reimbursement for our drugs, which would significantly
reduce the likelihood of our products gaining market
acceptance.
We expect that private insurers will consider the efficacy,
cost-effectiveness, safety and tolerability of our product
candidates in determining whether to approve reimbursement for such
product candidates and at what level. Obtaining these approvals can
be a time consuming and expensive process. Our business, financial
condition and results of operations would be materially adversely
affected if we do not receive approval for reimbursement of our
product candidates from private insurers on a timely or
satisfactory basis. Limitations on coverage could also be imposed
at the local Medicare carrier level or by fiscal intermediaries.
Medicare Part B, which covers medical insurance to Medicare
patients as discussed below, does not require participating
insurance plans to cover all drugs that have been approved by the
FDA. Our business, financial condition and results of operations
could be materially adversely affected if Part B medical insurance
were to limit access to, or deny or limit reimbursement of, our
product candidates.
Reimbursement systems in international markets vary significantly
by country and by region, and reimbursement approvals must be
obtained on a country-by-country basis. In many countries, the
product candidate cannot be commercially launched until
reimbursement is approved. In some foreign markets, prescription
pharmaceutical pricing remains subject to continuing governmental
control even after initial approval is granted. The negotiation
process in some countries can exceed 12 months. To obtain
reimbursement or pricing approval in some countries, we may be
required to conduct a clinical trial that compares the
cost-effectiveness of our product candidates to other available
therapies.
If the prices for our product candidates are reduced or if
governmental and other third-party payors do not provide adequate
coverage and reimbursement of our drugs, our future revenue, cash
flows and prospects for profitability will suffer.
We are exposed to product liability, non-clinical and
clinical liability risks which could place a substantial financial
burden upon us, should lawsuits be filed against us.
Our business exposes us to potential product liability and other
liability risks that are inherent in the testing, manufacturing and
marketing of pharmaceutical formulations and products. In addition,
the use in our anticipated clinical trials of pharmaceutical
products and the subsequent sale of product candidates by us, if
approved, or our potential collaborators may cause us to bear a
portion of or all product liability risks. A successful liability
claim or series of claims brought against us could have a material
adverse effect on our business, financial condition and results of
operations.
Because we do not currently have any clinical trials ongoing, we do
not currently carry product liability insurance. We anticipate
obtaining such insurance upon initiation of our clinical
development activities; however, we may be unable to obtain product
liability insurance on commercially reasonable terms or in adequate
amounts. On occasion, large judgments have been awarded in class
action lawsuits based on drugs that had unanticipated adverse
effects. A successful product liability claim or series of claims
brought against us could adversely affect our results of operations
and business if judgments therewith exceed our insurance
coverage.
If we fail to retain current members of our management, or to
attract and keep additional key personnel, we may be unable to
successfully develop or commercialize our product
candidates.
Our success depends on our continued ability to attract, retain and
motivate highly qualified management and scientific personnel. As
of March 30, 2021, we had 21 full-time employees. We will rely
primarily on outsourcing research, development and clinical trial
activities, and manufacturing operations, as well as other
functions critical to our business. We believe this approach
enhances our ability to focus on our core product opportunities,
allocate resources efficiently to different projects and allocate
internal resources more effectively. We have filled several key
open positions and are currently recruiting for several other
remaining positions. However, competition for qualified personnel
is intense. We may not be successful in attracting qualified
personnel to fulfill our current or future needs. In the event we
are unable to fill critical open employment positions, we may need
to delay our operational activities and goals, including the
development of our product candidates, and may have difficulty in
meeting our obligations as a public company. We do not maintain
“key person” insurance on any of our employees.
In addition, competitors and others are likely in the future to
attempt to recruit our employees. The loss of the services of any
of our key personnel, the inability to attract or retain highly
qualified personnel in the future or delays in hiring such
personnel, particularly senior management and other technical
personnel, could materially and adversely affect our business,
financial condition and results of operations. In addition, the
replacement of key personnel likely would involve significant time
and costs and may significantly delay or prevent the achievement of
our business objectives.
From time to time, our management seeks the advice and guidance of
certain scientific advisors and consultants regarding clinical and
regulatory development programs and other customary matters. These
scientific advisors and consultants are not our employees and may
have commitments to, or consulting or advisory contracts with,
other entities that may limit their availability to us. In
addition, our scientific advisors may have arrangements with other
companies to assist those companies in developing products or
technologies that may compete with us.
We will need to increase the size of our organization and may
not successfully manage our growth.
We are a preclinical-stage pharmaceutical company with a small
number of employees, and our management systems currently in place
are not likely to be adequate to support our future growth plans.
Our ability to grow and to manage our growth effectively will
require us to hire, train, retain, manage and motivate additional
employees and to implement and improve our operational, financial
and management systems. These demands also may require the hiring
of additional senior management personnel or the development of
additional expertise by our senior management personnel. Hiring a
significant number of additional employees, particularly those at
the management level, would increase our expenses significantly.
Moreover, if we fail to expand and enhance our operational,
financial and management systems in conjunction with our potential
future growth, such failure could have a material adverse effect on
our business, financial condition and results of operations.
Because our Chief Executive Officer is involved with several
unaffiliated privately held companies, he may experience conflicts
of interest and competing demands for his time and
attention.
Dietrich Stephan, Ph.D., our Chief Executive Officer, is a member
of the governing bodies of several unaffiliated privately held
companies, as well as a general partner of Cyto Ventures. Although
Dr. Stephan expects to devote substantially all of his time to us,
he expects to continue in each of these positions for the
foreseeable future. Conflicts of interest could arise with respect
to business opportunities that could be advantageous to third party
organizations affiliated with Dr. Stephan, on the one hand, and us,
on the other hand.
The majority of our current management lacks public company
experience, which could put us at greater risk of incurring fines
or regulatory actions for failure to comply with federal securities
laws and could put us at a competitive disadvantage and require our
management to devote additional time and resources to ensure
compliance with applicable corporate governance
requirements.
The majority of our current executive management do not have
experience in managing and operating a public company, which could
have an adverse effect on our ability to quickly respond to
problems or adequately address issues and matters applicable to
public companies. Any failure to comply with federal securities
laws, rules or regulations could subject us to fines or regulatory
actions, which may materially adversely affect our business,
financial condition and results of operations. Further, since
certain of our current executive officers do not have experience
managing and operating a public company, we may need to dedicate
additional time and resources to comply with legally mandated
corporate governance policies relative to our competitors whose
management teams have more public company experience.
We rely significantly on information technology and any
failure, inadequacy, interruption or security lapse of that
technology, including any cybersecurity incidents, could harm our
ability to operate our business effectively.
Despite the implementation of security measures, our internal
computer systems and those of third parties with which we contract
are vulnerable to damage from cyber-attacks, computer viruses,
unauthorized access, natural disasters, terrorism, war and
telecommunication and electrical failures. System failures,
accidents or security breaches could cause interruptions in our
operations and could result in a material disruption of our drug
development and preclinical and clinical activities and business
operations, in addition to possibly requiring substantial
expenditures of resources to remedy. To the extent that any
disruption or security breach was to result in a loss of or damage
to our data or applications, or inappropriate disclosure of
confidential or proprietary information, we could incur material
legal claims and liability, damage to our reputation, suffer loss
or harm to our intellectual property rights and the further
research, development and commercial efforts of our products and
product candidates could be delayed. The loss of drug development
or clinical trial data 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 were to result in a loss of, or damage to, our data or
applications, or inappropriate disclosure of confidential or
proprietary information, we could incur liability and our
development programs and the development of our product candidates
could be delayed. In addition, if we are held liable for a claim
against which we are not insured or for damages exceeding the
limits of our insurance coverage, whether arising out of
cybersecurity matters, or from some other matter, that claim could
have a material adverse effect on our results of operations.
Our employees, consultants, third-party vendors and
collaborators may engage in misconduct or other improper
activities, including noncompliance with regulatory standards and
requirements.
We are exposed to the risk of employee, consultant, third-party
vendor or collaborator fraud or other misconduct. Misconduct by our
employees, consultants, third-party vendors or collaborators could
include, among other things, intentional failures to comply with
FDA regulations, provide accurate information to the FDA, comply
with manufacturing standards, comply with federal and state
healthcare fraud and abuse laws and regulations, report financial
information or data accurately or disclose unauthorized activities
to us. In particular, sales, marketing and business arrangements in
the healthcare industry are subject to extensive laws and
regulations intended to prevent fraud, kickbacks, self-dealing and
other abusive practices. These laws and regulations may restrict or
prohibit a wide range of pricing, discounting, marketing and
promotion, sales commissions, customer incentive programs and other
business arrangements. Employee, consultant, vendor or collaborator
misconduct also could involve the improper use of information
obtained in the course of preclinical or clinical trials, which
could result in regulatory sanctions and serious harm to our
reputation. It is not always possible to identify and deter such
misconduct, and the precautions we take to detect and prevent this
activity may not be effective in controlling unknown or unmanaged
risks or losses or in protecting us from governmental
investigations or other actions or lawsuits stemming from a failure
to be in compliance with such laws or regulations. If any such
actions are instituted against us, and we are not successful in
defending ourselves or asserting our rights, those actions could
have a material adverse effect on our business, financial condition
and results of operations, and result in the imposition of
significant fines or other sanctions against us.
Business disruptions such as natural disasters could
seriously harm our future revenues and financial condition and
increase our costs and expenses.
We and our suppliers may experience a disruption in our and their
business as a result of natural disasters. A significant natural
disaster, such as an earthquake, hurricane, flood or fire, could
severely damage or destroy our headquarters or facilities or the
facilities of our manufacturers or suppliers, which could have a
material and adverse effect on our business, financial condition
and results of operations. In addition, terrorist acts or acts of
war targeted at the U.S., and specifically the Pittsburgh,
Pennsylvania, greater New York, New York, and greater southern
California regions, could cause damage or disruption to us, our
employees, facilities, partners and suppliers, which could have a
material adverse effect on our business, financial condition and
results of operations.
We may engage in strategic transactions that could impact our
liquidity, increase our expenses and present significant
distractions to our management.
From time to time, we may consider strategic transactions, such as
spin-offs, strategic partnerships, joint ventures, restructurings,
divestitures, business combinations and investments. Additional
potential transactions that we may consider include a variety of
different business arrangements, including acquisitions of
companies, asset purchases and out-licensing or in-licensing of
products, product candidates or technologies. Any such transaction
may require us to incur non-recurring or other charges, may
increase our near- and long-term expenditures and may pose
significant integration challenges or disrupt our management or
business, which could adversely affect our business, financial
condition and results of operations. For example, these
transactions may entail numerous operational and financial risks,
including:
|
· |
exposure to unknown
liabilities; |
|
· |
disruption of our business and
diversion of our management’s time and attention in order to
develop acquired products, product candidates or technologies; |
|
· |
incurrence of substantial debt or
dilutive issuances of equity securities to pay for any of these
transactions; |
|
· |
higher-than-expected transaction
and integration costs; |
|
· |
write-downs of assets or goodwill
or impairment charges; |
|
· |
increased amortization
expenses; |
|
· |
difficulty and cost in combining
the operations and personnel of any acquired businesses or product
lines with our operations and personnel; |
|
· |
impairment of relationships with
key suppliers or customers of any acquired businesses or product
lines due to changes in management and ownership; and |
|
· |
inability to retain key employees
of any acquired businesses. |
Accordingly, although there can be no assurance that we will
undertake or successfully complete any transactions of the nature
described above, any transactions that we do complete may be
subject to the foregoing or other risks, and could have a material
adverse effect on our business, financial condition and results of
operations.
Risks Related to Our Intellectual Property
Our success depends in part on our ability to protect our
intellectual property. It is difficult and costly to protect our
proprietary rights and technology, and we may not be able to
protect our intellectual property rights throughout the
world.
Our commercial success will depend in large part on obtaining and
maintaining patent, trademark and trade secret protection of our
proprietary technologies and our product candidates, their
respective components, formulations, methods used to manufacture
them and methods of treatment, as well as successfully defending
these patents against third-party challenges. Our ability to stop
unauthorized third parties from making, using, selling, offering to
sell or importing our product candidates is dependent upon the
extent to which we have rights under valid and enforceable patents
or trade secrets that cover these activities.
The patenting process is 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. In
addition, we may not pursue or obtain patent protection in all
relevant markets. 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. Our pending and future
patent applications may not result in issued patents that protect
our technology or products, in whole or in part. In addition, our
existing patents and any future patents we obtain may not be
sufficiently broad to prevent others from using our technology or
from developing competing products and technologies.
In the future we may, and presently do, in-license intellectual
property from licensors. We may rely on these licensors to file and
prosecute patent applications and maintain patents and otherwise
protect the intellectual property we license from them. We may have
limited control over these activities or any other intellectual
property that may be in-licensed. For example, we cannot be certain
that such activities by licensors have been or will be conducted in
compliance with applicable laws and regulations or will result in
valid and enforceable patents and other intellectual property
rights. We may have limited control over the manner in which our
licensors initiate an infringement proceeding against a third-party
infringer of the intellectual property rights, or defend certain of
the intellectual property that is licensed to us. It is possible
that the licensors’ infringement proceeding or defense activities
may be less vigorous than had we conducted them ourselves.
The growth of our business may depend in part on our ability to
acquire or in-license additional proprietary rights. For example,
our programs may involve additional product candidates that may
require the use of additional proprietary rights held by third
parties. Our product candidates may also require specific
formulations to work effectively and efficiently. These
formulations may be covered by intellectual property rights held by
others. We may develop products containing our compounds and
pre-existing pharmaceutical compounds. These pharmaceutical
compounds may be covered by intellectual property rights held by
others. We may be required by the FDA or comparable foreign
regulatory authorities to provide a companion diagnostic test or
tests with our product candidates. These diagnostic test or
tests may be covered by intellectual property rights held by
others. We may be unable to acquire or in-license any relevant
third-party intellectual property rights that we identify as
necessary or important to our business operations. We may fail to
obtain any of these licenses at a reasonable cost or on reasonable
terms, if at all, which would harm our business. We may need to
cease use of the compositions or methods covered by such
third-party intellectual property rights, and may need to seek to
develop alternative approaches that do not infringe on such
intellectual property rights which may entail additional costs and
development delays, even if we were able to develop such
alternatives, which may not be feasible. Even if we are able to
obtain a license under such intellectual property rights, any such
license may be non-exclusive, which may allow our competitors
access to the same technologies licensed to us. If we are unable to
successfully obtain rights to required third-party
intellectual property or to maintain the existing intellectual
property rights we have, we may have to abandon development of such
program and our business and financial condition could suffer.
We may not be successful in obtaining or maintaining
necessary rights to our product candidates through acquisitions and
in-licenses.
Because several of our programs currently require the use of
proprietary rights held by third parties, the growth of our
business will likely depend in part on our ability to maintain and
exploit these proprietary rights. In addition, we may need to
acquire or in-license additional intellectual property in the
future. We may be unable to acquire or in-license any compositions,
methods of use, processes or other intellectual property rights
from third parties that we identify as necessary for our product
candidates. We face competition with regard to acquiring and
in-licensing third-party intellectual property rights, including
from a number of more established companies. These established
companies may have a competitive advantage over us due to their
size, cash resources and greater clinical development and
commercialization capabilities. In addition, companies that
perceive us to be a competitor may be unwilling to assign or
license intellectual property rights to us. We also may be unable
to acquire or in-license third-party intellectual property rights
on terms that would allow it to make an appropriate return on our
investment, and we may not be able to market products or perform
research and development or other activities covered by these
patents.
We may enter into collaboration agreements with U.S. and foreign
academic institutions to accelerate development of our current or
future preclinical product candidates. Typically, these agreements
include an option for the company to negotiate a license to the
institution’s intellectual property rights resulting from the
collaboration. Even with such an option, we may be unable to
negotiate a license within the specified timeframe or under terms
that are acceptable to us. If we are unable to license rights from
a collaborating institution, the institution may offer the
intellectual property rights to other parties, potentially blocking
our ability to pursue our desired program.
If we are unable to successfully obtain required third-party
intellectual property rights or maintain our existing intellectual
property rights, we may need to abandon development of the related
program and our business, financial condition and results of
operations could be materially and adversely affected.
If we are unable to obtain and maintain sufficient patent and
other intellectual property protection for our product candidates
and technology, our competitors could develop and commercialize
products and technology similar or identical to ours, and we may
not be able to compete effectively in our market or successfully
commercialize any product candidates we may develop.
We rely upon a combination of patents, trade secret protection and
confidentiality agreements to protect the intellectual property
related to our technologies. We will only be able to protect our
product candidates, proprietary technologies and their uses from
unauthorized use by third parties to the extent that valid and
enforceable patents or trade secrets cover them. Any disclosure to
or misappropriation by third parties of our confidential
proprietary information could enable competitors to quickly
duplicate or surpass our technological achievements, thus eroding
our competitive position in our market.
Composition-of-matter patents on the active pharmaceutical
ingredient are generally considered to be the strongest form of
intellectual property protection for pharmaceutical products, as
such patents provide protection without regard to any method of
use. Method-of-use patents protect the use of a product for the
specified method. This type of patent does not prevent a competitor
from making and marketing a product that is identical to our
products for an indication that is outside the scope of the
patented method. Moreover, even if competitors do not actively
promote their product for our targeted indications, physicians may
prescribe these products “off-label.” Although off-label
prescriptions may infringe or contribute to the infringement of
method-of use patents, the practice is common and such infringement
is difficult to prevent or prosecute.
The strength of patents in the biotechnology and pharmaceutical
field involves complex legal and scientific questions and can be
uncertain. The patent applications that we own may fail to result
in issued patents in the United States or in other foreign
countries. Even if the patents do successfully issue, third parties
may challenge the validity, enforceability, inventorship, or scope
thereof, which may result in such patents being narrowed,
invalidated or held unenforceable. Furthermore, even if they are
unchallenged, our patents and patent applications may not
adequately protect our intellectual property or prevent others from
designing around our claims. If the breadth or strength of
protection provided by the patents and patent applications we hold
with respect to our product candidates is threatened, it could
dissuade companies from collaborating with us to develop, and
threaten our ability to commercialize, our product candidates.
Further, if we encounter delays in our clinical trials, the period
of time during which we could market our product candidates under
patent protection would be reduced. Since patent applications in
the United States and most other countries are confidential for a
period of time after filing, we cannot be certain that we were the
first to file any patent application related to our product
candidates. Furthermore, for applications in which all claims are
entitled to a priority date before March 16, 2013, an interference
proceeding can be provoked by a third-party or instituted by the
United States Patent and Trademark Office or the USPTO, to
determine who was the first to invent any of the subject matter
covered by the patent claims of our applications.
In addition to the protection afforded by patents, we seek to rely
on trade secret protection and confidentiality agreements to
protect proprietary know-how that is not patentable, processes for
which patents are difficult to enforce and any other elements of
our drug discovery and development processes that involve
proprietary know- how, information or technology that is not
covered by patents. Although we require all of our employees to
assign their inventions to us, and require all of our employees,
consultants, advisors and any third parties who have access to our
proprietary know-how, information or technology to enter into
confidentiality agreements, we cannot be certain that our trade
secrets and other confidential proprietary information will not be
disclosed or that competitors will not otherwise gain access to our
trade secrets or independently develop substantially equivalent
information and techniques. Furthermore, the laws of some foreign
countries do not protect proprietary rights to the same extent or
in the same manner as the laws of the United States. As a result,
we may encounter significant problems in protecting and defending
our intellectual property both in the United States and abroad. If
we are unable to prevent unauthorized material disclosure of our
intellectual property to third parties, we will not be able to
establish or maintain a competitive advantage in our market, which
could materially adversely affect our business, operating results
and financial condition.
If we fail to comply with our obligations in the agreements
under which we in-license intellectual property and other rights
from third parties or otherwise experiences disruptions to our
business relationships with our licensors, we could lose
intellectual property rights that are important to our
business.
Our license agreement with CMU (the “CMU License Agreement”), as
the licensor (the “Licensor”), is important to our business, and we
expect to enter into additional license agreements in the future.
The CMU License Agreement imposes, and we expect that future
license agreements will impose, various royalties, sublicensing
fees and other obligations on us. If we fail to comply with our
obligations under these agreements, or if we file for bankruptcy,
we may be required to make certain payments to the Licensor, we may
lose the exclusivity of our license, or the Licensor may have the
right to terminate the license, in which event we would not be able
to develop or market products covered by the license. Additionally,
the royalties and other payments associated with these licenses
could materially and adversely affect our business, financial
condition and results of operations.
Pursuant to the terms of the CMU License Agreement, the Licensor
has the right to terminate the CMU License Agreement with respect
to the program licensed under certain circumstances, including, but
not limited to: (i) if we do not pay amounts when due and within
the applicable cure periods or (ii) if we file or have filed
against us a petition in bankruptcy or makes an assignment for the
benefit of creditors. In the event the CMU License Agreement is
terminated by the Licensor, all licenses (or, in the determination
of the Licensor, the exclusivity of such licenses) granted to us by
the Licensor will terminate immediately.
In some cases, patent prosecution of our licensed technology may be
controlled solely by the licensor. If our licensor fails to obtain
and maintain patent or other protection for the proprietary
intellectual property we in-license, then we could lose our rights
to the intellectual property or our exclusivity with respect to
those rights, and our competitors could market competing products
using the intellectual property. In certain cases, we may control
the prosecution of patents resulting from licensed technology. In
the event we breach any of our obligations related to such
prosecution, we may incur significant liability to our licensing
partners. Licensing of intellectual property is of critical
importance to our business and involves complex legal, business and
scientific issues. Disputes may arise regarding intellectual
property subject to a licensing agreement, 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 joint creation or use of intellectual
property by our licensors and us and our collaborators; and |
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the priority of invention of
patented technology. |
If disputes over intellectual property and other rights that we
have in-licensed 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 any such obligations
to our licensor, such licensor may terminate their licenses to us,
in which case we would not be able to market products covered by
these licenses. The loss of our licenses would have a material
adverse effect on our business, financial condition and results of
operations.
We may be required to pay royalties and sublicensing fees
pursuant to the CMU License Agreement, which could adversely affect
the overall profitability for us of any product candidates that we
may seek to commercialize.
Under the terms of the CMU License Agreement, we will be required
to pay royalties on future worldwide net product sales and a
percentage of sublicensing fees that we may earn. These royalty
payments and sublicensing fees could adversely affect the overall
profitability for us of any product candidates that we may seek to
commercialize.
We may not be able to protect our proprietary or licensed
technology in the marketplace.
We depend on our ability to protect our proprietary or licensed
technology. We rely on trade secret, patent, copyright and
trademark laws, and confidentiality, licensing and other agreements
with employees and third parties, all of which offer only limited
protection. Our success depends in large part on our ability and
any licensor’s or licensee’s ability to obtain and maintain patent
protection in the U.S. and other countries with respect to our
proprietary or licensed technology and product candidates. We
currently in-license some of our intellectual property rights to
develop our product candidates and may in-license additional
intellectual property rights in the future. We cannot be certain
that patent enforcement activities by our current or future
licensors have been or will be conducted in compliance with
applicable laws and regulations or will result in valid and
enforceable patents or other intellectual property rights. We also
cannot be certain that our current or future licensors will
allocate sufficient resources or prioritize their or our
enforcement of such patents. Even if we are not a party to these
legal actions, an adverse outcome could prevent us from continuing
to license intellectual property that we may need to operate our
business, which would have a material adverse effect on our
business, financial condition and results of operations.
If we are compelled to spend significant time and money protecting
or enforcing our licensed patents and future patents we may own,
designing around patents held by others or licensing or acquiring,
potentially for large fees, patents or other proprietary rights
held by others, our business, financial condition and results of
operations may be materially and adversely affected. If we are
unable to effectively protect the intellectual property that we own
or in-license, other companies may be able to offer the same or
similar products for sale, which could materially adversely affect
our business, financial condition and results of operations. The
patents of others from whom we may license technology, and any
future patents we may own, may be challenged, narrowed, invalidated
or circumvented, which could limit our ability to stop competitors
from marketing the same or similar products or limit the length of
term of patent protection that we may have for our products.
Obtaining and maintaining patent protection depends on
compliance with various procedural, document submission, fee
payment and other requirements imposed by governmental patent
agencies, and our patent protection for licensed patents, licensed
pending patent applications and potential future patent
applications and patents could be reduced or eliminated for
non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various
other governmental fees on patents and/or patent applications will
be due to be paid to the U.S. Patent and Trademark Office (“USPTO”)
and various governmental patent agencies outside of the U.S. in
several stages over the lifetime of the applicable patent and/or
patent application. The USPTO and various non-U.S. governmental
patent agencies require compliance with a number of procedural,
documentary, fee payment and other similar provisions during the
patent application process. In many cases, an inadvertent lapse can
be cured by payment of a late fee or by other means in accordance
with the applicable rules. 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. If this occurs with respect to
our in-licensed patents or patent applications we may file in the
future, our competitors might be able to use our technologies,
which would have a material adverse effect on our business,
financial condition and results of operations.
The patent position of pharmaceutical and biotechnology companies
generally is highly uncertain and involves complex legal and
factual questions for which many legal principles remain
unresolved. In recent years patent rights have been the subject of
significant litigation. As a result, the issuance, scope, validity,
enforceability and commercial value of our patent rights are highly
uncertain. Our pending and future patent applications may not
result in patents being issued in the United States or in other
jurisdictions which protect our technology or products or which
effectively prevent others from commercializing competitive
technologies and products. Changes in either the patent laws or
interpretation of the patent laws in the United States and other
countries may diminish the value of our patents or narrow the scope
of our patent protection. In addition, the laws of foreign
countries may not protect our rights to the same extent as the laws
of the United States. Publications of discoveries in the scientific
literature often lag behind the actual discoveries, and patent
applications in the United States and other jurisdictions are
typically not published until 18 months after filing, or in some
cases not at all. Therefore, we cannot be certain that we were the
first to make the inventions claimed in our patents or pending
patent applications, or that we were the first to file for patent
protection of such inventions. In addition, the U.S. Patent and
Trademark Office, or USPTO, might require that the term of a patent
issuing from a pending patent application be disclaimed and limited
to the term of another patent that is commonly owned or names a
common inventor. As a result, the issuance, scope, validity,
enforceability and commercial value of our patent rights are highly
uncertain.
Even if our patent applications issue as patents, they may not
issue in a form that will provide us with any meaningful
protection, prevent competitors from competing with us or otherwise
provide us with any competitive advantage. Our competitors may be
able to circumvent our owned or licensed patents by developing
similar or alternative technologies or products in a non-infringing
manner. The issuance of a patent is not conclusive as to its scope,
validity or enforceability, and our owned and in-licensed patents
may be challenged in the courts or patent offices in the United
States and abroad. Such challenges may result in the patent claims
of our owned or in-licensed patents being narrowed, invalidated or
held unenforceable, in whole or in part. This result could limit
our ability to stop or prevent us from stopping others from using
or commercializing similar or identical technology and products, or
limit the duration of the patent protection of our technology and
products. Such challenges may result in loss of exclusivity or
freedom to operate. 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 patent portfolio may not provide us with sufficient rights to
exclude others from commercializing products similar or identical
to ours or otherwise provide us with a competitive advantage.
The degree of future protection for our proprietary rights is
uncertain because legal means afford only limited protection and
may not adequately protect our rights or permit us to gain or keep
our competitive advantage. For example:
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others may be able to make or use
compounds that are similar to the pharmaceutical compounds used in
our product candidates but that are not covered by the claims of
our patents; |
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the active pharmaceutical
ingredients in our current product candidates will eventually
become commercially available in generic drug products, and no
patent protection may be available with regard to formulation or
method of use; |
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we or our licensors, as the case
may be, may fail to meet our obligations to the U.S. government in
regards to any in-licensed patents and patent applications funded
by U.S. government grants, leading to the loss of patent
rights; |
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we might not have been the first to
file patent applications for these inventions; |
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others may independently develop
similar or alternative technologies or duplicate any of our
technologies; |
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it is possible that our pending
patent applications will not result in issued patents; |
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it is possible that there are prior
public disclosures that could invalidate our patents, as the case
may be, or parts of our or their patents; |
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it is possible that others may
circumvent our patents; |
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it is possible that there are
unpublished patent applications maintained in secrecy that may
later issue with claims covering our products or technology similar
to ours; |
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the laws of foreign countries may
not protect our proprietary rights to the same extent as the laws
of the United States; |
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the claims of our issued patents or
patent applications, if and when issued, may not cover our product
candidates; |
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our patents may not provide us with
any competitive advantages, may be narrowed in scope, or be held
invalid or unenforceable as a result of legal challenges by third
parties; |
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the inventors of our patents or
patent applications may become involved with competitors, develop
products or processes which design around our patents, or become
hostile to us or the patents or patent applications on which they
are named as inventors; |
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collaborators may develop adjacent
or competing products to ours that are outside the scope of our
patents; |
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we may not develop additional
proprietary technologies for which we can obtain patent
protection; |
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it is possible that product
candidates or diagnostic tests we develop may be covered by third
parties’ patents or other exclusive rights; or |
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the patents of others may have an
adverse effect on our business. |
Patents that we currently license and patents that we may own or
license in the future do not necessarily ensure the protection of
our licensed or owned intellectual property for a number of
reasons, including, without limitation, the following:
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the patents may not be broad or
strong enough to prevent competition from other products that are
identical or similar to our product candidates; |
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there can be no assurance that the
term of a patent can be extended under the provisions of patent
term extensions afforded by U.S. law or similar provisions in
foreign countries, where available; |
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the issued patents and patents that
we may obtain or license in the future may not prevent generic
entry into the market for our product candidates; |
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we, or third parties from whom we
in-license or may license patents, may be required to disclaim part
of the term of one or more patents; |
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there may be prior art of which we
are not aware that may affect the validity or enforceability of a
patent claim; |
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there may be prior art of which we
are aware, which we do not believe affects the validity or
enforceability of a patent claim, but which, nonetheless,
ultimately may be found to affect the validity or enforceability of
a patent claim; |
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there may be other patents issued
to others that will affect our freedom to operate; |
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if the patents are challenged, a
court could determine that they are invalid or unenforceable; |
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there might be a significant change
in the law that governs patentability, validity and infringement of
our licensed patents or any future patents we may own that
adversely affects the scope of our patent rights; |
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a court could determine that a
competitor’s technology or product does not infringe our licensed
patents or any future patents we may own; and |
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the patents could irretrievably
lapse due to failure to pay fees or otherwise comply with
regulations or could be subject to compulsory licensing. |
If we encounter delays in our development or clinical trials, the
period of time during which we could market our potential products
under patent protection would be reduced.
Our competitors may be able to circumvent our licensed patents or
future patents we may own by developing similar or alternative
technologies or products in a non-infringing manner. Our
competitors may seek to market generic versions of any approved
products by submitting abbreviated new drug applications to the FDA
in which our competitors claim that our licensed patents or any
future patents we may own are invalid, unenforceable or not
infringed. Alternatively, our competitors may seek approval to
market their own products similar to or otherwise competitive with
our product candidates. In these circumstances, we may need to
defend or assert our licensed patents or any future patents we may
own, including by filing lawsuits alleging patent infringement. In
any of these types of proceedings, a court or other agency with
jurisdiction may find our licensed patents or any future patents we
may own invalid or unenforceable. We may also fail to identify
patentable aspects of our research and development before it is too
late to obtain patent protection. Even if we own or in-license
valid and enforceable patents, these patents still may not provide
protection against competing products or processes sufficient to
achieve our business objectives.
We also may rely on trade secrets to protect our technology,
especially where we do not believe patent protection is appropriate
or obtainable. However, trade secrets are difficult to protect, and
we have limited control over the protection of trade secrets used
by our collaborators and suppliers. Although we use reasonable
efforts to protect our trade secrets, our employees, consultants,
contractors, outside scientific collaborators and other advisors
may unintentionally or willfully disclose our information to
competitors or use such information to compete with us. Moreover,
our competitors may independently develop equivalent knowledge,
methods and know-how. If our confidential or proprietary
information is divulged to or acquired by third parties, including
our competitors, our competitive position in the marketplace will
be harmed and this would have a material adverse effect on our
business.
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 countries do not
protect intellectual property rights to the same extent as laws in
the United States. Consequently, we may not be able to prevent
third parties from practicing our inventions in all countries
outside the United States, or from selling or importing products
made using our inventions in and into the United States or other
countries. Competitors may use our technologies in countries where
we have not obtained patent protection to develop their own
products and further, may infringe our patents in territories where
we have patent protection, but enforcement is not as strong as in
the United States. These products may compete with our products and
our 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 certain countries.
The legal systems of certain countries, particularly certain
developing countries, do not favor the enforcement of patents,
trade secrets and other intellectual property, particularly those
relating to pharmaceutical and biotechnology 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 countries 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 infringe the intellectual property rights of others,
which may prevent or delay our drug development efforts and prevent
us from commercializing or increase the costs of commercializing
our product candidates.
Our commercial success depends significantly on our ability to
operate without infringing the patents and other intellectual
property rights of third parties. For example, there could be
issued patents of which we are not aware that our current or
potential future product candidates infringe. There also could be
patents that we believe we do not infringe, but that we may
ultimately be found to infringe. We have licensed intellectual
property from CMU under the CMU License Agreement, and prior
generation intellectual property was licensed to other entities.
Such intellectual property, in conjunction with further developed
technologies for gene editing therapies using such intellectual
property, may overlap with our own intellectual property.
As the biotechnology and pharmaceutical industries expand and more
patents are issued, the risk increases that others may assert our
product candidates infringe the patent rights of others. Moreover,
it is not always clear to industry participants, including us,
which patents cover various types of drugs, products or their
methods of use or manufacture. Thus, because of the large number of
patents issued and patent applications filed in our fields, there
may be a risk that third parties may allege they have patent rights
encompassing our product candidates, technologies or
methods. Furthermore, because the nucleic acid therapeutics
intellectual property landscape is still evolving and our product
candidates have not been through clinical trials or commercialized,
it is difficult to conclusively assess our freedom to operate
without infringing third party rights. There are numerous companies
that have pending patent applications and issued patents directed
to certain aspects of nucleic acid therapeutics. We are aware of
third-party competitors in the oligonucleotide therapeutics space,
whose patent filings and/or issued patents may include claims
directed to targets and/or products related to some of our
programs. It is possible that at the time that we commercialize our
products these third-party patent portfolios may include issued
patent claims that cover our product candidates or critical
features of their production or use. Our competitive position may
suffer if patents issued to third parties or other third-party
intellectual property rights cover, or may be alleged to cover, our
product candidates or elements thereof, or methods of manufacture
or use relevant to our development plans. In such cases, we may not
be in a position to develop or commercialize product candidates
unless we successfully pursue litigation to nullify or invalidate
the third-party intellectual property right concerned or enter into
a license agreement with the intellectual property right holder, if
available on commercially reasonable terms.
Moreover, patent applications are in some cases maintained in
secrecy until patents are issued. The publication of discoveries in
the scientific or patent literature frequently occurs substantially
later than the date on which the underlying discoveries were made
and patent applications were filed. Because patents can take many
years to issue, there may be currently pending applications of
which we are unaware that may later result in issued patents that
our product candidates or potential products infringe. For example,
pending applications may exist that claim or can be amended to
claim subject matter that our product candidates or potential
products infringe. Competitors may file continuing patent
applications claiming priority to already issued patents in the
form of continuation, divisional, or continuation-in-part
applications, in order to maintain the pendency of a patent family
and attempt to cover our product candidates. We cannot be
certain that others have not filed patent applications for
technology covered by our issued patents or our pending
applications, or that we were the first to invent the technology.
Our competitors may have filed, and may in the future file, patent
applications covering our products or technology similar to ours.
Any such patent application may have priority over our patent
applications or patents, which could require us to obtain rights to
issued patents covering such technologies.
Third parties may assert that we are employing their proprietary
technology without authorization and may sue us for patent or other
intellectual property infringement. These lawsuits are costly and
could adversely affect our business, financial condition and
results of operations and divert the attention of managerial and
scientific personnel. If we are sued for patent infringement, we
would need to demonstrate that our product candidates, potential
products or methods either do not infringe the claims of the
relevant patent or that the patent claims are invalid, and we may
not be able to do this. Proving invalidity is difficult. For
example, in the U.S., proving invalidity requires a showing of
clear and convincing evidence to overcome the presumption of
validity enjoyed by issued patents. Even if we are successful in
these proceedings, we may incur substantial costs and the time and
attention of our management and scientific personnel could be
diverted in pursuing these proceedings, which could have a material
adverse effect on us. In addition, we may not have sufficient
resources to bring these actions to a successful conclusion. If a
court holds that any third-party patents are valid, enforceable and
cover our products or their use, the holders of any of these
patents may be able to block our ability to commercialize our
products unless it acquires or obtains a license under the
applicable patents or until the patents expire.
If a third party claims that we infringe its intellectual property
rights, we may face a number of issues, including, but not limited
to: infringement and other intellectual property claims which,
regardless of merit, may be expensive and time-consuming to
litigate and may divert our management’s attention from our core
business; substantial damages for infringement, which we may have
to pay if a court decides that the product candidate or technology
at issue infringes on or violates the third party’s rights, and, if
the court finds that the infringement was willful, we could be
ordered to pay treble damages and the patent owner’s attorneys’
fees; a court prohibiting us from developing, manufacturing,
marketing or selling our product candidates, or from using our
proprietary technologies, unless the third party licenses its
product rights to us, which it is not required to do; if a license
is available from a third party, we may have to pay substantial
royalties, upfront fees and other amounts, and/or grant
cross-licenses to intellectual property rights for our products;
and redesigning our product candidates or processes so they do not
infringe, which may not be possible or may require substantial
monetary expenditures and time.
We may choose to challenge the patentability of claims in a third
party’s U.S. patent by requesting that the USPTO review the patent
claims in an ex-parte re-exam, inter
partes review or post-grant review proceedings. These
proceedings are expensive and may consume our time or other
resources. We may choose to challenge a third party’s patent in
patent opposition proceedings in the EPO, or other foreign patent
office. The costs of these opposition proceedings could be
substantial, and may consume our time or other resources. If we
fail to obtain a favorable result at the USPTO, EPO or other patent
office then we may be exposed to litigation by a third party
alleging that the patent may be infringed by our product candidates
or proprietary technologies.
We may not be able to enter into licensing arrangements or make
other arrangements at a reasonable cost or on reasonable terms. Any
inability to secure licenses or alternative technology could result
in delays in the introduction of our product candidates or lead to
prohibition of the manufacture or sale of products by us. Even if
we are able to obtain a license, it may be non-exclusive, thereby
giving our competitors access to the same technologies licensed to
us. We could be forced, including by court order, to cease
commercializing the infringing technology or product candidate. In
addition, in any such proceeding or litigation, we could be found
liable for monetary damages, including treble damages and
attorneys’ fees, if we are found to have willfully infringed a
patent. A finding of infringement could prevent us from
commercializing our product candidates or force us to cease some of
our business operations, which could materially and adversely
affect our business, financial condition and results of operations.
Any claims by third parties that we have misappropriated their
confidential information or trade secrets could have a similar
material and adverse effect on our business, financial condition
and results of operations. In addition, any uncertainties resulting
from the initiation and continuation of any litigation could have a
material adverse effect on our ability to raise the funds necessary
to continue our operations.
Our product candidates may also require specific formulations to
work effectively and efficiently. These formulations may be covered
by intellectual property rights held by others. We may develop
products containing our compounds and pre-existing pharmaceutical
compounds. These pharmaceutical compounds may be covered by
intellectual property rights held by others. We may be required by
the FDA or comparable foreign regulatory authorities to provide a
companion diagnostic test or tests with our product candidates.
These diagnostic test or tests may be covered by intellectual
property rights held by others. We may be unable to acquire or
in-license any relevant third-party intellectual property rights
that we identify as necessary or important to our business
operations.
We, or our licensors, may not be able to detect infringement
against our owned or in-licensed patents, as the case may be, which
may be especially difficult for manufacturing processes or
formulation patents. Even if we or our licensors detect
infringement by a third party of our owned or in-licensed patents,
we or our licensors, as the case may be, may choose not to pursue
litigation against or settlement with the third party. If we, or
our licensors, later sue such third party for patent infringement,
the third party may have certain legal defenses available to it,
which otherwise would not be available except for the delay between
when the infringement was first detected and when the suit was
brought. Such legal defenses may make it impossible for us or our
licensors to enforce our owned or in-licensed patents, as the case
may be, against such third party.
Any claims or lawsuits relating to infringement of
intellectual property rights brought by or against us will be
costly and time consuming and may adversely affect our business,
financial condition and results of operations.
Competitors may infringe or otherwise violate our patents,
trademarks, copyrights or other intellectual property. To counter
infringement or other violations, we may be required to initiate
litigation to enforce or defend our licensed and owned intellectual
property. Lawsuits to protect our intellectual property rights can
be very time consuming and costly. There is a substantial amount of
litigation involving patent and other intellectual property rights
in the pharmaceutical industry generally. Such litigation or
proceedings could substantially increase our operating expenses and
reduce the resources available for development activities or any
future sales, marketing or distribution activities.
In any infringement litigation, any award of monetary damages we
receive may not be commercially valuable. Furthermore, because of
the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of our
confidential information could be compromised by disclosure during
litigation. Moreover, there can be no assurance that we will have
sufficient financial or other resources to file and pursue such
infringement claims, which typically last for years before they are
resolved. Further, any claims we assert against a perceived
infringer could provoke these parties to assert counterclaims
against us alleging that we have infringed their patents. Some of
our competitors may be able to sustain the costs of such litigation
or proceedings more effectively than we can because of their
greater financial resources. Uncertainties resulting from the
initiation and continuation of patent litigation or other
proceedings could have a material adverse effect on our ability to
compete in the marketplace. In addition, in a patent infringement
proceeding, a court may decide that one or more of the patents we
assert is invalid or unenforceable, in whole or in part, construe
the patent’s claims narrowly or refuse to prevent the other party
from using the technology at issue on the grounds that our patents
do not cover the technology. Similarly, if we assert trademark
infringement claims, a court may determine that the marks we have
asserted are invalid or unenforceable or that the party against
whom we have asserted trademark infringement has superior rights to
the marks in question. In such a case, we could ultimately be
forced to cease use of such marks.
In addition, our licensed patents and patent applications, and
patents and patent applications that we may apply for, own or
license in the future, could face other challenges, such as
interference proceedings, opposition proceedings, re-examination
proceedings and other forms of post-grant review. Any of these
challenges, if successful, could result in the invalidation of, or
in a narrowing of the scope of, any of our licensed patents and
patent applications and patents and patent applications that we may
apply for, own or license in the future subject to challenge. Any
of these challenges, regardless of their success, would likely be
time-consuming and expensive to defend and resolve and would divert
our management and scientific personnel’s time and attention.
Any issued patents we may own covering our product candidates
could be narrowed or found invalid or unenforceable if challenged
in court or before administrative bodies in the United States or
abroad, including the USPTO.
Any of our intellectual property rights could be challenged or
invalidated despite measures we take to obtain patent and other
intellectual property protection with respect to our product
candidates and proprietary technology. For example, if we were to
initiate legal proceedings against a third party to enforce a
patent covering one of our product candidates, the defendant could
counterclaim that our patent is invalid and/or unenforceable. In
patent litigation in the U.S. and in some other jurisdictions,
defendant counterclaims alleging invalidity and/or unenforceability
are commonplace. Grounds for a validity challenge could be an
alleged failure to meet any of several statutory requirements, for
example, lack of novelty, obviousness or non-enablement. Grounds
for an unenforceability assertion could be an allegation that
someone connected with prosecution of the patent withheld material
information from the USPTO or the applicable foreign counterpart,
or made a misleading statement, during prosecution. A litigant or
the USPTO itself could challenge our patents on this basis even if
we believe that we have conducted our patent prosecution in
accordance with the duty of candor and in good faith. The outcome
following such a challenge is unpredictable.
With respect to challenges to the validity of our patents, for
example, there might be invalidating prior art, of which we and the
patent examiner were unaware during prosecution. 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 a product candidate. Even if a defendant
does not prevail on a legal assertion of invalidity and/or
unenforceability, our patent claims may be construed in a manner
that would limit our ability to enforce such claims against the
defendant and others. The cost of defending such a challenge,
particularly in a foreign jurisdiction, and any resulting loss of
patent protection could have a material adverse impact on one or
more of our product candidates and our business. Enforcing our
intellectual property rights against third parties may also cause
such third parties to file other counterclaims against us, which
could be costly to defend, particularly in a foreign jurisdiction,
and could require us to pay substantial damages, cease the sale of
certain products or enter into a license agreement and pay
royalties (which may not be possible on commercially reasonable
terms or at all). Any efforts to enforce our intellectual property
rights are also likely to be costly and may divert the efforts of
our scientific and management personnel.
We may be subject to claims challenging the inventorship of
our patents and other intellectual property.
We may be subject to claims that former employees, collaborators or
other third parties have an interest in our patents, trade secrets,
or other intellectual property as an inventor or co-inventor. For
example, we may have inventorship disputes arise from conflicting
obligations of employees, consultants or others who are involved in
developing our product candidates. While it is our policy to
require our employees and contractors who may be involved in the
development of intellectual property to execute agreements
assigning such intellectual property to us, we may be unsuccessful
in executing such an agreement with each party who in fact develops
intellectual property that we regard as our own. Our and their
assignment agreements may not be self-executing or may be breached,
and litigation may be necessary to defend against these and other
claims challenging inventorship or our ownership of our patents,
trade secrets or other intellectual property. If we fail in
defending any such claims, in addition to paying monetary damages,
we may lose valuable intellectual property rights, such as
exclusive ownership of, or right to use, intellectual property that
is important to our product candidates. Even if we are successful
in defending against such claims, litigation could result in
substantial costs and be a distraction to management and other
employees. Any of the foregoing could have a material adverse
effect on our business, financial condition, results of operations
and prospects.
We may not be able to protect our intellectual property
rights throughout the world.
Filing, prosecuting and defending patents on product candidates
throughout the world would be prohibitively expensive. Competitors
may use our licensed and owned technologies in jurisdictions where
we have not licensed or obtained patent protection to develop their
own products and, further, may export otherwise infringing products
to territories where we may obtain or license patent protection,
but where patent enforcement is not as strong as that in the U.S.
These products may compete with our product candidates in
jurisdictions where we do not have any issued or licensed patents,
and any future patent claims or other intellectual property rights
may not be effective or sufficient to prevent them from so
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 and other intellectual property protection, particularly
those relating to pharmaceuticals, which could make it difficult
for us to stop the infringement of our licensed patents and future
patents we may own, or marketing of competing products in violation
of our proprietary rights generally. Further, the laws of some
foreign countries do not protect proprietary rights to the same
extent or in the same manner as the laws of the U.S. As a result,
we may encounter significant problems in protecting and defending
our licensed and owned intellectual property both in the U.S. and
abroad. For example, China currently affords less protection to a
company’s intellectual property than some other jurisdictions. As
such, the lack of strong patent and other intellectual property
protection in China may significantly increase our vulnerability
regarding unauthorized disclosure or use of our intellectual
property and undermine our competitive position. Proceedings to
enforce our future patent rights, if any, in foreign jurisdictions
could result in substantial cost and divert our efforts and
attention from other aspects of our business.
We may be unable to adequately prevent disclosure of trade
secrets and other proprietary information.
In order to protect our proprietary and licensed technology and
processes, we rely in part on confidentiality agreements with our
corporate partners, employees, consultants, manufacturers, outside
scientific collaborators and sponsored researchers and other
advisors. These agreements may not effectively prevent disclosure
of our 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. Failure to obtain or
maintain trade secret protection could adversely affect our
competitive business position.
We may be subject to claims that our employees, consultants
or independent contractors have wrongfully used or disclosed
confidential information of third parties.
We expect to employ individuals who were previously employed at
other pharmaceutical companies. Although we have no knowledge of
any such claims against us, we may be subject to claims that us or
our employees, consultants or independent contractors have
inadvertently or otherwise used or disclosed confidential
information of our employees’ former employers or other third
parties. Litigation may be necessary to defend against these
claims. There is no guarantee of success in defending these claims,
and even if we are successful, litigation could result in
substantial cost and be a distraction to our management and other
employees.
We may become involved in disputes with our employees,
consultants, or independent contractors regarding the ownership of
intellectual property.
We will rely on our employees, consultants, and independent
contractors to develop intellectual property that we will own and
commercialize. These persons may dispute the terms of their
agreements with us, for example, their obligation to assign
intellectual property, work product, and know how to us. In case of
such a dispute, the person may assert that he owns the work that he
performed on our behalf, and that all corresponding intellectual
property rights vest in him. The person may assert ownership of the
intellectual property, refuse to disclose the intellectual property
to us, and fail to execute documents essential to document our
ownership. If the person withholds the disclosure of new
technology, we may not even know what technology has been withheld
from us, or that the technology even exists. In this case, we may
never be able to identify and perfect title to the technology. Such
a person would pose a significant risk of disclosure of our
confidential intellectual property. If the person chose to reveal
the technology to a third party, we may have no means or
opportunity to prevent the disclosure. Our confidential
intellectual property would then become known to third parties,
possibly even without us knowing about the disclosure. We would
suffer material adverse effects from the disclosure and misuse of
our intellectual property. To enforce our rights would require a
complex dispute of state and federal intellectual property law to
take place in a state court. The outcome of such a dispute in a
state court, especially in a jury trial, is highly uncertain.
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 for a product candidate, we may be open to competition
from competitive medications, including generic medications. Given
the amount of time required for the development, testing and
regulatory review of new product candidates, patents protecting
such product candidates might expire before or shortly after such
product candidates are commercialized. As a result, our patent
portfolio may not provide us with sufficient rights to exclude
others from commercializing product candidates similar or identical
to ours for a meaningful amount of time, or at all.
Depending upon the timing, duration and conditions of any FDA
marketing approval of our product candidates, one or more of our
U.S. patents may be eligible for limited patent term extension
under the Drug Price Competition and Patent Term Restoration Act of
1984, referred to as the Hatch-Waxman Amendments, and similar
legislation in the European Union and certain other countries. The
Hatch-Waxman Amendments permit a patent term extension of up to
five years for a patent covering an approved product as
compensation for effective patent term lost during product
development and the FDA regulatory review process. However, we may
not receive an extension if we fail to exercise due diligence
during the testing phase or regulatory review process, fail to
apply within applicable deadlines, fail to apply prior to
expiration of relevant patents or otherwise fail to satisfy
applicable requirements. Moreover, the length of the extension
could be less than we request. Only one patent per approved product
can be extended, the extension cannot extend the total patent term
beyond 14 years from approval and only those claims covering the
approved drug, a method for using it or a method for manufacturing
it may be extended. If we are unable to obtain patent term
extension or the term of any such extension is less than we
request, the period during which we can enforce our patent rights
for the applicable product candidate will be shortened and our
competitors may obtain approval to market competing products
sooner. As a result, our revenue from applicable products could be
reduced. Further, if this occurs, our competitors may take
advantage of our investment in development and trials by
referencing our clinical and preclinical data and launch their
product earlier than might otherwise be the case, and our
competitive position, business, financial condition, results of
operations and prospects could be materially harmed.
Also, there are detailed rules and requirements regarding the
patents that may be submitted to the FDA for listing in the
Approved Drug Products with Therapeutic Equivalence Evaluations, or
the Orange Book. We may be unable to obtain patents covering our
product candidates that contain one or more claims that satisfy the
requirements for listing in the Orange Book. Even if we submit a
patent for listing in the Orange Book, the FDA may decline to list
the patent, or a manufacturer of generic drugs may challenge the
listing. If one of our product candidates is approved and a patent
covering that product candidate is not listed in the Orange Book, a
manufacturer of generic drugs would not have to provide advance
notice to us of any abbreviated new drug application filed with the
FDA to obtain permission to sell a generic version of such product
candidate. Any of the foregoing could harm our competitive
position, business, financial condition, results of operations and
prospects.
Risks Related to Government Regulation
We are very early in our development efforts. All of our
product candidates are still in preclinical development. If we are
unable to advance our product candidates to clinical development,
obtain regulatory approval and ultimately commercialize our product
candidates or experience significant delays in doing so, our
business will be materially harmed.
We are very early in our development efforts, and all of our
product candidates are still in preclinical development. We have
invested substantially all of our efforts and financial resources
in the identification and preclinical development of PATrOL-enabled
therapies, including the development programs for the treatment of
Huntington’s Disease and Myotonic Dystrophy Type 1. Our ability to
generate product revenues, which we do not expect will occur for
many years, if ever, will depend on the successful development and
eventual commercialization of our product candidates, which may
never occur. We currently generate no revenue from sales of any
products, and we may never be able to develop or commercialize a
marketable product. In addition, certain of our product candidate
development programs contemplate the development of companion
diagnostics, which are assays or tests to identify an appropriate
patient population. Companion diagnostics are subject to regulation
as medical devices and must themselves be approved for marketing by
the FDA or certain other foreign regulatory agencies before we may
commercialize our product candidates. The success of our product
candidates will depend on several factors, including the
following:
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successful completion of
preclinical studies; |
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· |
approval of INDs for our planned
clinical trials or future clinical trials; |
| |
· |
successful enrollment in, and
completion of, clinical trials; |
| |
· |
successful development of companion
diagnostics for use with certain of our product candidates; |
| |
· |
receipt of regulatory approvals
from applicable regulatory authorities; |
| |
· |
establishing commercial
manufacturing capabilities or making arrangements with third-party
manufacturers for clinical supply and commercial
manufacturing; |
| |
· |
obtaining and maintaining patent
and trade secret protection or regulatory exclusivity for our
product candidates; |
| |
· |
launching commercial sales of our
product candidates, if and when approved, whether alone or in
collaboration with others; |
| |
· |
acceptance of the product
candidates, if and when approved, by patients, the medical
community and third-party payors; |
| |
· |
effectively competing with other
therapies; |
| |
· |
obtaining and maintaining
third-party insurance coverage and adequate reimbursement; |
| |
· |
enforcing and defending
intellectual property rights and claims; and |
| |
· |
maintaining a continued acceptable
safety profile of the product candidates following approval, if
approved. |
If we do not achieve one or more of these factors in a timely
manner or at all, we could experience significant delays or an
inability to successfully commercialize our product candidates,
which would materially harm our business. If we do not receive
regulatory approvals for our product candidates, we may not be able
to continue our operations.
Furthermore, the FDA has relatively limited experience with nucleic
acid therapeutics, particularly PNAs, which may increase the
complexity, uncertainty and length of the regulatory review process
for our product candidates. To date, the FDA has approved few
nucleic acid therapeutics for marketing and commercialization, and
the FDA and our foreign counterparts have not yet established any
definitive policies, practices or guidelines specifically in
relation to these drugs. The lack of policies, practices or
guidelines specific to nucleic acid therapeutics may hinder or slow
review by the FDA of any regulatory filings that we may submit.
Moreover, the FDA may respond to these submissions by defining
requirements we may not have anticipated. Such responses could lead
to significant delays in the development of our product candidates.
In addition, because there may be approved treatments for some of
the diseases for which we may seek approval, in order to receive
regulatory approval, we may need to demonstrate through clinical
trials that the product candidates we develop to treat these
diseases, if any, are not only safe and effective, but safer or
more effective than existing products. Furthermore, in recent
years, there has been increased public and political pressure on
the FDA with respect to the approval process for new drugs, and the
FDA’s standards, especially regarding drug safety, appear to have
become more stringent. As a result of the foregoing factors, we may
never receive regulatory approval to market and commercialize any
product candidate.
Preclinical and clinical trials are expensive, time-consuming
and difficult to design and implement, and involve uncertain
outcomes. Furthermore, results of earlier preclinical studies and
clinical trials may not be predictive of results of future
preclinical studies or clinical trials.
All of our product candidates are still in the preclinical stage,
and their risk of failure is high. Before we can commence clinical
trials for a product candidate, we must complete extensive
preclinical testing and studies that support our planned INDs in
the U.S., or similar applications in other jurisdictions. We cannot
be certain of the timely completion or outcome of our preclinical
testing and studies and cannot predict if the FDA or other
regulatory authorities will accept our proposed clinical programs
or if the outcome of our preclinical testing and studies will
ultimately support the further development of our programs. It is
also impossible to predict when or if any of our product candidates
will complete clinical trials evaluating their safety and
effectiveness in humans or will receive regulatory approval. To
obtain the requisite regulatory approvals to market and sell any of
our product candidates, we must demonstrate through extensive
preclinical studies and clinical trials that our PATrOL™ platform
and product candidates are safe and effective in humans for use in
each target indication. To date, we have never advanced a product
candidate into a clinical trial. Preclinical and clinical testing
is expensive and can take many years to complete, and the outcome
is inherently uncertain. Failure can occur at any time during the
preclinical or clinical trial process. Our preclinical programs may
experience delays or may never advance to clinical trials, which
would adversely affect our ability to obtain regulatory approvals
or commercialize these programs on a timely basis or at all, which
would have an adverse effect on our business, financial condition
and results of operations.
Additionally, the results of preclinical studies and future
clinical trials of product candidates may not be predictive of the
results of later-stage clinical trials. Product candidates in later
stages of clinical trials may fail to show the desired safety and
efficacy results despite having progressed through preclinical
studies and initial clinical trials. Many companies in the
pharmaceutical industry have suffered significant setbacks in
advanced clinical trials due to adverse safety profiles or lack of
efficacy, notwithstanding promising results in earlier studies.
Similarly, our future clinical trial results may not be successful
for these or other reasons.
This product candidate development risk is heightened by any
changes in the anticipated clinical trials compared to the
completed clinical trials. As product candidates are developed from
preclinical through early to late stage clinical trials towards
approval and commercialization, it is customary that various
aspects of the development program, such as manufacturing and
methods of administration, are altered along the way in an effort
to optimize processes and results. While these types of changes are
common and are intended to optimize the product candidates for late
stage clinical trials, approval and commercialization, such changes
carry the risk that they will not achieve these intended
objectives.
Any of these changes could make the results of our anticipated
clinical trials or other future clinical trials we may initiate
less predictable and could cause our product candidates to perform
differently, including causing toxicities, which could delay
completion of our clinical trials, delay approval of our product
candidates, and/or jeopardize our ability to commence product sales
and generate revenues.
We may rely on third parties to conduct
investigator-sponsored clinical trials of our product candidates.
Any failure by a third party to meet our obligations with respect
to the clinical development of our product candidates may delay or
impair our ability to obtain regulatory approval for other product
candidates.
We may rely on academic and private non-academic institutions to
conduct and sponsor preclinical and clinical trials relating to our
product candidates. We will not control the design or conduct of
the investigator-sponsored trials, and it is possible that the FDA
or non-U.S. regulatory authorities will not view these
investigator-sponsored trials as providing adequate support for
future preclinical and clinical trials, whether controlled by us or
third parties, for any one or more reasons, including elements of
the design or execution of the trials or safety concerns or other
trial results. For example, we collaborate with, and rely on,
academic centers to conduct preclinical and
non-investigator-sponsored research and it is possible that the
interests of such academic centers may not be aligned with our
interests.
Such arrangements will likely provide us certain information rights
with respect to the investigator-sponsored trials, including access
to and the ability to use and reference the data, including for our
own regulatory filings, resulting from the investigator-sponsored
trials. However, we would not have control over the timing and
reporting of the data from investigator-sponsored trials, nor would
we own the data from the investigator-sponsored trials. If we are
unable to confirm or replicate the results from the
investigator-sponsored trials or if negative results are obtained,
we would likely be further delayed or prevented from advancing
further clinical development of our product candidates. Further, if
investigators or institutions breach their obligations with respect
to the clinical development of our product candidates, or if the
data proves to be inadequate compared to the first-hand knowledge
we might have gained had the investigator-sponsored trials been
sponsored and conducted by us, then our ability to design and
conduct any future preclinical or clinical trials ourselves may be
adversely affected.
Additionally, the FDA or non-U.S. regulatory authorities may
disagree with the sufficiency of our right of reference to the
preclinical, manufacturing or clinical data generated by these
investigator-sponsored trials, or our interpretation of
preclinical, manufacturing or clinical data from these
investigator-sponsored trials. If so, the FDA or other non-U.S.
regulatory authorities may require us to obtain and submit
additional preclinical, manufacturing, or clinical data before we
may initiate our anticipated trials and/or may not accept such
additional data as adequate to initiate our anticipated trials.
Our product candidates may cause undesirable side effects
that could delay or prevent their regulatory approval or
commercialization or have other significant adverse implications on
our business, financial condition and results of
operations.
Undesirable side effects observed in preclinical studies or in
clinical trials with our product candidates could interrupt, delay
or halt their development and could result in the denial of
regulatory approval by the FDA, the EMA or comparable foreign
authorities for any or all targeted indications or adversely affect
the marketability of any product candidates developed using our
PATrOL™ platform that receive regulatory approval. In turn, this
could eliminate or limit our ability to commercialize our product
candidates.
Our product candidates may exhibit adverse effects in preclinical
toxicology studies and adverse interactions with other drugs. There
are also risks associated with additional requirements the FDA, the
EMA or comparable foreign authorities may impose for marketing
approval with regard to a particular disease.
Our product candidates may require a risk management program that
could include patient and healthcare provider education, usage
guidelines, appropriate promotional activities, a post-marketing
observational study and ongoing safety and reporting mechanisms,
among other requirements. Prescribing could be limited to physician
specialists or physicians trained in the use of the drug, or could
be limited to a more restricted patient population. Any risk
management program required for approval of our product candidates
could potentially have an adverse effect on our business, financial
condition and results of operations.
Undesirable side effects involving our product candidates may have
other significant adverse implications on our business, financial
condition and results of operations. For example:
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we may be unable to obtain
additional financing on acceptable terms, if at all; |
|
· |
our collaborators may terminate any
development agreements covering these product candidates; |
|
· |
if any development agreements are
terminated, we may determine not to further develop the affected
product candidates due to resource constraints and may not be able
to establish additional collaborations for their further
development on acceptable terms, if at all; |
|
· |
if we were to later continue the
development of these product candidates and receive regulatory
approval, earlier findings may significantly limit their
marketability and thus significantly lower our potential future
revenues from their commercialization; |
|
· |
we may be subject to product
liability or stockholder litigation; and |
|
· |
we may be unable to attract and
retain key employees. |
In addition, if any of our product candidates receive marketing
approval and we or others later identify undesirable side effects
caused by the product:
|
· |
regulatory authorities may withdraw
their approval of the PATrOL™-enabled product, or we or our
partners may decide to cease marketing and sale of the product
voluntarily; |
|
· |
we may be required to change the
way the product is administered, conduct additional preclinical
studies or additional clinical trials after initial clinical trials
regarding the product, change the labeling of the product, or
change the product’s manufacturing facilities; and |
|
· |
our reputation may suffer. |
Any of these events could prevent us from achieving or maintaining
market acceptance of the affected product and could substantially
increase the costs and expenses of commercializing the product,
which in turn could delay or prevent us from generating significant
revenues from the sale of the product.
Delays in the commencement or completion of clinical trials
could result in increased costs to us and delay our ability to
establish strategic collaborations.
Delays in the commencement or completion of clinical trials could
significantly impact our drug development costs. We do not know
whether anticipated clinical trials will begin on time or be
completed on schedule, if at all. The commencement of clinical
trials can be delayed for a variety of reasons, including, but not
limited to, delays related to:
| |
· |
obtaining regulatory approval to
commence one or more clinical trials; |
| |
· |
reaching agreement on acceptable
terms with prospective third-party contract research organizations
(“CROs”) and clinical trial sites; |
| |
· |
manufacturing sufficient quantities
of a product candidate or other materials necessary to conduct
clinical trials; |
| |
· |
changes in regulations as part of a
response to the COVID-19 pandemic, which may require us to change
the ways in which future clinical trials would otherwise be
conducted; |
| |
· |
obtaining institutional review
board approval to conduct one or more clinical trials at a
prospective site; |
| |
· |
recruiting and enrolling patients
to participate in one or more clinical trials; and |
| |
· |
the failure of our collaborators to
adequately resource our product candidates due to their focus on
other programs or as a result of general market conditions. |
In addition, once a clinical trial has begun, it may be suspended
or terminated by us, our collaborators, the institutional review
boards or data safety monitoring boards charged with overseeing our
clinical trials, the FDA, the EMA or comparable foreign authorities
due to a number of factors, including:
|
· |
failure to conduct the clinical
trial in accordance with regulatory requirements or clinical
protocols; |
|
· |
inspection of the clinical trial
operations or clinical trial site by the FDA, the EMA or comparable
foreign authorities resulting in the imposition of a clinical
hold; |
|
· |
unforeseen safety issues; |
|
· |
lack of adequate funding to
continue the clinical trials; and |
|
· |
lack of patient enrollment in
clinical studies. |
If we experience delays in the completion or termination of any
clinical trial of our product candidates, the commercial prospects
of our product candidates will be harmed, and our ability to
commence product sales and generate product revenues from any of
our product candidates will be delayed. In addition, any delays in
completing our clinical trials will increase our costs and slow
down our product candidate development and approval process. Delays
in completing our clinical trials could also allow our competitors
to obtain marketing approval before we do or shorten the patent
protection period during which we may have the exclusive right to
commercialize our product candidates. Any of these occurrences may
harm our business, financial condition and prospects significantly.
In addition, many of the factors that cause, or lead to, a delay in
the commencement or completion of clinical trials may also
ultimately lead to the denial of regulatory approval of our product
candidates.
If we experience delays in the enrollment of patients in our
clinical trials, our receipt of necessary regulatory approvals
could be delayed or prevented.
We may not be able to initiate or continue clinical trials for our
product candidates if we are unable to locate and enroll a
sufficient number of eligible patients to participate in these
trials as required by the FDA or other regulatory authorities.
Patient enrollment, a significant factor in the timing of clinical
trials, is affected by many factors, including the size and nature
of the patient population, the proximity of patients to clinical
sites, the eligibility criteria for the trial, the design of the
clinical trial, competing clinical trials and clinicians’ and
patients’ perceptions as to the potential advantages of the drug
being studied in relation to other available therapies, including
any new drugs that may be approved for the indications we are
investigating. In addition, the COVID-19 pandemic may negatively
impact our ability to recruit and enroll patients for our clinical
trials because they may be reluctant or unable to visit clinical
sites, or may delay seeking treatment for chronic conditions.
If we fail to enroll and maintain the number of patients for which
the clinical trial was designed, the statistical power of that
clinical trial may be reduced, which would make it harder to
demonstrate that the product candidate being tested in such
clinical trial is safe and effective. Additionally, enrollment
delays in our clinical trials may result in increased development
costs for our product candidates, which would cause our value to
decline and limit our ability to obtain additional financing. Our
inability to enroll a sufficient number of patients for any of our
future clinical trials would result in significant delays or may
require us to abandon one or more clinical trials altogether.
We intend to rely on third parties to conduct our preclinical
studies and clinical trials and perform other tasks. If these third
parties do not successfully carry out their contractual duties,
meet expected deadlines, or comply with regulatory requirements, we
may not be able to obtain regulatory approval for or commercialize
our product candidates and our business, financial condition and
results of operations could be substantially harmed.
We intend to rely upon third-party CROs, medical institutions,
clinical investigators and contract laboratories to monitor and
manage data for our ongoing preclinical and anticipated clinical
programs. Nevertheless, we maintain responsibility for ensuring
that each of our preclinical studies are, and anticipated clinical
studies will be, conducted in accordance with the applicable
protocol, legal, regulatory, and scientific standards and our
reliance on these third parties does not relieve the Company of our
regulatory responsibilities. The Company and our CROs and other
vendors are required to comply with current requirements on cGMP,
good clinical practices (“GCP”) and GLP, which are a collection of
laws and regulations enforced by the FDA, the EMA and comparable
foreign authorities for all of our product candidates in clinical
development. Regulatory authorities enforce these regulations
through periodic inspections of preclinical study and clinical
trial sponsors, principal investigators, preclinical study and
clinical trial sites, and other contractors. If we or any of our
CROs or vendors fails to comply with applicable regulations, the
data generated in our preclinical studies and clinical trials may
be deemed unreliable and the FDA, the EMA or comparable foreign
authorities may require us to perform additional preclinical
studies and clinical trials before approving our marketing
applications. We cannot assure you that upon inspection by a given
regulatory authority, such regulatory authority will determine that
any of our clinical trials comply with GCP regulations. In
addition, our clinical trials must be conducted with products
produced consistent with cGMP regulations. Our failure to comply
with these regulations may require it to repeat clinical trials,
which would delay the development and regulatory approval
processes.
We may also not be able to enter into arrangements with CROs on
commercially reasonable terms, or at all. In addition, our CROs
will not be our employees, and except for remedies available to us
under our agreements with such CROs, we will not be able to control
whether or not they devote sufficient time and resources to our
ongoing preclinical and clinical programs. If CROs do not
successfully carry out their contractual duties or obligations or
meet expected deadlines, if they need to be replaced or if the
quality or accuracy of the data they obtain is compromised due to
the failure to adhere to our protocols, regulatory requirements, or
for other reasons, our clinical trials may be extended, delayed or
terminated and we may not be able to obtain regulatory approval for
or successfully commercialize our product candidates. CROs may also
generate higher costs than anticipated. As a result, our business,
financial condition and results of operations and the commercial
prospects for our product candidates could be materially and
adversely affected, our costs could increase, and our ability to
generate revenue could be delayed.
Switching or adding additional CROs, medical institutions, clinical
investigators or contract laboratories involves additional cost and
requires management time and focus. In addition, there is a natural
transition period when a new CRO commences work replacing a
previous CRO. As a result, delays occur, which can materially
impact our ability to meet our desired development timelines. There
can be no assurance that we will not encounter similar challenges
or delays in the future or that these delays or challenges will not
have a material adverse effect on our business, financial condition
or results of operations.
Our product candidates are subject to extensive regulation
under the FDA, the EMA or comparable foreign authorities, which can
be costly and time consuming, cause unanticipated delays or prevent
the receipt of the required approvals to commercialize our product
candidates.
The clinical development, manufacturing, labeling, storage,
record-keeping, advertising, promotion, export, marketing and
distribution of our product candidates are subject to extensive
regulation by the FDA and other U.S. regulatory agencies, the EMA
or comparable authorities in foreign markets. In the U.S., neither
us nor our collaborators are permitted to market our product
candidates until we or our collaborators receive approval of an NDA
from the FDA or receive similar approvals abroad. The process of
obtaining these approvals is expensive, often takes many years, and
can vary substantially based upon the type, complexity and novelty
of the product candidates involved. Approval policies or
regulations may change and may be influenced by the results of
other similar or competitive products, making it more difficult for
us to achieve such approval in a timely manner or at all. Any
guidance that may result from recent FDA advisory panel discussions
may make it more expensive to develop and commercialize such
product candidates. In addition, as a company, we have not
previously filed NDAs with the FDA or filed similar applications
with other foreign regulatory agencies. This lack of experience may
impede our ability to obtain FDA or other foreign regulatory agency
approval in a timely manner, if at all, for our product candidates
for which development and commercialization is our
responsibility.
Despite the time and expense invested, regulatory approval is never
guaranteed. The FDA, the EMA or comparable foreign authorities can
delay, limit or deny approval of a product candidate for many
reasons, including:
| |
· |
a product candidate may not be
deemed safe or effective; |
| |
· |
agency officials of the FDA, the
EMA or comparable foreign authorities may not find the data from
non-clinical or preclinical studies and clinical trials generated
during development to be sufficient; |
| |
· |
the FDA, the EMA or comparable
foreign authorities may not approve our third-party manufacturers’
processes or facilities; or |
| |
· |
the FDA, the EMA or a comparable
foreign authority may change our approval policies or adopt new
regulations. |
Our inability to obtain these approvals would prevent us from
commercializing our product candidates.
The FDA, the NIH and the EMA have demonstrated caution in
their regulation of gene therapy treatments, and ethical and legal
concerns about gene therapy and genetic testing may result in
additional regulations or restrictions on the development and
commercialization of our product candidates, which may be difficult
to predict.
The FDA, National Institutes of Health (“NIH”) and the EMA have
each expressed interest in further regulating biotechnology,
including gene therapy and genetic testing. For example, the EMA
advocates a risk-based approach to the development of a gene
therapy product. Agencies at both the federal and state level in
the United States, as well as U.S. congressional committees and
other governments or governing agencies, have also expressed
interest in further regulating the biotechnology industry. Such
action may delay or prevent commercialization of some or all of our
product candidates.
Regulatory requirements in the U.S. and in other jurisdictions
governing gene therapy products have changed frequently and may
continue to change in the future. The FDA established the Office of
Cellular, Tissue and Gene Therapies within its Center for Biologics
Evaluation and Research to consolidate the review of gene therapy
and related products, and established the Cellular, Tissue and Gene
Therapies Advisory Committee to advise this review. Prior to
submitting an IND, our human clinical trials will be subject to
review by the NIH Office of Biotechnology Activities (“OBA”)
Recombinant DNA Advisory Committee (the “RAC”). Following an
initial review, RAC members make a recommendation as to whether the
protocol raises important scientific, safety, medical, ethical or
social issues that warrant in-depth discussion at the RAC’s
quarterly meetings. Even though the FDA decides whether individual
gene therapy protocols may proceed under an IND, the RAC’s
recommendations are shared with the FDA and the RAC public review
process, if undertaken, can delay the initiation of a clinical
trial, even if the FDA has reviewed the trial design and details
and has not objected to its initiation or has notified the sponsor
that the study may begin. Conversely, the FDA can put an IND on a
clinical hold even if the RAC has provided a favorable review or
has recommended against an in-depth, public review. Moreover, under
guidelines published by the NIH, patient enrollment in our future
gene silencing clinical trials cannot begin until the investigator
for such clinical trial has received a letter from the OBA
indicating that the RAC review process has been completed; and
Institutional Biosafety Committee (“IBC”) approval as well as all
other applicable regulatory authorizations have been obtained. In
addition to the government regulators, the IBC and IRB of each
institution at which we will conduct clinical trials of our product
candidates, or a central IRB if appropriate, would need to review
the proposed clinical trial to assess the safety of the trial. In
addition, adverse developments in clinical trials of gene therapy
products conducted by others may cause the FDA or other oversight
bodies to change the requirements for approval of any of our
product candidates. Similarly, the EMA governs the development of
gene therapies in the European Union and may issue new guidelines
concerning the development and marketing authorization for gene
therapy products and require that we comply with these new
guidelines. These regulatory review agencies and committees and the
new requirements or guidelines they promulgate may lengthen the
regulatory review process, require us to perform additional studies
or trials, increase our development costs, lead to changes in
regulatory positions and interpretations, delay or prevent approval
and commercialization of our product candidates or lead to
significant post-approval limitations or restrictions. As we
advance our product candidates, we will be required to consult with
these regulatory agencies and committees and comply with applicable
requirements and guidelines. If we fail to do so, we may be
required to delay or discontinue development of such product
candidates. These additional processes may result in a review and
approval process that is longer than we otherwise would have
expected. Delays as a result of an increased or lengthier
regulatory approval process or further restrictions on the
development of our product candidates can be costly and could
negatively impact our or our collaborators’ ability to complete
clinical trials and commercialize our current and future product
candidates in a timely manner, if at all.
Even if our product candidates receive regulatory approval in
the U.S., it may never receive approval or commercialize our
products outside of the U.S.
In order to market any products outside of the U.S., we must
establish and comply with numerous and varying regulatory
requirements of other countries regarding safety and efficacy.
Approval procedures vary among countries and can involve additional
product testing and additional administrative review periods. The
time required to obtain approval in other countries might differ
from that required to obtain FDA approval. The regulatory approval
process in other countries may include all of the risks detailed
above regarding FDA approval in the U.S. as well as other risks.
Regulatory approval in one country does not ensure regulatory
approval in another, but a failure or delay in obtaining regulatory
approval in one country may have a negative effect on the
regulatory process in others. Failure to obtain regulatory approval
in other countries or any delay seeking or obtaining such approval
would impair our ability to develop foreign markets for our product
candidates.
Even if any of our product candidates receive regulatory
approval, our product candidates may still face future development
and regulatory difficulties.
If any of our product candidates receive regulatory approval, the
FDA, the EMA or comparable foreign authorities may still impose
significant restrictions on the indicated uses or marketing of the
product candidates or impose ongoing requirements for potentially
costly post-approval studies and trials. In addition, regulatory
agencies subject a product, our manufacturer and the manufacturer’s
facilities to continual review and periodic inspections. If a
regulatory agency discovers previously unknown problems with a
product, including adverse events of unanticipated severity or
frequency, or problems with the facility where the product is
manufactured, a regulatory agency may impose restrictions on that
product, our collaborators or us, including requiring withdrawal of
the product from the market. Our product candidates will also be
subject to ongoing FDA, EMA or comparable foreign authorities’
requirements for the labeling, packaging, storage, advertising,
promotion, record-keeping and submission of safety and other
post-market information on the drug. If our product candidates fail
to comply with applicable regulatory requirements, a regulatory
agency may:
| |
· |
issue warning letters or other
notices of possible violations; |
| |
· |
impose civil or criminal penalties
or fines or seek disgorgement of revenue or profits; |
| |
· |
suspend any ongoing clinical
trials; |
| |
· |
refuse to approve pending
applications or supplements to approved applications filed by us or
our collaborators; |
| |
· |
withdraw any regulatory
approvals; |
| |
· |
impose restrictions on operations,
including costly new manufacturing requirements, or shut down our
manufacturing operations; or |
| |
· |
seize or detain products or require
a product recall. |
The FDA, the EMA and comparable foreign authorities actively
enforce the laws and regulations prohibiting the promotion of
off-label uses.
The FDA, the EMA and comparable foreign authorities strictly
regulate the promotional claims that may be made about prescription
products, such as our product candidates, if approved. In
particular, a product may not be promoted for uses that are not
approved by the FDA, the EMA or comparable foreign authorities as
reflected in the product’s approved labeling. If we receive
marketing approval for our product candidates for our proposed
indications, physicians may nevertheless use our products for their
patients in a manner that is inconsistent with the approved label,
if the physicians personally believe in their professional medical
judgment that our products could be used in such manner. However,
if we are found to have promoted our product candidates, if
approved, for any off-label uses, the federal government could levy
civil, criminal or administrative penalties, and seek fines against
us. Such enforcement has become more common in the industry. The
FDA, the EMA or comparable foreign authorities could also request
that we enter into a consent decree or a corporate integrity
agreement, or seek a permanent injunction against us under which
specified promotional conduct is monitored, changed or curtailed.
If we cannot successfully manage the promotion of our product
candidates, if approved, we could become subject to significant
liability, which would materially adversely affect our business,
financial condition and results of operations.
We and our potential contract manufacturers are subject to
significant regulation with respect to manufacturing our product
candidates. The manufacturing facilities on which we will rely may
not continue to meet regulatory requirements.
All entities involved in the preparation of therapeutics for
clinical trials or commercial sale, including our potential
contract manufacturers for our product candidates, are subject to
extensive regulation. Components of a finished therapeutic product
approved for commercial sale or used in late-stage clinical trials
must be manufactured in accordance with cGMP. These regulations
govern manufacturing processes and procedures and the
implementation and operation of quality systems to control and
assure the quality of investigational products and products
approved for sale. Poor control of production processes can lead to
the introduction of contaminants or to inadvertent changes in the
properties or stability of our product candidates that may not be
detectable in final product testing. We or our potential contract
manufacturers must supply all necessary documentation in support of
an NDA or marketing authorization application (“MAA”) on a timely
basis and must adhere to GLP and cGMP regulations enforced by the
FDA, the EMA or comparable foreign authorities through their
facilities inspection program. Some of our potential contract
manufacturers may not have produced a commercially approved
pharmaceutical product and therefore may not have obtained the
requisite regulatory authority approvals to do so. The facilities
and quality systems of some or all of our potential third-party
contractors must pass a pre-approval inspection for compliance with
the applicable regulations as a condition of regulatory approval of
our product candidates or any of our other potential product
candidates. In addition, the regulatory authorities may, at any
time, audit or inspect a manufacturing facility involved with the
preparation of our product candidates or the associated quality
systems for compliance with the regulations applicable to the
activities being conducted. Although we plan to oversee the
contract manufacturers, we cannot control the manufacturing process
of, and will be completely dependent on, our contract manufacturing
partners for compliance with applicable regulatory requirements. If
these facilities do not pass a pre-approval plant inspection,
regulatory approval of the product candidates may not be granted or
may be substantially delayed until any violations are corrected to
the satisfaction of the regulatory authority, if ever.
The regulatory authorities also may, at any time following approval
of a product for sale, audit the manufacturing facilities of our
potential third-party contractors. If any such inspection or audit
identifies a failure to comply with applicable regulations or if a
violation of our product specifications or applicable regulations
occurs independent of such an inspection or audit, we or the
relevant regulatory authority may require remedial measures that
may be costly or time consuming for us or a third party to
implement, and that may include the temporary or permanent
suspension of a clinical trial or commercial sales or the temporary
or permanent closure of a facility. Any such remedial measures
imposed upon us or third parties with whom we may contract could
materially harm our business, financial condition and results of
operations.
If we or any of our potential third-party manufacturers fail to
maintain regulatory compliance, the FDA, the EMA or comparable
foreign authorities can impose regulatory sanctions including,
among other things, refusal to approve a pending application for a
product candidate, withdrawal of an approval, or suspension of
production. As a result, our business, financial condition and
results of operations may be materially and adversely affected.
Additionally, if supply from one manufacturer is interrupted, an
alternative manufacturer would need to be qualified through an NDA
supplement or MAA variation, or equivalent foreign regulatory
filing, which could result in further delay. The regulatory
agencies may also require additional studies or trials if a new
manufacturer is relied upon for commercial production. Switching
manufacturers may involve substantial costs and is likely to result
in a delay in our desired clinical and commercial timelines.
These factors could cause us to incur higher costs and could cause
the delay or termination of clinical trials, regulatory
submissions, required approvals, or commercialization of our
product candidates. Furthermore, if our suppliers fail to meet
contractual requirements and we are unable to secure one or more
replacement suppliers capable of production at a substantially
equivalent cost, our clinical trials may be delayed or we could
lose potential revenue.
Current and future legislation may increase the difficulty
and cost of commercializing our product candidates and may affect
the prices we may obtain if our product candidates are approved for
commercialization.
In the U.S. and some foreign jurisdictions, there have been a
number of adopted and proposed legislative and regulatory changes
regarding the healthcare system that could prevent or delay
regulatory approval of our product candidates, restrict or regulate
post-marketing activities and affect our ability to profitably sell
any of our product candidates for which we obtain regulatory
approval.
In the U.S., the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (“MMA”) changed the way Medicare covers
and pays for pharmaceutical products. Cost reduction initiatives
and other provisions of this legislation could limit the coverage
and reimbursement rate that we receive for any of our approved
product candidates. While the MMA only applies to drug benefits for
Medicare beneficiaries, private payors often follow Medicare
coverage policy and payment limitations in setting their own
reimbursement rates. Therefore, any reduction in reimbursement that
results from the MMA may result in a similar reduction in payments
from private payors.
In March 2010, the Patient Protection and Affordable Care Act, as
amended by the Health Care and Education Reconciliation Act of 2010
(collectively the “ACA”), was enacted. The ACA was intended to
broaden access to health insurance, reduce or constrain the growth
of healthcare spending, enhance remedies against healthcare fraud
and abuse, add new transparency requirements for healthcare and
health insurance industries, impose new taxes and fees on the
health industry and impose additional health policy reforms. The
ACA increased manufacturers’ rebate liability under the Medicaid
Drug Rebate Program by increasing the minimum rebate amount for
both branded and generic drugs and revised the definition of
“average manufacturer price” (“AMP”), which may also increase the
amount of Medicaid drug rebates manufacturers are required to pay
to states. The legislation also expanded Medicaid drug rebates and
created an alternative rebate formula for certain new formulations
of certain existing products that is intended to increase the
rebates due on those drugs. The Centers for Medicare & Medicaid
Services, which administers the Medicaid Drug Rebate Program, also
has proposed to expand Medicaid rebates to the utilization that
occurs in the territories of the U.S., such as Puerto Rico and the
Virgin Islands. Further, beginning in 2011, the ACA imposed a
significant annual fee on companies that manufacture or import
branded prescription drug products. Legislative and regulatory
proposals have been introduced at both the state and federal level
to expand post-approval requirements and restrict sales and
promotional activities for pharmaceutical products.
There have been recent public announcements by members of the U.S.
Congress, President Trump and his administration regarding their
plans to repeal and replace the ACA and Medicare. For example, on
December 22, 2017, President Trump signed into law the Tax Cuts and
Jobs Act of 2017, which, among other things, eliminated the
individual mandate requiring most Americans (other than those who
qualify for a hardship exemption) to carry a minimum level of
health coverage, effective January 1, 2019. We are not sure whether
additional legislative changes will be enacted, or whether the FDA
regulations, guidance or interpretations will be changed, or what
the impact of such changes on the marketing approvals of our
product candidates, if any, may be. In addition, increased scrutiny
by the U.S. Congress of the FDA’s approval process may
significantly delay or prevent marketing approval, as well as
subject us to more stringent product labeling and post-marketing
approval testing and other requirements.
Additionally, there has been heightened governmental scrutiny in
the U.S. of pharmaceutical pricing practices in light of the rising
cost of prescription drugs and biologics. Such scrutiny has
resulted in several recent congressional inquiries and proposed and
enacted federal and state legislation designed to, among other
things, bring more transparency to product pricing, review the
relationship between pricing and manufacturer patient programs, and
reform government program reimbursement methodologies for products.
At the federal level, the Trump administration’s budget proposal
for fiscal year 2019 contains further drug price control measures
that could be enacted during the 2019 budget process or in other
future legislation, including, for example, measures to permit
Medicare Part D plans to negotiate the price of certain drugs under
Medicare Part B, to allow some states to negotiate drug prices
under Medicaid, and to eliminate cost sharing for generic drugs for
low-income patients. Further, the Trump administration released a
“Blueprint,” or plan, to lower drug prices and reduce out of pocket
costs of drugs that contains additional proposals to increase drug
manufacturer competition, increase the negotiating power of certain
federal healthcare programs, incentivize manufacturers to lower the
list price of their products, and reduce the out of pocket costs of
drug products paid by consumers. The U.S. Department of Health and
Human Services has already started the process of soliciting
feedback on some of these measures and, at the same, is immediately
implementing others under its existing authority. While some
proposed measures will require authorization through additional
legislation to become effective, Congress and the Trump
administration have each indicated that it will continue to seek
new legislative and/or administrative measures to control drug
costs. At the state level, legislatures are increasingly passing
legislation and implementing regulations designed to control
pharmaceutical and biological product pricing, including price or
patient reimbursement constraints, discounts, restrictions on
certain product access and marketing cost disclosure and
transparency measures, and, in some cases, designed to encourage
importation from other countries and bulk purchasing.
We expect that these and other healthcare reform measures that may
be adopted in the future may result in more rigorous coverage
criteria and in additional downward pressure on the price that we
receive for any approved drug. Any reduction in reimbursement from
Medicare or other government programs may result in a similar
reduction in payments from private payors. The implementation of
cost containment measures or other healthcare reforms may prevent
us from being able to generate revenue, attain profitability or
commercialize our drugs.
In June 2016, the United Kingdom (“UK”) held a referendum pursuant
to which voters elected to leave the European Union (“EU”),
commonly referred to as Brexit. The UK formally left the EU on
January 31, 2020, and the UK remained subject to EU law during a
“Brexit transition period” that ended on December 31, 2020.
Although the long-term effects of Brexit will depend on any
agreements the UK makes to retain access to the EU markets, Brexit
has created additional uncertainties that may ultimately result in
new regulatory costs and challenges for biotechnology companies. We
cannot predict what consequences the withdrawal of the UK from the
EU, if it occurs, might have on the regulatory frameworks of the UK
or the EU, or on our future operations, if any, in these
jurisdictions.
Changes in government funding for the FDA and other
government agencies could hinder their ability to hire and retain
key leadership and other personnel, properly administer drug
innovation, or prevent our product candidates from being developed
or commercialized, which could negatively impact our business,
financial condition and results of operations.
The ability of the FDA to review and approve new products can be
affected by a variety of factors, including budget and funding
levels, ability to hire and retain key personnel, and statutory,
regulatory and policy changes. Average review times at the agency
have fluctuated in recent years as a result. In addition,
government funding of other agencies that fund research and
development activities is subject to the political process, which
is inherently fluid and unpredictable.
In December 2016, the 21st Century Cures Act was signed into law.
This new legislation is designed to advance medical innovation and
empower the FDA with the authority to directly hire positions
related to drug and device development and review. However,
government proposals to reduce or eliminate budgetary deficits may
include reduced allocations to the FDA and other related government
agencies. These budgetary pressures may result in a reduced ability
by the FDA to perform their respective roles; including the related
impact to academic institutions and research laboratories whose
funding is fully or partially dependent on both the level and
timing of funding from government sources.
Disruptions at the FDA and other agencies may also slow the time
necessary for our product candidates to be reviewed or approved by
necessary government agencies, which could adversely affect our
business, financial condition and results of operations.
We are subject to “fraud and abuse” and similar laws and
regulations, and a failure to comply with such regulations or
prevail in any litigation related to noncompliance could harm our
business, financial condition and results of
operations.
In the U.S., we are subject to various federal and state healthcare
“fraud and abuse” laws, including anti-kickback laws, false claims
laws and other laws intended, among other things, to reduce fraud
and abuse in federal and state healthcare programs. The federal
Anti-Kickback Statute makes it illegal for any person, including a
prescription drug manufacturer, or a party acting on its behalf, to
knowingly and willfully solicit, receive, offer or pay any
remuneration that is intended to induce the referral of business,
including the purchase, order or prescription of a particular drug,
or other good or service for which payment in whole or in part may
be made under a federal healthcare program, such as Medicare or
Medicaid. Although we seek to structure our business arrangements
in compliance with all applicable requirements, these laws are
broadly written, and it is often difficult to determine precisely
how the law will be applied in specific circumstances. Accordingly,
it is possible that our practices may be challenged under the
federal Anti-Kickback Statute.
The federal False Claims Act prohibits anyone from, among other
things, knowingly presenting or causing to be presented for payment
to the government, including the federal healthcare programs,
claims for reimbursed drugs or services that are false or
fraudulent, claims for items or services that were not provided as
claimed, or claims for medically unnecessary items or services.
Under the Health Insurance Portability and Accountability Act of
1996, we are prohibited from knowingly and willfully executing a
scheme to defraud any healthcare benefit program, including private
payors, or 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 to obtain
money or property of any healthcare benefit program. Violations of
fraud and abuse laws may be punishable by criminal or civil
sanctions, including penalties, fines or exclusion or suspension
from federal and state healthcare programs such as Medicare and
Medicaid and debarment from contracting with the U.S. government.
In addition, private individuals have the ability to bring actions
on behalf of the government under the federal False Claims Act as
well as under the false claims laws of several states.
Many states have adopted laws similar to the federal Anti-Kickback
Statute, some of which apply to the referral of patients for
healthcare services reimbursed by any source, not just governmental
payors. In addition, some states have passed laws that require
pharmaceutical companies to comply with the April 2003 Office of
Inspector General Compliance Program Guidance for Pharmaceutical
Manufacturers or the Pharmaceutical Research and Manufacturers of
America’s Code on Interactions with Healthcare Professionals.
Several states also impose other marketing restrictions or require
pharmaceutical companies to make marketing or price disclosures to
the state. There are ambiguities as to what is required to comply
with these state requirements and if we fail to comply with an
applicable state law requirement, we could be subject to
penalties.
Neither the government nor the courts have provided definitive
guidance on the application of fraud and abuse laws to our
business. Law enforcement authorities are increasingly focused on
enforcing these laws, and it is possible that some of our practices
may be challenged under these laws. Efforts to ensure that our
business arrangements with third parties will comply with
applicable healthcare laws and regulations will involve substantial
costs. If we are found in violation of one of these laws, we could
be subject to significant civil, criminal and administrative
penalties, damages, fines, exclusion from governmental funded
federal or state healthcare programs and the curtailment or
restructuring of our operations. If this occurs, our business,
financial condition and results of operations may be materially
adversely affected.
If we face allegations of noncompliance with the law and
encounter sanctions, our reputation, revenues and liquidity may
suffer, and any of our product candidates that are ultimately
approved for commercialization could be subject to restrictions or
withdrawal from the market.
Any government investigation of alleged violations of law could
require us to expend significant time and resources in response,
and could generate negative publicity. Any failure to comply with
ongoing regulatory requirements may significantly and adversely
affect our ability to generate revenues from any of our product
candidates that are ultimately approved for commercialization. If
regulatory sanctions are applied or if regulatory approval is
withdrawn, our business, financial condition and results of
operations will be adversely affected. Additionally, if we are
unable to generate revenues from product sales, our potential for
achieving profitability will be diminished and our need to raise
capital to fund our operations will increase.
Risks Related to Our Common Stock
The market price of our common stock is expected to be
volatile.
The trading price of our stock is likely to be volatile. Our stock
price could be subject to wide fluctuations in response to a
variety of factors, including the following:
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· |
our ability to conduct and achieve
continued positive outcomes from our preclinical activities on the
PATrOL™ platform and disease specific programs; |
| |
· |
public health crises, pandemics and
epidemics, such as a novel strain of coronavirus (COVID-19) and
their effects on our preclinical activities; |
| |
· |
results from, costs, and any delays
in, anticipated preclinical and clinical studies and data
releases; |
| |
· |
contracting with third parties such
as academic institutions, and various CROs who will perform such
studies, or the potential lack of performance of such
organizations; |
| |
· |
acceptance of INDs by the FDA or
similar regulatory filing by comparable foreign regulatory
authorities for the conduct of clinical trials of our product
candidates and our proposed design of future clinical trials; |
| |
· |
delays in publications of research
findings; |
| |
· |
significant lawsuits, including
patent or stockholder litigation; |
| |
· |
inability to
obtain additional funding or funding on favorable terms; |
| |
· |
failure to
successfully develop and commercialize our product candidates; |
| |
· |
changes in laws or
regulations applicable to our product candidates; |
| |
· |
inability to
obtain adequate product supply for our product candidates, or the
inability to do so at acceptable prices or in an acceptable
timeframe; |
| |
· |
unanticipated
serious safety concerns related to our PATrOL™ platform or any of
our product candidates; |
| |
· |
adverse regulatory
decisions; |
| |
· |
introduction of
new products or technologies by our competitors; |
| |
· |
adverse events or
results for our competitors or our product candidate target areas
that could generally adversely affect us our or our industry; |
| |
· |
failure to meet or
exceed drug development or financial projections we provide to the
public; |
| |
· |
failure to meet or
exceed the estimates, expectations and projections of the
investment community and our stockholders; |
| |
· |
the perception of
the pharmaceutical industry by the public, legislatures, regulators
and the investment community; |
| |
· |
announcements of
significant acquisitions, strategic partnerships, joint ventures or
capital commitments by us or our competitors; |
| |
· |
disputes or other
developments relating to proprietary rights, including patents,
litigation matters and our ability to obtain patent protection for
our licensed and owned technologies; |
| |
· |
additions or
departures of key scientific, management, or board personnel; |
| |
· |
changes in the
market valuations of similar companies; |
| |
· |
general economic
and market conditions and overall fluctuations in the U.S. equity
market; |
| |
· |
sales of our
common stock by us or our stockholders in the future; |
| |
· |
trading volume of
our common stock; |
| |
· |
period-to-period
fluctuations in our financial results; |
| |
· |
any identified
material weakness in our internal control over financial
reporting; |
| |
· |
changes in the
structure of health care payments; |
| |
· |
changes in the
Nasdaq listing of our stock; and |
| |
· |
recommendations of
equity analysts covering our stock. |
In addition, the stock market, and equity values of small
pharmaceutical companies in particular, have experienced extreme
price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of these companies.
Broad market and industry factors may negatively affect the market
price of our common stock, regardless of our actual operating
performance. Further, a decline in the financial markets and
related factors beyond our control may cause our stock price to
decline rapidly and unexpectedly.
In the past, following periods of volatility in the market price of
a company’s securities, stockholders have often instituted class
action securities litigation against those companies. Such
litigation, if instituted, could result in substantial costs and
diversion of management attention and resources, which could
significantly harm our profitability and reputation.
As previously disclosed in our Annual Report on Form 10-K for the
fiscal year ended September 30, 2019 (the “2019 Form 10-K”), in
connection with the preparation of the Company’s consolidated
financial statements for the fiscal year ended September 30, 2019,
but prior to the issuance of such financial statements, the Company
determined the accounting treatment and valuations pertaining to
the PATrOL™ technology license acquired during the first quarter of
fiscal 2019 should be modified. The 2019 Form 10-K disclosed that
the change in accounting treatment and valuations resulted in an
increase in total operating expenses of approximately $0.9 million
on the Company’s consolidated statements of operations for the
fiscal year ended September 30, 2019 and a decrease in intangible
assets of approximately $1.5 million on the Company’s consolidated
balance sheet as of and for the fiscal year ended September 30,
2019, as well as a decrease in total operating expenses of
approximately $0.3 million on the Company’s consolidated statements
of operations in connection with the adjustment of the valuation of
certain share-based awards for the fiscal year ended September 30,
2019.
In addition, the Company identified an error in one of the
Black-Scholes option pricing model assumptions, utilized in
calculating the fair value of a stock option award granted during
the year ended September 30, 2019, which resulted in an
overstatement of share-based compensation expense. The Company
concluded that the error was not material to any prior annual or
interim period. Nevertheless, the Company has revised its
historical financial statements to properly reflect the fair value
of options granted in the prior period.
If we are required to restate any of our financial statements in
the future due to our inability to adequately remedy the issues
that gave rise to these modifications or for any other reason, we
may be subject to regulatory penalties and investors could lose
confidence in the accuracy and completeness of our financial
statements, which could cause our share price to decline.
Our management owns a significant percentage of our stock and
is able to exert significant control over matters subject to
stockholder approval.
Dr. Stephan, our President, Chief Executive Officer and a director
of us, holds a significant number of shares of our outstanding
common stock and an option to purchase additional shares of common
stock. Accordingly, Dr. Stephan has the ability to influence us
through his ownership position.
This significant concentration of stock ownership may adversely
affect the trading price for our common stock because investors
often perceive disadvantages in owning stock in companies with
controlling stockholders. As a result, Dr. Stephan could
significantly influence all matters requiring approval by our
stockholders, including the election of directors and the approval
of mergers or other business combination transactions. Dr. Stephan
may be able to determine all matters requiring stockholder
approval. The interests of these stockholders may not always
coincide with our interests or the interests of other stockholders.
This may also prevent or discourage unsolicited acquisition
proposals or offers for our common stock that you may feel are in
your best interests as one of our stockholders, and he may act in a
manner that advances his best interests and not necessarily those
of other stockholders, including seeking a premium value for his
common stock, and might affect the prevailing market price for our
common stock.
We previously identified a material weakness in
our internal control over financial reporting, which has been
remediated. If we identify additional material weaknesses in the
future or otherwise fail to maintain an effective system of
internal controls, we may not be able to accurately or timely
report our financial condition or results of operations, which may
adversely affect our business and stock price.
We previously identified a material weakness in
our internal control over financial reporting as of September 30,
2019. Although this material weakness was remediated as of
September 30, 2020 as discussed in Item 9A of Part II of our Annual
Report on Form 10-K for the fiscal year ended September 30, 2020,
we cannot assure you that we will not identify another material
weakness in the future. A material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a
material misstatement of our annual or interim financial statements
will not be prevented or detected in a timely basis.
As previously disclosed in our 2019 Form 10-K, in connection with
the preparation of our financial statements for such fiscal year,
our management and the Audit Committee of our board of directors
determined that our accounting treatment and valuations pertaining
to the PATrOL™ technology license should be modified. In connection
with such revisions, our management identified a material weakness
in our internal control over financial reporting due to a lack of
expertise in complex accounting transactions, which were not
operating effectively to provide reasonable assurance that complex
transactions were accounted for correctly. We subsequently restated
our unaudited condensed consolidated statements of operations and
our unaudited condensed consolidated balance sheets as of and for
the three months ended December 31, 2018 and as of and for the
three and six months ended March 31, 2019 upon the filing of our
Quarterly Reports on Form 10-Q for such periods. As discussed in
Item 9A of Part II of our Annual Report on Form 10-K for the fiscal
year ended September 30, 2020, we took remedial measures during
fiscal 2019 and throughout fiscal 2020 to remediate this material
weakness.
We cannot assure you that the measures we have taken to date, and
actions we may take in the future, will be sufficient to prevent or
avoid potential future material weaknesses. In connection with the
implementation of the necessary procedures and practices related to
internal control over financial reporting, we may identify material
weaknesses that we may not be able to remediate in time to meet the
deadline imposed by the Sarbanes-Oxley Act for compliance with the
requirements of Section 404. In addition, we may encounter problems
or delays in completing the implementation of any improvements and
receiving a favorable attestation by our independent registered
public accounting firm, if and when required.
If we are unable to achieve and maintain an effective internal
control environment in our disclosure controls or internal control
over financial reporting, the accuracy and timing of our financial
reporting may be adversely affected; our liquidity, our access to
capital markets and our ability to complete acquisitions may be
adversely affected; we may be unable to maintain or regain
compliance with applicable securities laws, The Nasdaq Stock Market
LLC (“Nasdaq”) listing requirements, and the covenants under
certain agreements regarding the timely filing of periodic reports;
we may be subject to regulatory investigations and penalties;
investors may lose confidence in our financial reporting; and our
stock price may decline.
We restated our previously issued unaudited financial
statements for the three months ended December 31, 2019 and the
three and six months ended March 31, 2019. As a result, and if we
identify errors in our financial reporting in the future that
require us to restate other previously issued financial statements,
such restatements may subject us to unanticipated costs or
regulatory penalties and could cause investors to lose confidence
in the accuracy and completeness of our financial statements, which
could cause the price of our common stock to decline.
As discussed further in our Quarterly Reports on Form 10-Q for the
quarters ended December 31, 2019 and March 31, 2020, we restated
our unaudited condensed consolidated financial statements and
related disclosures for the three months ended December 31, 2018
and the three and six months ended March 31, 2019 in a Form 8-K
amendment filed on March 26, 2020. The misstatements were
quantitatively material to the period presented in such prior
financial statements, and we determined that it would be
appropriate to correct the misstatements in such previously issued
interim financial statements by restating such financial
statements. We may be subject to unanticipated costs and regulatory
penalties and investors could lose confidence in the accuracy and
completeness of our financial statements, which could cause our
share price to decline, due to such restatement and if we are
required to restate any of our other financial statements in the
future.
We may take advantage of specified reduced disclosure
requirements applicable to a “smaller reporting company” under
Regulation S-K, and the information that we provide to stockholders
may be different than they might receive from other public
companies.
We are a “smaller reporting company,” as defined under Regulation
S-K. As a smaller reporting company, we may take advantage of
specified reduced disclosure and other requirements that are
otherwise applicable generally to public companies. These
provisions include, among other things, scaled disclosure
requirements, including about our executive compensation
arrangements.
We intend to continue to take advantage of certain of the scaled
disclosure requirements of smaller reporting companies. We may
continue to take advantage of these allowances until we are no
longer a smaller reporting company. We will cease to be a smaller
reporting company if we have (i) more than $250 million in market
value of our shares held by non-affiliates as of the last business
day of our second fiscal quarter or (ii) more than $100 million of
annual revenues in our most recent fiscal year completed before the
last business day of our second fiscal quarter and a market value
of our shares held by non-affiliates more than $700 million as of
the last business day of our second fiscal quarter. We may choose
to take advantage of some but not all of these scaled disclosure
requirements. Therefore, the information that we provide
stockholders may be different than one might get from other public
companies. Further, if some investors find our shares of common
stock less attractive as a result, there may be a less active
trading market for our shares of common stock and the market price
of such shares of common stock may be more volatile.
Our amended and restated certificate of incorporation
provides that the Court of Chancery of the State of Delaware and
the federal district courts of the United States are the exclusive
forums for substantially all disputes between us and our
stockholders other than actions arising under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, which could limit our stockholders’ ability to obtain a
favorable judicial forum for disputes with us or our directors,
officers, or employees.
Our amended and restated certificate of incorporation provides that
the Court of Chancery of the State of Delaware is the exclusive
forum for:
|
· |
any derivative action or proceeding
brought on our behalf; |
|
· |
any action asserting a breach of
fiduciary duty; |
| |
|
|
|
· |
any action asserting a claim
against us arising under the General Corporation Law of the State
of Delaware (the “DGCL”), our amended and restated certificate of
incorporation or our amended and restated bylaws; and |
| |
|
|
|
· |
any action asserting a claim
against us that is governed by the internal-affairs doctrine |
These exclusive-forum provisions do not apply to claims under the
Securities Act, the Exchange Act or any other claims for which the
federal courts have exclusive jurisdiction.
These exclusive forum provisions may limit a stockholder’s ability
to bring a claim in a judicial forum that it finds favorable for
disputes with us or our directors, officers, or other employees,
which may discourage lawsuits against us and our directors,
officers, and other employees. If a court were to find either
exclusive forum provision in our amended and restated certificate
of incorporation to be inapplicable or unenforceable in an action,
it may incur additional costs associated with resolving the dispute
in other jurisdictions, which could harm our business.
We are subject to securities class action litigation and
derivative shareholder litigation. If an unfavorable ruling were to
occur, there exists the possibility of a material adverse impact on
us.
On February 14, 2018, plaintiff Jeevesh Khanna, commenced an action
in the Southern District of New York, against Ohr and several
current and former officers and directors, alleging that they
violated federal securities laws between June 24, 2014 and January
4, 2018. On August 7, 2018, the lead plaintiffs, now George Lehman
and Insured Benefit Plans, Inc., filed an amended complaint,
stating the class period to be April 8, 2014 through January 4,
2018. The plaintiffs did not quantify any alleged damages in their
complaint but, in addition to attorneys’ fees and costs, they seek
to maintain the action as a class action and to recover damages on
behalf of themselves and other persons who purchased or otherwise
acquired Ohr common stock during the putative class period and
purportedly suffered financial harm as a result. We and the
individuals dispute these claims and intend to defend the matter
vigorously. On September 17, 2018, Ohr filed a motion to dismiss
the complaint. On September 20, 2019, the district court entered an
order granting the defendants’ motion to dismiss. On October 23,
2019, the plaintiffs filed a notice of appeal of that order
dismissing the action and other related orders by the district
court. After full briefing and oral argument, on October 9, 2020,
the U.S. Court of Appeals for the Second Circuit issued a summary
order affirming the district court’s order granting the motion to
dismiss and remanding the action to the district court to make a
determination on the record related to plaintiffs’ request for
leave to file an amended complaint. On October 16, 2020, the
district court requested the parties’ positions as to how they
proposed to proceed in light of the Second Circuit’s decision.
After letter briefing on this issue and plaintiffs’ alternative
request for leave to file a second amended complaint, on November
16, 2020, the district court denied plaintiffs’ request to amend
and dismissed with prejudice plaintiffs’ claims. On December 16,
2020, plaintiffs filed a notice of appeal of that order denying
plaintiffs leave to amend, and the plaintiffs filed their appellate
brief with respect to such matters with the Court on March 31,
2021. This litigation could result in substantial costs and a
diversion of management’s resources and attention, which could harm
the Company’s business and the value of the Company’s common
stock.
On May 3, 2018, plaintiff Adele J. Barke, derivatively on behalf of
Ohr, commenced an action against certain former directors of Ohr,
including Michael Ferguson, Orin Hirschman, Thomas M. Riedhammer,
June Almenoff and Jason S. Slakter in the Supreme Court, State of
New York, alleging that the action was brought in the right and for
the benefit of Ohr seeking to remedy their “breach of fiduciary
duties, corporate waste and unjust enrichment that occurred between
June 24, 2014 and the present.” It does not quantify any alleged
damages. We and the individuals dispute these claims and intend to
defend the matter vigorously. Such litigation has been stayed
pursuant to a stipulation by the parties, which has been so ordered
by the court, pending a decision in the Southern District case on
the motion to dismiss, but that status could change. This
litigation could result in substantial costs and a diversion of
management’s resources and attention, which could harm our business
and the value of our common stock.
On March 20, 2019, a putative class action lawsuit was filed in the
United States District Court for District of Delaware naming as
defendants Ohr and its board of directors, Legacy NeuBase and Ohr
Acquisition Corp., captioned Wheby v. Ohr Pharmaceutical,
Inc., et al., Case No. 1:19-cv-00541-UNA (the “Wheby Action”).
The plaintiffs in the Wheby Action allege that the preliminary
joint proxy/prospectus statement filed by Ohr with the SEC on March
8, 2019 contained false and misleading statements and omitted
material information in violation of Section 14(a) of the Exchange
Act and SEC Rule 14a-9 promulgated thereunder, and further that the
individual defendants are liable for those alleged misstatements
and omissions under Section 20(a) of the Exchange Act. The
complaint in the Wheby Action has not been served on, nor was
service waived by, any of the named defendants in that action. The
action seeks, among other things, to rescind the Merger or an award
of damages, and an award of attorneys’ and experts’ fees and
expenses. The defendants dispute the claims raised in the Wheby
Action. Management believes that the likelihood of an adverse
decision from the sole remaining action is unlikely; however, the
litigation could result in substantial costs and a diversion of
management’s resources and attention, which could harm our business
and the value of our common stock.
Anti-takeover provisions in our charter documents and under
Delaware law could make an acquisition of the Company more
difficult and may prevent attempts by our stockholders to replace
or remove our management.
Provisions in our amended and restated certificate of incorporation
and amended and restated bylaws may significantly reduce the value
of shares of our common stock to a potential acquirer or delay or
prevent an acquisition or a change in management without the
consent of our board of directors. The provisions in our amended
and restated certificate of incorporation and amended and restated
bylaws include the following:
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· |
a classified board
of directors with three-year staggered terms, which may delay the
ability of stockholders to change the membership of a majority of
our board of directors; |
| |
· |
no cumulative
voting in the election of directors, which limits the ability of
minority stockholders to elect director candidates; |
| |
· |
the exclusive
rights of our board of directors to establish the authorized number
of directors and to elect a director to fill a vacancy created by
the expansion of our board of directors or the death, resignation,
disqualification, retirement or removal of a director, which
prevents stockholders from being able to fill vacancies on our
board of directors; |
| |
· |
a provision that
directors may be removed by our stockholders only for cause; |
| |
· |
the ability of our
board of directors to authorize the issuance of shares of preferred
stock and to determine the price and other terms of those shares,
including preferences and voting rights, without stockholder
approval, which could be used to significantly dilute the ownership
of a hostile acquirer; |
| |
· |
the ability of our
board of directors to make, alter or appeal our amended and
restated bylaws without obtaining stockholder approval; |
| |
· |
the affirmative
vote of the holders of at least 66 2/3% of the voting power of all
of the then-outstanding shares of our capital stock entitled to
vote generally in the election of directors is required to amend,
alter, repeal or adopt any provision inconsistent with, several of
the provisions of our amended and restated certificate of
incorporation and amended and restated bylaws; |
| |
· |
a prohibition on
stockholder action by written consent, which forces stockholder
action to be taken at an annual or special meeting of our
stockholders; |
| |
· |
the requirement
that a special meeting of stockholders may be called only by our
board of directors, chief executive officer or president, which may
delay the ability of our stockholders to force consideration of a
proposal or to take action, including the removal of
directors; |
| |
· |
a restriction on
the forum for certain litigation against us to Delaware; and |
| |
· |
advance notice
procedures that stockholders must comply with in order to nominate
candidates to our board of directors or to propose matters to be
acted upon at a stockholders’ meeting, which may discourage or
deter a potential acquirer from conducting a solicitation of
proxies to elect the acquirer’s own slate of directors or otherwise
attempting to obtain control of us. |
Although we believe these provisions collectively will provide for
an opportunity to receive higher bids by requiring potential
acquirers to negotiate with our board of directors, they would
apply even if the offer may be considered beneficial by some
stockholders. In addition, these provisions may frustrate or
prevent any attempts by our stockholders to replace or remove then
current management by making it more difficult for stockholders to
replace members of the board of directors, which is responsible for
appointing the members of management.
Certain provisions of the DGCL deter hostile takeovers.
Specifically, Section 203 of the DGCL prohibits a Delaware
corporation from engaging in a business combination with an
“interested stockholder” for a period of three years following the
date the person first became an interested stockholder, unless
(with certain exceptions) the business combination or the
transaction by which the person became an interested stockholder is
approved in a prescribed manner. Generally, a “business
combination” includes a merger, asset or stock sale, or certain
other transactions resulting in a financial benefit to the
interested stockholder. Generally, an “interested stockholder” is a
person who, together with affiliates and associates, beneficially
owns or within three years prior to becoming an “interested
stockholder” did own, 15% or more of a corporation’s outstanding
voting stock. While this statute permits a corporation to opt out
of these protective provisions in its certificate of incorporation,
our certificate of incorporation does not include any such opt-out
provision.
Claims for indemnification by our directors and officers may
reduce our available funds to satisfy successful third-party claims
against us and may reduce the amount of money available to
us.
Our amended and restated certificate of incorporation provides that
we will indemnify our directors and officers, in each case to the
fullest extent permitted by Delaware law.
In addition, as permitted by Section 145 of the General Corporation
Law of the State of Delaware, or the DGCL, our amended and restated
certificate of incorporation and our indemnification agreements
that we have entered into with our directors and officers provide
that:
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· |
We will indemnify
our directors and officers for serving us in those capacities or
for serving other business enterprises at our request, to the
fullest extent permitted by Delaware law. Delaware law provides
that a corporation may indemnify such person if such person acted
in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the registrant and, with
respect to any criminal proceeding, had no reasonable cause to
believe such person’s conduct was unlawful. |
| |
· |
We may, in our
discretion, indemnify employees and agents in those circumstances
where indemnification is permitted by applicable law. |
| |
· |
We are required to
advance expenses actually and reasonably incurred by our directors
and officers in connection with any proceeding, except that such
directors or officers shall undertake to repay such advances if it
is ultimately determined by a court of competent jurisdiction that
such person is not entitled to indemnification. |
| |
· |
We will not be
obligated pursuant to our amended and restated certificate of
incorporation to indemnify a person with respect to proceedings
initiated by that person against us or our other indemnitees,
except with respect to proceedings authorized by our board of
directors or brought to enforce a right to indemnification. |
| |
· |
The rights to
indemnification conferred in our amended and restated certificate
of incorporation are not exclusive, and we are authorized to enter
into indemnification agreements with our directors, officers,
employees and agents and to obtain insurance to indemnify such
persons. |
| |
· |
We may not
retroactively amend our amended and restated certificate of
incorporation provisions to reduce our indemnification obligations
to current or former directors or officers. |
Our indemnification obligations could result in substantial
expenditures by us, which we will be unable to recover.
Our pre-Merger net operating loss carryforwards and certain
other tax attributes will likely be subject to limitations. The
pre-Merger net operating loss carryforwards and certain other tax
attributes of us may also be subject to limitations as a result of
ownership changes resulting from the Merger.
In general, a corporation that undergoes an “ownership change,” as
defined in Section 382 of the Internal Revenue Code of 1986, as
amended, is subject to limitations on its ability to utilize its
pre-change net operating losses (“NOLs”) to offset future taxable
income (the “Section 382 Limitation”). Such an ownership change
occurs if the aggregate stock ownership of certain stockholders,
generally stockholders beneficially owning five percent or more of
a corporation’s common stock, applying certain look-through and
aggregation rules, increases by more than 50 percentage points over
such stockholders’ lowest percentage ownership during the testing
period, generally three years. Due to the ownership change of the
Company upon completion of the Merger, our NOLs and certain other
tax attributes will be subject to the Section 382 Limitation.
Consequently, even if we achieve profitability, we may not be able
to utilize a material portion of our NOLs and certain other tax
attributes because of the Section 382 Limitation, which could have
a material adverse effect on cash flow and results of operations.
As of September 30, 2020, we had approximately $20.0 million in NOL
carryforwards. We have not completed an analysis regarding the
limitation of net operating loss carryforwards, however, it is
likely that the Section 382 Limitation will cause a significant
portion of our NOL carryforwards to never be utilized. In addition,
if we are determined to have discontinued our historic business
following the completion of the Merger, subject to certain
exceptions, the Section 382 Limitation could eliminate all
possibility of utilizing our NOL carryforwards.
We may never pay dividends on our common stock so any returns
would be limited to the appreciation of our stock.
We currently anticipate that we will retain future earnings for the
development, operation and expansion of our business and do not
anticipate we will declare or pay any cash dividends for the
foreseeable future. In addition, the terms of any future debt
agreements may preclude us from paying dividends. Any return to
stockholders will therefore be limited to the appreciation of their
stock.
General Risk Factors
If securities or industry analysts do not publish research,
or publish inaccurate or unfavorable research, about our business,
our stock price and trading volume could decline.
The trading market for our common stock depends, in part, on the
research and reports that securities or industry analysts publish
about us or our business. If one or more of the analysts who cover
us downgrade our stock or publish inaccurate or unfavorable
research about our business, our stock price would likely decline.
In addition, if our operating results fail to meet the forecast of
analysts, our stock price would likely decline. If one or more of
these analysts cease coverage of us or fail to publish reports on
us regularly, demand for our common stock could decrease, which
might cause our stock price and trading volume to decline.
The estimates and judgments we make, or the assumptions on
which we rely, in preparing our financial statements could prove
inaccurate.
Our financial statements have been prepared in accordance with U.S.
GAAP. The preparation of these financial statements requires us to
make estimates and judgments that affect the reported amounts of
our assets, liabilities, revenues and expenses, the amounts of
charges accrued by us and related disclosure of contingent assets
and liabilities. We base our estimates on historical experience and
on various other assumptions that we believe to be reasonable under
the circumstances. We cannot assure, however, that our estimates,
or the assumptions underlying them, will not change over time or
otherwise prove inaccurate. For example, our estimates as they
relate to anticipated timelines and milestones for our preclinical
development or clinical trials may prove to be inaccurate. If this
is the case, we may be required to restate our financial
statements, which could, in turn, subject us to securities class
action litigation or regulatory investigation or action. Defending
against such potential litigation or regulatory action relating to
a restatement of our financial statements would be expensive and
would require significant attention and resources of our
management. Moreover, our insurance to cover our obligations with
respect to the ultimate resolution of any such litigation or
regulatory action may be inadequate. As a result of these factors,
any such potential litigation or regulatory action could have a
material adverse effect on our financial results or harm our
business.
Sales of a substantial number of shares of our common stock
in the public market by our stockholders, future issuances of our
common stock or rights to purchase our common stock, could cause
our stock price to fall.
Sales of a substantial number of shares of our common stock by our
existing stockholders in the public market, or the perception that
these sales might occur, could depress the market price of our
common stock and could impair our ability to raise capital through
the sale of additional equity securities. We are unable to predict
the effect that such sales may have on the prevailing market price
of our common stock.
DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus, any accompanying prospectus supplement and the
documents incorporated by reference into this prospectus may
contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the “Securities
Act”), and Section 21E of the Exchange Act, about NeuBase. These
forward-looking statements are intended to be covered by the safe
harbor for forward-looking statements provided by the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are not statements of historical fact, and can be
identified by the use of forward-looking terminology such as
“believes,” “expects,” “may,” “will,” “could,” “should,”
“projects,” “plans,” “goal,” “targets,” “potential,” “estimates,”
“pro forma,” “seeks,” “intends” or “anticipates” or the negative
thereof or comparable terminology. Forward-looking statements
include discussions of strategy, financial projections, guidance
and estimates (including their underlying assumptions), statements
regarding plans, objectives, expectations or consequences of
various transactions, and statements about the future performance,
operations, products and services of NeuBase. We caution our
stockholders and other readers not to place undue reliance on such
statements.
You should read this prospectus, any accompanying prospectus
supplement and the documents incorporated by reference completely
and with the understanding that our actual future results may be
materially different from what we currently expect. Our business
and operations are and will be subject to a variety of risks,
uncertainties and other factors. Consequently, actual results and
experience may materially differ from those contained in any
forward-looking statements. Such risks, uncertainties and other
factors that could cause actual results and experience to differ
from those projected include, but are not limited to, the risk
factors set forth in Part I - Item 1A, “Risk Factors,” in our
Annual Report on Form 10-K for the
year ended September 30, 2020, filed with the SEC on December
23, 2020 and in our Quarterly Report on Form 10-Q for
the quarter ended December 31, 2020, filed with the SEC on
February 11, 2021, and elsewhere in the other documents
incorporated by reference into this prospectus.
You should assume that the information appearing in this
prospectus, any accompanying prospectus supplement, any related
free writing prospectus and any document incorporated herein by
reference is accurate as of its date only. Because the risk factors
referred to above could cause actual results or outcomes to differ
materially from those expressed in any forward-looking statements
made by us or on our behalf, you should not place undue reliance on
any forward-looking statements. Further, any forward-looking
statement speaks only as of the date on which it is made. New
factors emerge from time to time, and it is not possible for us to
predict which factors will arise. In addition, we cannot assess the
impact of each factor on our business or the extent to which any
factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements. All written or oral forward-looking statements
attributable to us or any person acting on our behalf made after
the date of this prospectus are expressly qualified in their
entirety by the risk factors and cautionary statements contained in
and incorporated by reference into this prospectus. Unless legally
required, we do not undertake any obligation to release publicly
any revisions to such forward-looking statements to reflect events
or circumstances after the date of this prospectus or to reflect
the occurrence of unanticipated events.
USE OF PROCEEDS
Except as otherwise provided in the applicable prospectus
supplement or in any free writing prospectuses we have authorized
for use in connection with a specific offering, we currently intend
to use the net proceeds from the sale of the securities offered by
this prospectus, if any, for working capital and general corporate
purposes, which may include capital expenditures, research and
development expenditures, regulatory affairs expenditures,
preclinical and clinical trial expenditures, pipeline expansion,
legal expenditures, including intellectual property protection and
maintenance expenditures, acquisitions of new technologies and
investments, business combinations and the repurchase of capital
stock.
The intended application of proceeds from the sale of any
particular offering of securities using this prospectus will be
described in the accompanying prospectus supplement relating to
such offering. The precise amount and timing of the application of
these proceeds will depend upon a number of factors, such as the
timing and progress of our research and development efforts, the
timing of any acquisition or business combination efforts, our
funding requirements and the availability and costs of other funds.
Pending application of the net proceeds as described above, we
intend to temporarily invest the proceeds in short term,
investment-grade, interest-bearing securities.
DESCRIPTION OF CAPITAL STOCK
General Matters
The following description summarizes the most important terms of
our capital stock. Because it is only a summary of the provisions
of our certificate of incorporation, as amended (the “Certificate
of Incorporation”), and bylaws, as amended (the “Bylaws”), it does
not contain all of the information that may be important to you.
For a complete description of the matters set forth in this
“Description of Capital Stock,” you should refer to our Certificate
of Incorporation and Bylaws, each of which are included as exhibits
to the registration statement of which this prospectus is a part,
and to the applicable provisions of Delaware law.
As of December 31,
2020, our authorized capital stock consisted of 250,000,000
shares of common stock, $0.0001 par value per share, and 10,000,000
shares of preferred stock, $0.0001 par value per share. Our Board
may establish the rights and preferences of the preferred stock
from time to time. As of March 31, 2021, there were 23,180,024 shares
of our common stock issued and outstanding and no shares of
preferred stock issued and outstanding.
Common Stock
Dividend Rights. We have never paid cash dividends on our
Common Stock. Moreover, we do not anticipate paying periodic cash
dividends on Common Stock for the foreseeable future. Any future
determination about the payment of dividends will be made at the
discretion of our board of directors and will depend upon its
earnings, if any, capital requirements, operating and financial
conditions and on such other factors as our board of directors
deems relevant.
Preferred Stock
We currently have no outstanding shares of Preferred Stock. Under
our Certificate of Incorporation, our board of directors has the
authority, without further action by stockholders, to designate one
or more series of Preferred Stock and to fix the voting powers,
designations, preferences, limitations, restrictions and relative
rights granted to or imposed upon the Preferred Stock, including
dividend rights, conversion rights, voting rights, rights and terms
of redemption, liquidation preference and sinking fund terms, any
or all of which may be preferential to or greater than the rights
of our Common Stock.
Our board of directors may authorize the issuance of Preferred
Stock with voting or conversion rights that could adversely affect
the voting power or other rights of the holders of Common Stock.
The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes,
could, among other things, have the effect of delaying, deferring
or preventing a change in control and may adversely affect the
market price of the Common Stock and the voting and other rights of
the holders of Common Stock.
Our board of directors may specify the following characteristics of
any Preferred Stock:
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the designation and stated value, if any, of the class or
series of Preferred Stock; |
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the number of shares of the class or series of Preferred Stock
offered, and the liquidation preference, if any, per share; |
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the dividend rate(s), period(s) or payment date(s) or method(s)
of calculation, if any, applicable to the class or series of
Preferred Stock; |
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whether dividends, if any, are
cumulative or non-cumulative and, if cumulative, the date from
which dividends on the class or series of Preferred Stock will
accumulate; |
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the provisions for a sinking fund, if any, for the class or
series of Preferred Stock; |
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the provision for redemption, if applicable, of the class or
series of Preferred Stock; |
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the terms and conditions, if
applicable, upon which the class or series of Preferred Stock will
be convertible into Common Stock, including the conversion price or
manner of calculation and conversion period; |
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voting rights, if any, of the class or series of Preferred
Stock; |
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the relative ranking and
preferences of the class or series of Preferred Stock as to
dividend rights and rights, if any, upon the liquidation,
dissolution or winding up of our affairs; |
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any limitations on issuance of any
class or series of Preferred Stock ranking senior to or on a parity
with the class or series of Preferred Stock as to dividend rights
and rights, if any, upon liquidation, dissolution or winding up of
our affairs; and |
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any other specific terms, preferences, rights, limitations or
restrictions of the class or series of Preferred Stock. |
Anti-Takeover Effects of Certain Provisions of our Certificate of
Incorporation, Bylaws and the General Corporation Law of the State
of Delaware
Certain provisions of Delaware law and the Company’s Certificate of
Incorporation contain provisions that could make the following
transactions more difficult: acquisition of the Company by means of
a tender offer; acquisition of the Company by means of a proxy
contest or otherwise; or removal of the Company’s incumbent
officers and directors. It is possible that these provisions could
make it more difficult to accomplish or could deter transactions
that stockholders may otherwise consider to be in their best
interest or in the Company’s best interests, including transactions
that might result in a premium over the market price for the
Company’s capital stock.
These provisions, summarized below, are expected to discourage
coercive takeover practices and inadequate takeover bids. These
provisions are also designed to encourage persons seeking to
acquire control of the Company to first negotiate with the
Company’s board of directors. The Company believes that the
benefits of increased protection of the Company’s potential ability
to negotiate with the proponent of an unfriendly or unsolicited
proposal to acquire or restructure the Company outweigh the
disadvantages of discouraging these proposals because negotiation
of these proposals could result in an improvement of their
terms.
Delaware Anti-Takeover Statute
The Company is subject to Section 203 of the General Corporation
Law of the State of Delaware, which prohibits persons deemed to be
“interested stockholders” from engaging in a “business combination”
with a publicly-held Delaware corporation for three years following
the date these persons become interested stockholders unless the
business combination is, or the transaction in which the person
became an interested stockholder was, approved in a prescribed
manner or another prescribed exception applies. Generally, an
“interested stockholder” is a person who, together with affiliates
and associates, owns, or within three years prior to the
determination of interested stockholder status did own, 15% or more
of a corporation’s voting stock. Generally, a “business
combination” includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested
stockholder. The existence of this provision may have an
anti-takeover effect with respect to transactions not approved in
advance by the board of directors, such as discouraging takeover
attempts that might result in a premium over the market price of
the Common Stock.
Undesignated Preferred Stock
The ability to authorize undesignated Preferred Stock will make it
possible for the Company’s board of directors to issue Preferred
Stock with voting or other rights or preferences that could impede
the success of any attempt to change control of the Company. These
and other provisions may have the effect of deterring hostile
takeovers or delaying changes in control or management of the
Company.
Elimination of Stockholder Action by Written Consent
Our Certificate of Incorporation eliminates the right of
stockholders to act by written consent without a meeting.
Classified Board; Election and Removal of Directors; Filling
Vacancies
The Company’s board of directors are divided into three classes.
The directors in each class serve for a three-year term, one class
being elected each year by the Company’s stockholders, with
staggered three-year terms. Only one class of directors will be
elected at each annual meeting of the Company’s stockholders, with
the other classes continuing for the remainder of their respective
three-year terms. At all meetings of stockholders for the election
of directors, a plurality of the votes cast is sufficient to elect
each director. The Company’s Certificate of Incorporation provides
for the removal of any of the Company’s directors only for cause
and requires a stockholder vote by the holders of at least 66 2/3%
of the voting power of the then outstanding voting stock.
Furthermore, any vacancy on the Company’s board of directors,
however occurring, including a vacancy resulting from an increase
in the size of the board, may only be filled by a resolution of the
board of directors unless the board of directors determines that
such vacancies shall be filled by the stockholders. This system of
electing and removing directors and filling vacancies may tend to
discourage a third party from making a tender offer or otherwise
attempting to obtain control of the Company, because it generally
makes it more difficult for stockholders to replace a majority of
the directors.
Choice of Forum
The Company’s Certificate of Incorporation provides that, unless
the Company consents in writing to the selection of an alternative
forum, the Court of Chancery of the State of Delaware will be the
exclusive forum for: any derivative action or proceeding brought on
the Company’s behalf; any action asserting a claim of breach of
fiduciary duty; any action asserting a claim against the Company
arising pursuant to the Delaware General Corporation Law, the
Company’s Certificate of Incorporation or the Amended and Restated
Bylaws of the Company; or any action asserting a claim against the
Company that is governed by the internal affairs doctrine. Such
exclusive forum provision, however, does not apply to suits brought
to enforce any liability or duty created by the Securities Act or
the Exchange Act. Although the Company’s Certificate of
Incorporation contains the choice of forum provision described
above, it is possible that a court could find that such a provision
is inapplicable for a particular claim or action or that such
provision is unenforceable.
Amendment of Charter Provisions
The amendment of any of the above provisions in the Company’s
Certificate of Incorporation, except for the provision making it
possible for the Company’s board of directors to issue undesignated
Preferred Stock, would require approval by a stockholder vote by
the holders of at least 66 2/3% of the voting power of the then
outstanding voting stock.
The provisions of the Delaware General Corporation Law and the
Company’s Certificate of Incorporation could have the effect of
discouraging others from attempting hostile takeovers and, as a
consequence, they may also inhibit temporary fluctuations in the
market price of the Common Stock that often result from actual or
rumored hostile takeover attempts. These provisions may also have
the effect of preventing changes in the Company’s management. It is
possible that these provisions could make it more difficult to
accomplish transactions that stockholders may otherwise deem to be
in their best interests.
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is Standard
Registrar and Transfer Company. The transfer agent and registrar’s
address is 440 East 400 South, Suite 200, Salt Lake City, UT
84111.
Listing
Our common stock is listed on the Nasdaq Capital Market under the
symbol “NBSE.”
DESCRIPTION OF DEBT SECURITIES
We may issue debt securities from time to time, in one or more
series, as either senior or subordinated debt or as senior or
subordinated convertible debt. While the terms we have summarized
below will apply generally to any debt securities that we may offer
under this prospectus, we will describe the particular terms of any
debt securities that we may offer in more detail in the applicable
prospectus supplement. The terms of any debt securities offered
under a prospectus supplement may differ from the terms described
below. Unless the context requires otherwise, whenever we refer to
the indenture, we also are referring to any supplemental indentures
that specify the terms of a particular series of debt
securities.
We will issue the debt securities under the indenture that we will
enter into with the trustee named in the indenture. The indenture
will be qualified under the Trust Indenture Act of 1939, as amended
(the “Trust Indenture Act”). We have filed the form of indenture as
an exhibit to the registration statement of which this prospectus
is a part, and supplemental indentures and forms of debt securities
containing the terms of the debt securities being offered will be
filed as exhibits to the registration statement of which this
prospectus is a part or will be incorporated by reference from
reports that we file with the SEC.
The following summary of material provisions of the debt securities
and the indenture is subject to, and qualified in its entirety by
reference to, all of the provisions of the indenture applicable to
a particular series of debt securities. We urge you to read the
applicable prospectus supplements and any related free writing
prospectuses we authorize for use in connection with a specific
offering of debt securities, as well as the complete indenture that
contains the terms of the debt securities.
General Matters
The indenture does not limit the amount of debt securities that we
may issue. It provides that we may issue debt securities up to the
principal amount that we may authorize and in any currency or
currency unit that we may designate. Except for the limitations on
consolidation, merger and sale of all or substantially all of our
assets contained in the indenture, the terms of the indenture do
not contain any covenants or other provisions designed to give
holders of any debt securities protection against changes in our
operations or financial condition or transactions involving us.
We may issue the debt securities issued under the indenture as
“discount securities,” which means they may be sold at a discount
below their stated principal amount. These debt securities, as well
as other debt securities that are not issued at a discount, may be
issued with “original issue discount” (“OID”) for U.S. federal
income tax purposes because of interest payment and other
characteristics or terms of the debt securities. Material U.S.
federal income tax considerations applicable to debt securities
issued with OID will be described in more detail in the applicable
prospectus supplement.
We will describe in the applicable prospectus supplement the terms
of the series of debt securities being offered, including:
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the title of the series of debt
securities; |
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any limit upon the aggregate
principal amount that may be issued; |
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the maturity date or dates; |
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the form of the debt securities of
the series; |
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the applicability of any
guarantees; |
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whether or not the debt securities
will be secured or unsecured, and the terms of any secured
debt; |
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whether the debt securities rank as
senior debt, senior subordinated debt, subordinated debt or any
combination thereof, and the terms of any subordination; |
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if the price (expressed as a
percentage of the aggregate principal amount thereof) at which the
debt securities will be issued is a price other than the principal
amount thereof, the portion of the principal amount thereof payable
upon declaration of acceleration of the maturity thereof, or if
applicable, the portion of the principal amount of such debt
securities that is convertible into another security or the method
by which any such portion shall be determined; |
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the interest rate or rates, which
may be fixed or variable, or the method for determining the rate
and the date interest will begin to accrue, the dates interest will
be payable and the regular record dates for interest payment dates
or the method for determining such dates; |
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our right, if any, to defer payment
of interest and the maximum length of any such deferral
period; |
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if applicable, the date or dates
after which, or the period or periods during which, and the price
or prices at which, we may, at our option, redeem the series of
debt securities pursuant to any optional or provisional redemption
provisions and the terms of those redemption provisions; |
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the date or dates, if any, on
which, and the price or prices at which we are obligated, pursuant
to any mandatory sinking fund or analogous fund provisions or
otherwise, to redeem, or at the holder’s option to purchase, the
series of debt securities and the currency or currency unit in
which the debt securities are payable; |
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the denominations in which we will
issue the series of debt securities, if other than denominations of
$1,000 and any integral multiple thereof; |
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any and all terms, if applicable,
relating to any auction or remarketing of the debt securities of
that series and any security for our obligations with respect to
such debt securities and any other terms which may be advisable in
connection with the marketing of debt securities of that
series; |
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whether the debt securities of the
series shall be issued in whole or in part in the form of a global
security or securities; the terms and conditions, if any, upon
which such global security or securities may be exchanged in whole
or in part for other individual securities, and the depositary for
such global security or securities; |
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if applicable, the provisions
relating to conversion or exchange of any debt securities of the
series and the terms and conditions upon which such debt securities
will be so convertible or exchangeable, including the conversion or
exchange price, as applicable, or how it will be calculated and may
be adjusted, any mandatory or optional (at our option or at the
holders’ option) conversion or exchange features, the applicable
conversion or exchange period and the manner of settlement for any
conversion or exchange; |
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if other than the full principal
amount thereof, the portion of the principal amount of debt
securities of the series which shall be payable upon declaration of
acceleration of the maturity thereof; |
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additions to or changes in the
covenants applicable to the particular debt securities being
issued, including, among others, the consolidation, merger or sale
covenant; |
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additions to or changes in the
events of default with respect to the securities and any change in
the right of the trustee or the holders to declare the principal,
premium, if any, and interest, if any, with respect to such
securities to be due and payable; |
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additions to or changes in or
deletions of the provisions relating to covenant defeasance and
legal defeasance; |
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additions to or changes in the
provisions relating to satisfaction and discharge of the
indenture; |
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additions to or changes in the
provisions relating to the modification of the indenture both with
and without the consent of the holders of the debt securities
issued under the indenture; |
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the currency of payment of the debt
securities if other than U.S. dollars and the manner of determining
the equivalent amount in U.S. dollars; |
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whether interest will be payable in
cash or additional debt securities at our or the holders’ option
and the terms and conditions upon which the election may be
made; |
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the terms and conditions, if any,
upon which we will pay amounts in addition to the stated interest,
premium, if any, and principal amounts of the debt securities of
the series to any holder that is not a “United States person” for
federal tax purposes; |
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any restrictions on transfer, sale
or assignment of the debt securities of the series; and |
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any other specific terms,
preferences, rights or limitations of, or restrictions on, the debt
securities, any other additions or changes in the provisions of the
indenture, and any terms that may be required by us or advisable
under applicable laws or regulations. |
Conversion or Exchange Rights
We will set forth in the applicable prospectus supplement the terms
on which a series of debt securities may be convertible into or
exchangeable for our common stock or our other securities. We will
include provisions as to settlement upon conversion or exchange and
whether conversion or exchange is mandatory, at the option of the
holder or at our option. We may include provisions pursuant to
which the number of shares of our common stock or our other
securities that the holders of the series of debt securities
receive would be subject to adjustment.
Consolidation, Merger or Sale
Unless we provide otherwise in the prospectus supplement applicable
to a particular series of debt securities, the indenture will not
contain any covenant that restricts our ability to merge or
consolidate, or sell, convey, transfer or otherwise dispose of our
assets as an entirety or substantially as an entirety. However, any
successor to or acquirer of such assets (other than a subsidiary of
ours) must assume all of our obligations under the indenture or the
debt securities, as appropriate.
Events of Default under the Indenture
Unless we provide otherwise in the prospectus supplement applicable
to a particular series of debt securities, the following are events
of default under the indenture with respect to any series of debt
securities that we may issue:
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if we fail to pay any installment
of interest on any series of debt securities, as and when the same
shall become due and payable, and such default continues for a
period of 90 days; provided, however, that a valid extension
of an interest payment period by us in accordance with the terms of
any indenture supplemental thereto shall not constitute a default
in the payment of interest for this purpose; |
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if we fail to pay the principal of,
or premium, if any, on any series of debt securities as and when
the same shall become due and payable whether at maturity, upon
redemption, by declaration or otherwise, or in any payment required
by any sinking or analogous fund established with respect to such
series; provided, however, that a valid extension of the maturity
of such debt securities in accordance with the terms of any
indenture supplemental thereto shall not constitute a default in
the payment of principal or premium, if any; |
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if we fail to observe or perform
any other covenant or agreement contained in the debt securities or
the indenture, other than a covenant specifically relating to
another series of debt securities, and our failure continues for a
period of 90 days after we receive written notice of such
failure, requiring the same to be remedied and stating that such is
a notice of default thereunder, from the trustee or holders of at
least 25% of the aggregate principal amount of the outstanding debt
securities of the applicable series; and |
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if specified events of bankruptcy,
insolvency or reorganization occur. |
If an event of default with respect to debt securities of any
series occurs and is continuing, other than certain specified
events of bankruptcy, insolvency or reorganization, the trustee or
the holders of at least 25% of the aggregate principal amount of
the outstanding debt securities of that series, by notice to us in
writing, and to the trustee if notice is given by such holders, may
declare the unpaid principal, premium, if any, and accrued
interest, if any, of such series of debt securities immediately due
and payable. If certain specified events of bankruptcy, insolvency
or reorganization occur with respect to us, the principal amount
and accrued interest, if any, of each issue of debt securities then
outstanding shall be due and payable without any notice or other
action on the part of the trustee or any holder.
The holders of a majority of the principal amount of the
outstanding debt securities of an affected series may waive any
default or event of default with respect to the series and its
consequences, except defaults or events of default regarding
payment of principal, premium, if any, or interest, unless we have
cured the default or event of default in accordance with the
indenture. Any waiver shall cure the default or event of
default.
Subject to the terms of the indenture, if an event of default under
an indenture shall occur and be continuing, the trustee will be
under no obligation to exercise any of its rights or powers under
such indenture at the request or direction of any of the holders of
the applicable series of debt securities, unless such holders have
offered the trustee reasonable indemnity. The holders of a majority
of the principal amount of the outstanding debt securities of any
series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee,
or exercising any trust or power conferred on the trustee, with
respect to the debt securities of that series, provided that:
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the direction so given by the
holder is not in conflict with any law or the applicable indenture;
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subject to its duties under the
Trust Indenture Act, the trustee need not take any action that
might involve it in personal liability or might be unduly
prejudicial to the holders not involved in the proceeding. |
A holder of the debt securities of any series will have the right
to institute a proceeding under the indenture or to appoint a
receiver or trustee, or to seek other remedies, only if:
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the holder has given written notice
to the trustee of a continuing event of default with respect to
that series; |
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the holders of at least 25% of the
aggregate principal amount of the outstanding debt securities of
that series have made a written request; |
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such holders have offered to the
trustee indemnity satisfactory to it against the costs, expenses
and liabilities to be incurred by the trustee in compliance with
the request; and |
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the trustee does not institute the
proceeding, and does not receive from the holders of a majority of
the aggregate principal amount of the outstanding debt securities
of that series other conflicting directions within 90 days
after the notice, request and offer. |
These limitations do not apply to a suit instituted by a holder of
debt securities if we default in the payment of the principal of,
or the premium, if any, or interest on, the debt securities.
We will periodically file statements with the trustee regarding our
compliance with specified covenants in the indenture.
Modification of Indenture; Waiver
Unless we provide otherwise in the prospectus supplement applicable
to a particular series of debt securities, we and the trustee may
change an indenture without the consent of any holders with respect
to specific matters, including, but not limited to, the
following:
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to cure any ambiguity, defect or
inconsistency in the indenture or in the debt securities of any
series; |
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to comply with the provisions
described above under “—Consolidation, Merger or Sale”; |
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to provide for uncertificated debt
securities in addition to or in place of certificated debt
securities; |
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to add to our covenants,
restrictions, conditions or provisions such new covenants,
restrictions, conditions or provisions for the benefit of the
holders of all or any series of debt securities, to make the
occurrence, or the occurrence and the continuance, of a default in
any such additional covenants, restrictions, conditions or
provisions an event of default or to surrender any right or power
conferred upon us in the indenture; |
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to add to, delete from or revise
the conditions, limitations and restrictions on the authorized
amount, terms or purposes of issue, authentication and delivery of
debt securities, as set forth in the indenture; |
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to make any change that does not
adversely affect the interests of any holder of debt securities of
any series in any material respect; |
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to provide for the issuance of, and
to establish the form and terms and conditions of, the debt
securities of any series as provided above under “—General
Matters,” to establish the form of any certifications required to
be furnished pursuant to the terms of the indenture or any series
of debt securities, or to add to the rights of the holders of any
series of debt securities; |
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to evidence and provide for the
acceptance of appointment under any indenture by a successor
trustee; or |
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to comply with any requirements of
the SEC in connection with the qualification of any indenture under
the Trust Indenture Act. |
In addition, under the indenture, the rights of holders of a series
of debt securities may be changed by us and the trustee with the
written consent of the holders of at least a majority of the
aggregate principal amount of the outstanding debt securities of
each series that is affected. However, unless we provide otherwise
in the prospectus supplement applicable to a particular series of
debt securities, we and the trustee may make the following changes
only with the consent of each holder of any outstanding debt
securities affected:
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extending the fixed maturity of any debt securities of any
series; |
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reducing the principal amount, reducing the rate of or extending
the time of payment of interest, or reducing any premium payable
upon the redemption of any series of debt securities; or |
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reducing the percentage of debt securities, the holders of which
are required to consent to any amendment, supplement, modification
or waiver. |
Discharge
The indenture provides that we can elect to be discharged from our
obligations with respect to one or more series of debt securities,
except for specified obligations, including, but not limited to,
the following obligations to:
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register the transfer or exchange
of debt securities of the series; |
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replace stolen, lost or mutilated
debt securities of the series; |
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pay principal of and premium and
interest on any debt securities of the series; |
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maintain paying agencies; |
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hold monies for payment in
trust; |
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recover excess money held by the
trustee; |
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compensate and indemnify the
trustee; and |
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appoint any successor trustee. |
In order to exercise our rights to be discharged, we must deposit
with the trustee money or government obligations sufficient to pay
all the principal of, and any premium, if any, and interest on, the
debt securities of the series on the dates payments are due.
Form, Exchange and Transfer
We will issue the debt securities of each series only in fully
registered form without coupons and, unless we provide otherwise in
the applicable prospectus supplement, in denominations of $1,000
and any integral multiple thereof. The indenture provides that we
may issue debt securities of a series in temporary or permanent
global form and as book-entry securities that will be deposited
with, or on behalf of, The Depository Trust Company, New York, New
York, known as DTC, or another depositary named by us and
identified in the applicable prospectus supplement with respect to
that series. To the extent the debt securities of a series are
issued in global form and as book-entry, a description of terms
relating to any book-entry securities will be set forth in the
applicable prospectus supplement.
At the option of the holder, subject to the terms of the indenture
and the limitations applicable to global securities described in
the applicable prospectus supplement, the holder of the debt
securities of any series can exchange the debt securities for other
debt securities of the same series, in any authorized denomination
and of like tenor and aggregate principal amount.
Subject to the terms of the indenture and the limitations
applicable to global securities set forth in the applicable
prospectus supplement, holders of the debt securities may present
the debt securities for exchange or for registration of transfer,
duly endorsed or with the form of transfer endorsed thereon duly
executed if so required by us or the security registrar, at the
office of the security registrar or at the office of any transfer
agent designated by us for this purpose. Unless otherwise provided
in the debt securities that the holder presents for transfer or
exchange, we will impose no service charge for any registration of
transfer or exchange, but we may require payment of any taxes or
other governmental charges.
We will name in the applicable prospectus supplement the security
registrar, and any transfer agent in addition to the security
registrar, that we initially designate for any debt securities. We
may at any time designate additional transfer agents or rescind the
designation of any transfer agent or approve a change in the office
through which any transfer agent acts, except that we will be
required to maintain a transfer agent in each place of payment for
the debt securities of each series.
If we elect to redeem the debt securities of any series, we will
not be required to:
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issue, register the transfer of, or
exchange any debt securities of that series during a period
beginning at the opening of business 15 days before the date
of mailing of a notice of redemption of any debt securities that
may be selected for redemption and ending at the close of business
on the date of the mailing; or |
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register the transfer of or
exchange any debt securities so selected for redemption, in whole
or in part, except for the unredeemed portion of any debt
securities we are redeeming in part. |
Information Concerning the Trustee
The trustee, other than during the occurrence and continuance of an
event of default under an indenture, undertakes to perform only
those duties as are specifically set forth in the applicable
indenture. Upon an event of default under an indenture, the trustee
must use the same degree of care as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this
provision, the trustee is under no obligation to exercise any of
the powers given to it by the indenture at the request of any
holder of debt securities unless it is offered reasonable security
and indemnity against the costs, expenses and liabilities that it
might incur.
Payment and Paying Agents
Unless we otherwise indicate in the applicable prospectus
supplement, we will make payment of the interest on any debt
securities on any interest payment date to the person in whose name
the debt securities, or one or more predecessor securities, are
registered at the close of business on the regular record date for
the interest.
We will pay principal of and any premium and interest on the debt
securities of a particular series at the office of the paying
agents designated by us, except that, unless we otherwise indicate
in the applicable prospectus supplement, we will make interest
payments by check that we will mail to the holder or by wire
transfer to certain holders. Unless we otherwise indicate in the
applicable prospectus supplement, we will designate the corporate
trust office of the trustee as our sole paying agent for payments
with respect to debt securities of each series. We will name in the
applicable prospectus supplement any other paying agents that we
initially designate for the debt securities of a particular series.
We will maintain a paying agent in each place of payment for the
debt securities of a particular series.
All money we pay to a paying agent or the trustee for the payment
of the principal of, or any premium or interest on, any debt
securities that remains unclaimed at the end of two years after
such principal, premium or interest has become due and payable will
be repaid to us, and the holder of the debt security thereafter may
look only to us for payment thereof.
Governing Law
The indenture and the debt securities, and any claim, controversy
or dispute arising under or related to the indenture or the debt
securities, will be governed by and construed in accordance with
the laws of the State of New York, except to the extent that the
Trust Indenture Act is applicable.
DESCRIPTION OF WARRANTS
The following description, together with the additional information
we may include in the applicable prospectus supplements and free
writing prospectuses we have authorized for use in connection with
a specific offering, summarizes the material terms and provisions
of the warrants that we may offer under this prospectus, which may
consist of warrants to purchase common stock, preferred stock or
debt securities and may be issued in one or more series.
Warrants may be issued independently or together with common stock,
preferred stock or debt securities offered by any prospectus
supplement, and may be attached to or separate from those
securities. While the terms we have summarized below will apply
generally to any warrants that we may offer under this prospectus,
we will describe the particular terms of any series of warrants
that we may offer in more detail in the applicable prospectus
supplement and any applicable free writing prospectus we authorize
for use in connection with the specific offering. The terms of any
warrants offered under a prospectus supplement may differ from the
terms described below.
We will file as exhibits to the registration statement of which
this prospectus is a part, or will incorporate by reference from
reports that we file with the SEC, the form of warrant agreement,
if any, including a form of warrant certificate, that describes the
terms of the particular series of warrants we are offering. The
following summaries of material provisions of the warrants and the
warrant agreements are subject to, and qualified in their entirety
by reference to, all the provisions of the warrant agreement and
warrant certificate applicable to the particular series of warrants
that we may offer under this prospectus. We urge you to read the
applicable prospectus supplements related to the particular series
of warrants that we may offer under this prospectus, as well as any
related free writing prospectuses we have authorized for use in
connection with a specific offering, and the complete warrant
agreements and warrant certificates that contain the terms of the
warrants.
General Matters
We
will describe in the
applicable prospectus supplement the terms relating to a series of
warrants being offered, including:
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the title of such securities; |
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the offering price or prices and
aggregate number of warrants offered; |
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the currency or currencies for
which the warrants may be purchased; |
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if applicable, the designation and
terms of the securities with which the warrants are issued and the
number of warrants issued with each such security or each principal
amount of such security; |
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if applicable, the date on and
after which the warrants and the related securities will be
separately transferable; |
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if applicable, the minimum or
maximum amount of such warrants which may be exercised at any one
time; |
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in the case of warrants to purchase
debt securities, the principal amount of debt securities
purchasable upon exercise of one warrant and the price at which,
and currency in which, this principal amount of debt securities may
be purchased upon such exercise; |
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in the case of warrants to purchase
common stock or preferred stock, the number of shares of common
stock or preferred stock, as the case may be, purchasable upon the
exercise of one warrant and the price at which, and the currency in
which, these shares may be purchased upon such exercise; |
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the effect of any merger,
consolidation, sale or other disposition of our business on the
warrant agreements and the warrants; |
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the terms of any rights to redeem
or call the warrants; |
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the terms of any rights to force
the exercise of the warrants; |
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any provisions for changes to or
adjustments in the exercise price or number of securities issuable
upon exercise of the warrants; |
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the dates on which the right to
exercise the warrants will commence and expire; |
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the manner in which the warrant
agreements and warrants may be modified; |
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a discussion of any material or
special United States federal income tax consequences of holding or
exercising the warrants; |
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the terms of the securities
issuable upon exercise of the warrants; and |
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any other specific terms,
preferences, rights or limitations of or restrictions on the
warrants. |
Before
exercising their warrants, holders of
warrants will not have any of the rights of holders of the
securities purchasable upon such exercise,
including:
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in the case of warrants to purchase
debt securities, the right to receive payments of principal of, or
premium, if any, or interest on, the debt securities purchasable
upon exercise or to enforce covenants in the applicable indenture;
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in the case of warrants to purchase
common stock or preferred stock, the right to receive dividends, if
any, or, payments upon our liquidation, dissolution or winding up
or to exercise voting rights, if any. |
Exercise of Warrants
Each warrant will entitle the holder to purchase the securities
that we specify in the applicable prospectus supplement at the
exercise price that we describe in the applicable prospectus
supplement. Unless we otherwise specify in the applicable
prospectus supplement, holders of the warrants may exercise the
warrants at any time up to the specified time on the expiration
date that we set forth in the applicable prospectus supplement.
After the close of business on the expiration date, unexercised
warrants will become void.
Unless we otherwise specify in the applicable prospectus
supplement, holders of the warrants may exercise the warrants by
delivering the warrant certificate representing the warrants to be
exercised together with specified information, and paying the
required amount to the warrant agent in immediately available
funds, as provided in the applicable prospectus supplement. We will
set forth on the reverse side of the warrant certificate and in the
applicable prospectus supplement the information that the holder of
the warrant will be required to deliver to the warrant agent in
connection with the exercise of the warrant.
Upon receipt of the required payment and the warrant certificate
properly completed and duly executed at the corporate trust office
of the warrant agent or any other office indicated in the
applicable prospectus supplement, we will issue and deliver the
securities purchasable upon such exercise. If fewer than all of the
warrants represented by the warrant certificate are exercised, then
we will issue a new warrant certificate for the remaining amount of
warrants. If we so indicate in the applicable prospectus
supplement, holders of the warrants may surrender securities as all
or part of the exercise price for warrants.
Governing Law
Unless we provide otherwise in the applicable prospectus
supplement, the warrants and warrant agreements, and any claim,
controversy or dispute arising under or related to the warrants or
warrant agreements, will be governed by and construed in accordance
with the laws of the State of New York.
Enforceability of Rights By Holders of Warrants
Each warrant agent will act solely as our agent under the
applicable warrant agreement and will not assume any obligation or
relationship of agency or trust with any holder of any warrant. A
single bank or trust company may act as warrant agent for more than
one issue of warrants. A warrant agent will have no duty or
responsibility in case of any default by us under the applicable
warrant agreement or warrant, including any duty or responsibility
to initiate any proceedings at law or otherwise, or to make any
demand upon us. Any holder of a warrant may, without the consent of
the related warrant agent or the holder of any other warrant,
enforce by appropriate legal action its right to exercise, and
receive the securities purchasable upon exercise of, its
warrants.
Warrant Agreement Will Not Be Qualified Under Trust Indenture
Act
No warrant agreement will be qualified as an indenture, and no
warrant agent will be required to qualify as a trustee, under the
Trust Indenture Act. Therefore, holders of warrants issued under a
warrant agreement will not have the protection of the Trust
Indenture Act with respect to their warrants.
Calculation Agent
Calculations relating to warrants may be made by a calculation
agent, an institution that we appoint as our agent for this
purpose. The prospectus supplement for a particular warrant will
name the institution that we have appointed to act as the
calculation agent for that warrant as of the original issue date
for that warrant. We may appoint a different institution to serve
as calculation agent from time to time after the original issue
date without the consent or notification of the holders.
The calculation agent’s determination of any amount of money
payable or securities deliverable with respect to a warrant will be
final and binding in the absence of manifest error.
DESCRIPTION OF UNITS
We may issue units consisting of any combination of the other types
of securities offered under this prospectus in one or more series.
We may evidence each series of units by unit certificates that we
will issue under a separate agreement. We may enter into unit
agreements with a unit agent. Each unit agent will be a bank or
trust company that we select. We will indicate the name and address
of the unit agent in the applicable prospectus supplement relating
to a particular series of units.
The following description, together with the additional information
included in the applicable prospectus supplement, summarizes the
general features of the units that we may offer under this
prospectus. You should read any prospectus supplement and any free
writing prospectus we authorize for use in connection with a
specific offering of units, as well as the complete unit agreements
that contain the terms of the units. Specific unit agreements will
contain additional important terms and provisions and we will file
as an exhibit to the registration statement of which this
prospectus is a part, or will incorporate by reference from another
report that we file with the SEC, the form of each unit agreement
relating to units offered under this prospectus.
If we offer any units, certain terms of that series of units will
be described in the applicable prospectus supplement, including,
without limitation, the following, as applicable:
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the title of the series of
units; |
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identification and description of
the separate constituent securities comprising the units; |
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the price or prices at which the
units will be issued; |
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the date, if any, on and after
which the constituent securities comprising the units will be
separately transferable; |
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a discussion of certain U.S.
federal income tax considerations applicable to the units; and |
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any other terms of the units and
their constituent securities. |
LEGAL OWNERSHIP OF SECURITIES
We can issue securities in registered form or in the form of one or
more global securities. We describe global securities in greater
detail below. We refer to those persons who have securities
registered in their own names on the books that we or any
applicable trustee or depositary maintain for this purpose as the
“holders” of those securities. These persons are the legal holders
of the securities. We refer to those persons who, indirectly
through others, own beneficial interests in securities that are not
registered in their own names, as “indirect holders” of those
securities. As we discuss below, indirect holders are not legal
holders, and investors in securities issued in book-entry form or
in street name will be indirect holders.
Book-Entry Holders
We may issue securities in book-entry form only, as we will specify
in the applicable prospectus supplement. This means securities may
be represented by one or more global securities registered in the
name of a financial institution that holds them as depositary on
behalf of other financial institutions that participate in the
depositary’s book-entry system. These participating institutions,
which are referred to as participants, in turn, hold beneficial
interests in the securities on behalf of themselves or their
customers.
Only the person in whose name a security is registered is
recognized as the holder of that security. Global securities will
be registered in the name of the depositary or its participants.
Consequently, for global securities, we will recognize only the
depositary as the holder of the securities, and we will make all
payments on the securities to the depositary. The depositary passes
along the payments it receives to its participants, which in turn
pass the payments along to their customers who are the beneficial
owners. The depositary and its participants do so under agreements
they have made with one another or with their customers; they are
not obligated to do so under the terms of the securities.
As a result, investors in a global security will not own securities
directly. Instead, they will own beneficial interests in a global
security, through a bank, broker or other financial institution
that participates in the depositary’s book-entry system or holds an
interest through a participant. As long as the securities are
issued in global form, investors will be indirect holders, and not
legal holders, of the securities.
Street Name Holders
We may terminate a global security in certain situations, as
described under “—Special Situations When a Global Security Will Be
Terminated,” or issue securities that are not issued in global
form. In these cases, investors may choose to hold their securities
in their own names or in “street name.” Securities held by an
investor in street name would be registered in the name of a bank,
broker or other financial institution that the investor chooses,
and the investor would hold only a beneficial interest in those
securities through an account he or she maintains at that
institution.
For securities held in street name, we or any applicable trustee or
depositary will recognize only the intermediary banks, brokers and
other financial institutions in whose names the securities are
registered as the holders of those securities, and we or any such
trustee or depositary will make all payments on those securities to
them. These institutions pass along the payments they receive to
their customers who are the beneficial owners, but only because
they agree to do so in their customer agreements or because they
are legally required to do so. Investors who hold securities in
street name will be indirect holders, not holders, of those
securities.
Legal Holders
Our obligations, as well as the obligations of any applicable
trustee or third party employed by us or a trustee, run only to the
legal holders of the securities. We do not have obligations to
investors who hold beneficial interests in global securities, in
street name or by any other indirect means. This will be the case
whether an investor chooses to be an indirect holder of a security
or has no choice because we are issuing the securities only in
global form.
For example, once we make a payment or give a notice to the legal
holder, we have no further responsibility for the payment or notice
even if that legal holder is required, under agreements with its
participants or customers or by law, to pass the payment or notice
along to the indirect holders but does not do so. Similarly, we may
want to obtain the approval of the holders to amend an indenture,
to relieve us of the consequences of a default or of our obligation
to comply with a particular provision of an indenture, or for other
purposes. In such an event, we would seek approval only from the
legal holders, and not the indirect holders, of the securities.
Whether and how the legal holders contact the indirect holders is
up to the legal holders.
Special Considerations for Indirect Holders
If you hold securities through a bank, broker or other financial
institution, either in book-entry form because the securities are
represented by one or more global securities or in street name, you
should check with your own institution to find out:
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how it handles securities payments
and notices; |
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whether it imposes fees or
charges; |
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how it would handle a request for
the holders’ consent, if ever required; |
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whether and how you can instruct it
to send you securities registered in your own name so you can be a
holder, if that is permitted in the future; |
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how it would exercise rights under
the securities if there were a default or other event triggering
the need for holders to act to protect their interests; and |
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if the securities are in book-entry
form, how the depositary’s rules and procedures will affect these
matters. |
Global Securities
A global security is a security that represents one or any other
number of individual securities held by a depositary. Generally,
all securities represented by the same global securities will have
the same terms.
Each security issued in book-entry form will be represented by a
global security that we issue to, deposit with and register in the
name of a financial institution or its nominee that we select. The
financial institution that we select for this purpose is called the
depositary. Unless we specify otherwise in the applicable
prospectus supplement, The Depository Trust Company, New York, New
York, known as DTC, will be the depositary for all securities
issued in book-entry form.
A global security may not be transferred to or registered in the
name of anyone other than the depositary, its nominee or a
successor depositary, unless special termination situations arise.
We describe those situations below under “—Special Situations When
a Global Security Will Be Terminated.” As a result of these
arrangements, the depositary, or its nominee, will be the sole
registered owner and legal holder of all securities represented by
a global security, and investors will be permitted to own only
beneficial interests in a global security. Beneficial interests
must be held by means of an account with a broker, bank or other
financial institution that in turn has an account with the
depositary or with another institution that does. Thus, an investor
whose security is represented by a global security will not be a
legal holder of the security, but only an indirect holder of a
beneficial interest in the global security.
If the prospectus supplement for a particular security indicates
that the security will be issued as a global security, then the
security will be represented by a global security at all times
unless and until the global security is terminated. If termination
occurs, we may issue the securities through another book-entry
clearing system or decide that the securities may no longer be held
through any book-entry clearing system.
Special Considerations for Global Securities
As an indirect holder, an investor’s rights relating to a global
security will be governed by the account rules of the investor’s
financial institution and of the depositary, as well as general
laws relating to securities transfers. We do not recognize an
indirect holder as a holder of securities and instead deal only
with the depositary that holds the global security.
If securities are issued only as global securities, an investor
should be aware of the following:
|
· |
an investor cannot cause the
securities to be registered in his or her name, and cannot obtain
non-global certificates for his or her interest in the securities,
except in the special situations described below; |
| |
|
|
|
· |
an investor will be an indirect
holder and must look to his or her own bank or broker for payments
on the securities and protection of his or her legal rights
relating to the securities, as described above; |
| |
|
|
|
· |
an investor may not be able to sell
interests in the securities to some insurance companies and to
other institutions that are required by law to own their securities
in non-book-entry form; |
| |
|
|
|
· |
an investor may not be able to
pledge his or her interest in the global security in circumstances
where certificates representing the securities must be delivered to
the lender or other beneficiary of the pledge in order for the
pledge to be effective; |
| |
|
|
|
· |
the depositary’s policies, which
may change from time to time, will govern payments, transfers,
exchanges and other matters relating to an investor’s interest in
the global security; |
| |
|
|
|
· |
we and any applicable trustee have
no responsibility for any aspect of the depositary’s actions or for
its records of ownership interests in the global security, nor will
we or any applicable trustee supervise the depositary in any
way; |
| |
|
|
|
· |
the depositary may, and we
understand that DTC will, require that those who purchase and sell
interests in the global security within its book-entry system use
immediately available funds, and your broker or bank may require
you to do the same; and |
| |
|
|
|
· |
financial institutions that
participate in the depositary’s book-entry system, and through
which an investor holds its interest in the global security, may
also have their own policies affecting payments, notices and other
matters relating to the securities. |
There may be more than one financial intermediary in the chain of
ownership for an investor. We do not monitor and are not
responsible for the actions of any of those intermediaries.
Special Situations When a Global Security Will Be Terminated
In a few special situations described below, a global security will
terminate and interests in it will be exchanged for physical
certificates representing those interests. After that exchange, the
choice of whether to hold securities directly or in street name
will be up to the investor. Investors must consult their own banks
or brokers to find out how to have their interests in securities
transferred to their own names, so that they will be direct
holders. The rights of holders and street name investors are
described above.
A global security will terminate when the following special
situations occur:
|
· |
if the depositary notifies us that
it is unwilling, unable or no longer qualified to continue as
depositary for that global security and we do not appoint another
institution to act as depositary within 90 days; |
| |
|
|
|
· |
if we notify any applicable trustee
that we wish to terminate that global security; or |
| |
|
|
|
· |
if an event of default has occurred
with regard to securities represented by that global security and
has not been cured or waived. |
The applicable prospectus supplement may also list additional
situations for terminating a global security that would apply only
to the particular series of securities covered by the prospectus
supplement. When a global security terminates, the depositary, and
neither we nor any applicable trustee, is responsible for deciding
the names of the institutions that will be the initial direct
holders.
PLAN OF DISTRIBUTION
We may sell the securities from time to time pursuant to
underwritten public offerings, direct sales to the public, “at the
market” offerings, negotiated transactions, block trades or a
combination of these methods. We may sell the securities to or
through underwriters or dealers, through agents, or directly to one
or more purchasers. We may distribute securities from time to time
in one or more transactions:
|
· |
at a fixed price or prices, which
may be changed; |
|
· |
at market prices prevailing at the
time of sale; |
|
· |
at prices related to such
prevailing market prices; or |
A prospectus supplement or supplements (and any related free
writing prospectus that we may have authorized for use in
connection with a specific offering) will describe the terms of the
offering of the securities, including, to the extent
applicable:
|
· |
the name or names of the
underwriters, if any; |
|
· |
the purchase price of the
securities or other consideration therefor, and the proceeds, if
any, we will receive from the sale; |
|
· |
any over-allotment options under
which underwriters may purchase additional securities from us; |
|
· |
any agency fees or underwriting
discounts and other items constituting agents’ or underwriters’
compensation; |
|
· |
any public offering price; |
|
· |
any discounts or concessions
allowed or re-allowed or paid to dealers; and |
|
· |
any securities exchange or market
on which the securities may be listed. |
Only underwriters named in the prospectus supplement will be
underwriters of the securities offered by the prospectus
supplement.
If underwriters are used in the sale, they will acquire the
securities for their own account and may resell the securities from
time to time in one or more transactions at a fixed public offering
price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the securities will be
subject to the conditions set forth in the applicable underwriting
agreement. We may offer the securities to the public through
underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Subject to certain conditions,
the underwriters will be obligated to purchase all of the
securities offered by the prospectus supplement, other than
securities covered by any over-allotment option. Any public
offering price and any discounts or concessions allowed or
re-allowed or paid to dealers may change from time to time. We may
use underwriters with whom we have a material relationship. We will
describe in the prospectus supplement, naming the underwriter, the
nature of any such relationship.
We may sell securities directly or through agents we designate from
time to time. We will name any agent involved in the offering
and sale of securities and we will describe any commissions we will
pay the agent in the prospectus supplement. Unless the
prospectus supplement states otherwise, our agent will act on a
best-efforts basis for the period of its appointment.
We may authorize agents or underwriters to solicit offers by
certain types of institutional investors to purchase securities
from us at the public offering price set forth in the prospectus
supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. We will
describe the conditions to these contracts and the commissions we
must pay for solicitation of these contracts in the prospectus
supplement.
We may provide agents and underwriters with indemnification against
civil liabilities, including liabilities under the Securities Act,
or contribution with respect to payments that the agents or
underwriters may make with respect to these liabilities. Agents and
underwriters may engage in transactions with, or perform services
for, us in the ordinary course of business.
All securities we may offer, other than common stock, will be new
issues of securities with no established trading market. Any
underwriters may make a market in these securities, but will not be
obligated to do so and may discontinue any market making at any
time without notice. We cannot guarantee the liquidity of the
trading markets for any securities.
Any underwriter may engage in over-allotment, stabilizing
transactions, short-covering transactions and penalty bids in
accordance with Regulation M under the Exchange Act.
Over-allotment involves sales in excess of the offering size, which
create a short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do
not exceed a specified maximum price. Syndicate-covering or other
short-covering transactions involve purchases of the securities,
either through exercise of the over-allotment option or in the open
market after the distribution is completed, to cover short
positions. Penalty bids permit the underwriters to reclaim a
selling concession from a dealer when the securities originally
sold by the dealer are purchased in a stabilizing or covering
transaction to cover short positions. Those activities may cause
the price of the securities to be higher than it would otherwise
be. If commenced, the underwriters may discontinue any of the
activities at any time.
Any underwriters that are qualified market makers on the Nasdaq
Capital Market may engage in passive market making transactions in
the common stock on the Nasdaq Capital Market in accordance with
Regulation M under the Exchange Act, during the business day
prior to the pricing of the offering, before the commencement of
offers or sales of the common stock. Passive market makers must
comply with applicable volume and price limitations and must be
identified as passive market makers. In general, a passive market
maker must display its bid at a price not in excess of the highest
independent bid for such security; if all independent bids are
lowered below the passive market maker’s bid, however, the passive
market maker’s bid must then be lowered when certain purchase
limits are exceeded. Passive market making may stabilize the market
price of the securities at a level above that which might otherwise
prevail in the open market and, if commenced, may be discontinued
at any time.
In compliance with guidelines of the Financial Industry Regulatory
Authority (“FINRA”), the maximum consideration or discount to be
received by any FINRA member or independent broker dealer may not
exceed 8% of the aggregate amount of the securities offered
pursuant to this prospectus and the applicable prospectus
supplement.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplement,
the validity of the securities offered by this prospectus, and any
supplement thereto, will be passed upon for us by Paul Hastings
LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of NeuBase as of September
30, 2020 and 2019, and for each of the two years in the period
ended September 30, 2020 incorporated by reference in this
prospectus have been so incorporated in reliance on the report of
Marcum LLP, independent registered public accounting firm, upon the
authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE
INFORMATION
We are a reporting company and file annual, quarterly and current
reports, proxy statements and other information with the SEC. We
have filed with the SEC a registration statement on Form S-3 under
the Securities Act with respect to the securities being offered
under this prospectus. This prospectus does not contain all of the
information set forth in the registration statement and the
exhibits to the registration statement. For further information
with respect to us and the securities being offered under this
prospectus, we refer you to the registration statement and the
exhibits and schedules filed as a part of the registration
statement. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC, including
NeuBase Therapeutics, Inc. The SEC’s Internet site can be
found at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY
REFERENCE
The SEC allows us to “incorporate by reference” information into
this prospectus, which means that we can disclose important
information to you by referring you to another document filed
separately with the SEC. The documents incorporated by reference
into this prospectus contain important information that you should
read about us.
The following documents are incorporated by reference into this
prospectus:
We also incorporate by reference any future filings (other than
current reports furnished under Item 2.02 or Item 7.01 of Form 8-K
and exhibits filed on such form that are related to such items
unless such Form 8-K expressly provides to the contrary) made with
the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act, including those made after the date of the initial
filing of the registration statement of which this prospectus is a
part and prior to effectiveness of such registration statement,
until we file a post-effective amendment that indicates the
termination of the offering of the securities made by this
prospectus and such future filings and will become a part of this
prospectus from the respective dates that such documents are filed
with the SEC. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes hereof or of
the related prospectus supplement to the extent that a statement
contained herein or in any other subsequently filed document which
is also incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
Documents incorporated by reference are available from us, without
charge. You may obtain documents incorporated by reference in this
prospectus by requesting them in writing or by telephone at the
following address:
NeuBase Therapeutics, Inc.
350 Technology Drive
Pittsburgh, PA 15219
Phone: (646)
450-1790
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth an estimate of the fees and expenses
relating to the issuance and distribution of the securities being
registered hereby, other than underwriting discounts and
commissions, all of which shall be borne by NeuBase Therapeutics,
Inc. (the “Registrant”). All of such fees and expenses, except for
the SEC registration fee and the FINRA filing fee, are
estimated:
| SEC
registration fee |
|
|
27,275 |
|
| FINRA filing fee |
|
|
(1 |
) |
| Legal fees and
expenses |
|
|
(1 |
) |
| Printing fees and
expenses |
|
|
(1 |
) |
| Accounting fees and
expenses |
|
|
(1 |
) |
| Transfer agent fees
and expenses |
|
|
(1 |
) |
| Warrant agent fees
and expenses |
|
|
(1 |
) |
| Trustee fees and
expenses |
|
|
(1 |
) |
|
Miscellaneous fees and expenses |
|
|
(1 |
) |
|
Total |
|
$ |
(1 |
) |
__________________
(1) These fees are calculated based on the securities offered and
the number of issuances and accordingly cannot be estimated at this
time.
Item 15. Indemnification of Officers and Directors.
Section 102 of the General Corporation Law of the State of Delaware
(the “DGCL”) permits a corporation to eliminate or limit the
personal liability of directors of a corporation to the corporation
or its stockholders for monetary damages for a breach of fiduciary
duty as a director, except where the director breached his duty of
loyalty to the corporation or its stockholders, failed to act in
good faith, engaged in intentional misconduct or knowingly violated
a law, authorized the payment of a dividend or approved a stock
repurchase or redemption in violation of the DGCL or derived an
improper personal benefit. The Registrant’s certificate of
incorporation, as amended, provides that no director of the
Registrant shall be personally liable to it or its stockholders for
monetary damages for any breach of fiduciary duty as a director,
notwithstanding any provision of law imposing such liability,
except to the extent that the DGCL prohibits the elimination or
limitation of liability of directors for breaches of fiduciary
duty.
Section 145 of the DGCL provides that a corporation has the power
to indemnify a director, officer, employee or agent of the
corporation, or a person serving at the request of the corporation
for another corporation, partnership, joint venture, trust or other
enterprise in related capacities against expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with
an action, suit or proceeding to which he or she was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of such position, if
such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests
of the corporation, and, in any criminal action or proceeding, had
no reasonable cause to believe his or her conduct was unlawful,
except that, in the case of actions brought by or in the right of
the corporation, no indemnification shall be made with respect to
judgments, fines and amounts paid in settlement in connection with
such action, suit or proceeding or with respect to any claim, issue
or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
Court of Chancery or other adjudicating court determines that,
despite the adjudication of liability but in view of all of the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
The Registrant’s bylaws, as amended, provide that the Registrant
will indemnify each person who was or is a party or threatened to
be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of the
Registrant) by reason of the fact that he or she is or was a
director or officer of the Registrant, or is or was serving, at the
Registrant’s request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise (all such persons being referred to as an “Indemnitee”),
against expenses (including, attorneys’ fees), judgments, fines,
and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding, if such Indemnitee
acted in good faith and in a manner he or she reasonably believed
to be in, or not opposed to, the Registrant’s best interests, and,
with respect to any criminal action or proceeding, he or she had no
reasonable cause to believe his or her conduct was unlawful. The
Registrant’s bylaws, as amended, also provide that the Registrant
will indemnify any Indemnitee who was or is a party to an action or
suit by or in the right of the Registrant to procure a judgment in
the Registrant’s favor by reason of the fact that the Indemnitee is
or was, a director or officer, or is or was serving, or has agreed
to serve, at the Registrant’s request as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including,
attorneys’ fees) actually and reasonably incurred by such
Indemnitee in connection with the defense or settlement of such
action or suit, if the Indemnitee acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to,
the Registrant’s best interests, except that no indemnification
shall be made with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the
Registrant, unless, and only to the extent, that the Court of
Chancery or the court in which such action or suit was brought
determines, despite the adjudication of liability but in view of
all the circumstances, he or she is entitled to indemnification of
such expenses which the Court of Chancery or such other court shall
deem proper. Notwithstanding the foregoing, to the extent that any
Indemnitee has been successful, on the merits or otherwise, he or
she will be indemnified against expenses (including attorneys’
fees) actually and reasonably incurred in connection therewith.
Expenses must be advanced to an Indemnitee under certain
circumstances.
The Registrant has entered into indemnification agreements with
each of its directors and executive officers that may be broader
than the specific indemnification provisions contained in the DGCL.
These indemnification agreements require the Registrant, among
other things, to indemnify its directors and executive officers
against liabilities that may arise by reason of their status or
service. These indemnification agreements also require the
Registrant to advance all expenses incurred by the directors and
executive officers in investigating or defending any such action,
suit or proceeding, subject to certain exceptions.
The Registrant’s bylaws, as amended, provide that the Registrant
may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Registrant or
is or was serving at the request of the Registrant as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against him or her in any such capacity, or arising out of
his or her status as such, whether or not the Registrant would have
the power to indemnify such person against such liability under the
DGCL. The Registrant has obtained insurance under which, subject to
the limitations of the insurance policies, coverage is provided to
the Registrant’s directors and executive officers against loss
arising from claims made by reason of breach of fiduciary duty or
other wrongful acts as a director or executive officer, including
claims relating to public securities matters, and to the Registrant
with respect to payments that may be made by the Registrant to
these directors and executive officers pursuant to the Registrant’s
indemnification obligations or otherwise as a matter of law.
See also the undertakings set out in response to Item 17
herein.
Item 16. Exhibits.
Exhibit
Number |
|
Description of
Document |
| |
|
| 2.1 |
|
Agreement
and Plan of Merger and Reorganization, dated as of January 2, 2019,
by and among the Registrant, Ohr Acquisition Corp. and NeuBase
Therapeutics, Inc. (incorporated herein by reference to Exhibit 2.1
to the Registrant’s Current Report on Form 8-K, filed on January 3,
2019) |
| |
|
| 2.2 |
|
First
Amendment to the Agreement and Plan of Merger and Reorganization,
dated as of June 27, 2019, by and among the Registrant, Ohr
Acquisition Corp. and NeuBase Therapeutics, Inc. (incorporated
herein by reference to Exhibit 2.1 to the Registrant’s Current
Report on Form 8-K, filed on July 3, 2019) |
| |
|
|
| 4.1 |
|
Form of
Series A Warrant (incorporated herein by reference to Exhibit 4.1
to the Registrant’s Current Report on Form 8-K, filed on December
8, 2016) |
| † |
To the extent applicable, to be filed by an amendment or as an
exhibit to a document filed under the Securities Exchange Act of
1934, as amended, and incorporated by reference herein. |
| * |
Filed
herewith. |
| # |
To be filed separately under the
electronic form type 305B2, if applicable. |
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that:
Paragraphs (1)(i), (1)(ii) and (1)(iii) of this section do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed pursuant
to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the Registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement
as of the date the filed prospectus was deemed part of and included
in the registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule
424(b)(2), (b)(5), or (b)(7) as part of a registration statement in
reliance on Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the
information required by section 10(a) of the Securities Act of 1933
shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of
sale of securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which
that prospectus relates, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof. Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such effective date.
(5) That, for the purpose of determining liability of the
Registrant under the Securities Act of 1933 to any purchaser in the
initial distribution of the securities, the undersigned Registrant
undertakes that in a primary offering of securities of the
undersigned Registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities
to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the
undersigned Registrant will be a seller to the purchaser and will
be considered to offer or sell such securities to such
purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
Registrant relating to the offering required to be filed pursuant
to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared
by or on behalf of the undersigned Registrant or used or referred
to by the undersigned Registrant;
(iii) The portion of any other free writing prospectus relating to
the offering containing material information about the undersigned
Registrant or its securities provided by or on behalf of the
undersigned Registrant; and
(iv) Any other communication that is an offer in the offering made
by the undersigned Registrant to the purchaser.
(6) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant’s annual
report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan’s annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(7) That, for purposes of determining any liability under the
Securities Act of 1933:
(i) the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of
1933 shall be deemed to be a part of this registration statement as
of the time it was declared effective; and
(ii) each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(8) To file an application
for the purpose of determining the eligibility of the trustee to
act under subsection (a) of Section 310 of the Trust
Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.
Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against
public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Pittsburgh, State of Pennsylvania, on April 1,
2021.
| |
NEUBASE THERAPEUTICS, INC. |
| |
|
|
| |
By: |
/s/ Dietrich A.
Stephan |
| |
|
Dr. Dietrich A. Stephan
President and Chief Executive Officer
|
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each of Dr. Dov A.
Goldstein, Dr. Franklyn G. Prendergast and Mr. Eric I. Richman
constitutes and appoints Dr. Dietrich A. Stephan and Mr. Sam
Backenroth, and each of them, and that Dr. Dietrich A. Stephan
constitutes and appoints Mr. Sam Backenroth, and that Mr. Sam
Backenroth constitutes and appoints Dr. Dietrich Stephan, as his
true and lawful attorney-in-fact and agent, upon the action of such
appointee, with full power of substitution and resubstitution, to
do any and all acts and things and execute, in the name of the
undersigned, any and all instruments which each of said
attorneys-in-fact and agents may deem necessary or advisable in
order to enable the Registrant to comply with the Securities Act of
1933, as amended (the “Securities Act”), and any requirements of
the Securities and Exchange Commission (the “Commission”) in
respect thereof, in connection with the filing with the Commission
of this Registration Statement on Form S-8 under the
Securities Act, including specifically but without limitation,
power and authority to sign the name of the undersigned to such
Registration Statement, and any amendments to such Registration
Statement (including post-effective amendments), and to file
the same with all exhibits thereto and other documents in
connection therewith, with the Commission, to sign any and all
applications, Registration Statements, notices or other documents
necessary or advisable to comply with applicable state securities
laws, and to file the same, together with other documents in
connection therewith with the appropriate state securities
authorities, granting unto each of said attorneys-in-fact and
agents full power and authority to do and to perform each and every
act and thing requisite or necessary to be done in and about the
premises, as fully and to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
|
Signature |
|
Title |
|
Date |
| |
|
|
|
|
|
/s/ Dietrich A. Stephan |
|
President and Chief Executive
Officer |
|
April 1,
2021 |
| Dr. Dietrich A. Stephan |
|
(Principal Executive
Officer) |
|
|
| |
|
|
|
|
|
/s/ Sam Backenroth |
|
Chief Financial Officer, Treasurer and
Secretary |
|
April 1,
2021 |
| Mr. Sam Backenroth |
|
(Principal
Financial Officer) |
|
|
| |
|
|
|
|
|
/s/Dov A. Goldstein |
|
Director |
|
April 1,
2021 |
| Dr. Dov A. Goldstein |
|
|
|
|
| |
|
|
|
|
|
/s/ Franklyn G. Prendergast |
|
Director |
|
April 1,
2021 |
| Dr. Franklyn
G. Prendergast |
|
|
|
|
| |
|
|
|
|
|
/s/Eric I. Richman |
|
Director |
|
April 1,
2021 |
| Mr. Eric I.
Richman |
|
|
|
|
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