Business Overview
We are a clinical stage biopharmaceutical
company focused on the discovery, development and commercialization of drugs for the treatment of cancer. Our core objective is
to leverage our proprietary phospholipid drug conjugate
TM
(PDCs
TM
) delivery platform to develop PDCs
that specifically target cancer cells to deliver improved efficacy and better safety as a result of fewer off-target effects. The
PDC
TM
platform possesses the potential for the discovery and development of the next generation of cancer-targeting
treatments and we plan to develop PDCs independently and through research and development collaborations.
Our lead PDC candidate, CLR 131, provides
targeted delivery of the cytotoxic (cell-killing) radioisotope iodine 131. CLR 131 is in a Phase 1 clinical study for relapsed
or refractory (R/R) multiple myeloma (MM) and a Phase 2 clinical study in R/R MM and a range of other B-cell malignancies. The
company plans to initiate a Phase 1 study for pediatric solid tumors and lymphomas and a second Phase 1 study of CLR 131 in combination
with external beam radiation for head and neck cancer. The company’s pipeline also includes two pre-clinical PDC chemotherapeutic
programs, CLR 1700 and 1900. CLR 1700 possess a Burton’s tyrosine kinase inhibitor (BTK) payload and is targeted for development
in hematologic cancers and CLR 1900 is being developed for solid tumors with a payload that inhibits mitosis (cell division) which
is a validated pathway for cell apoptosis.
We have leveraged our PDC platform to establish
three active collaborations featuring four unique payloads and mechanisms of action. Through research and development collaborations,
our strategy is to generate near-term capital, supplement internal resources, gain access to novel molecules or payloads, accelerate
product candidate development and broaden our proprietary and partnered product pipelines.
Our PDC platform provides selective delivery
of a diverse range of oncologic payloads to cancerous cells, whether a hematologic cancer or solid tumor, the primary tumor, or
a metastatic tumor and cancer stem cells. Our PDC platform takes advantage of a metabolic pathway utilized by all tumor cell types
in all stages of the tumor “cycle.” This allows the PDC molecules to gain access to the intracellular compartment of
the tumor cells and for the PDCs to continue to accumulate over time, which enhances drug efficacy. The PDC platform’s mechanism
of entry does not rely upon specific cell surface epitopes or antigens as are required by other targeted delivery platforms. Specific
cell surface epitopes are limited in number on the cell surface, undergo internalization and cycling upon binding and are not present
on all tumor cells of a particular cancer type. This means a subpopulation of tumor cells will always remain. In addition to the
benefits provided by the mechanism of entry, PDCs offer the potential advantage of having the ability to be conjugated to molecules
in numerous ways, thereby increasing the types of molecules selectively delivered via the PDC.
The PDC platform features include the capacity
to link with almost any molecule, provide a significant increase in targeted oncologic payload delivery and the ability to target
all tumor cells. As a result, we believe that we can generate PDCs to treat a broad range of cancers with the potential to improve
the therapeutic index of oncologic drug payloads, enhance or maintain efficacy while reducing adverse events by minimizing drug
delivery to healthy cells, and increasing delivery to cancerous cells and cancer stem cells.
We employ a drug discovery and development
approach that allows us to efficiently design, research and advance drug candidates. Our iterative process allows us to rapidly
and systematically produce multiple generations of incrementally improved targeted drug candidates.
A description of our PDC product candidates
follows:
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CLR 131 is a small-molecule, cancer-targeting radiotherapeutic PDC designed to deliver cytotoxic radiation directly and selectively to cancer cells and cancer stem cells. CLR 131 is our lead therapeutic PDC product candidate and is currently being evaluated in both Phase 2 and Phase 1 clinical studies. The Investigational New Drug (IND) application was accepted by the U.S. Food and Drug Administration (FDA) in March 2014. In December 2014, the FDA granted orphan drug designation for CLR 131 for the treatment of multiple myeloma (MM) and the Phase 1 study was initiated in April 2015. This clinical study is a standard three-by-three dose escalation safety study in patients with relapse or refractory multiple myeloma (R/RMM). Multiple myeloma is an incurable cancer of the plasma cells and is the second most common form of hematologic cancers. This cancer type was selected for clinical, regulatory and commercial rationales, including multiple myeloma’s highly radiosensitive nature, and continued unmet medical need in the relapse/refractory setting and has been determined to be a rare disease by the FDA based upon the current definition within the Orphan Drug Act. The primary goal of the Phase 1 study is to assess the compound’s safety and tolerability in patients with relapsed or refractory multiple myeloma. Secondary objectives include the establishment of a recommended Phase 2 dose, both with and without dexamethasone, as well as an evaluation of therapeutic activity by assessing surrogate efficacy markers which include M protein, Free Light Chain (FLC), Progression Free Survival (PFS) and Overall Survival (OS). In March 2018, the FDA granted orphan drug designation for CLR 131 for the treatment of neuroblastoma. The FDA previously accepted our IND application for a Phase 1 open-label, dose-escalating study to evaluate the safety and tolerability of a single intravenous administration of CLR 131 in up to 30 children and adolescents with cancers including neuroblastoma, sarcomas, lymphomas (including Hodgkin’s lymphoma) and malignant brain tumors. We expect to initiate this study during the second quarter of 2018.
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Phase 2 Study in Patients with
R/R select B-Cell Malignancies
In July 2016, we were awarded a $2,000,000 National
Cancer Institute Fast-Track Small Business Innovation Research (SBIR) grant to further advance the clinical development of CLR
131. The funds are supporting the Phase 2 study initiated in March 2017 to define the clinical benefits of CLR 131 in R/RMM and
other niche hematologic malignancies with high unmet clinical need. These niche hematologic malignancies include Chronic Lymphocytic
Leukemia, Small Lymphocytic Lymphoma, Marginal Zone Lymphoma, Lymphoplasmacytic Lymphoma, and Diffuse Large B-Cell Lymphoma. The
study will be conducted in approximately 10 top U.S. cancer centers in patients with orphan-designated relapse or refractory hematologic
cancers. The study's primary endpoint is clinical benefit response (CBR), with additional endpoints of progression free survival
PFS, median OS and other markers of efficacy following a single 25.0 mCi/m
2
dose of CLR 131, with the option for
a second 25.0 mCi/m
2
dose approximately 75-180 days later.
Phase 1 Study in Patients with R/R Multiple Myeloma
In September 2017, Cohort 4 results were announced
and these results showed that a single 30 minute infusion of 31.25mCi/m
2
of CLR 131 was safe and well tolerated by the
three patients in the cohort. Additionally, all three patients experienced clinical benefit with one patient achieving a Partial
Response (PR). We are monitoring response rates via surrogate markers of efficacy including M protein and free light chain FLC.
The International Myeloma Working Group (IMWG) defines a partial response PR as a greater than or equal to 50 percent decrease
in FLC levels (for patients in whom M protein is unmeasurable) or 50 percent decrease in M protein. The patient experiencing a
partial response had an 82 percent reduction in FLC. This patient did not produce M protein, received seven prior lines of treatment
including radiation, stem cell transplantation and multiple triple combination treatments including one with daratumumab that was
not tolerated. One patient experiencing stable disease attained a 44 percent reduction in M protein.
The key clinical outcome for R/RMM patients is OS.
Patients in the Phase 1 dose escalation study have attained the following Median OS as of November 3, 2017: Cohort 3 patients (single
25.0 mCi/m
2
dose) at 10 months, Cohort 2 patients (single 18.75mCi/m
2
dose) at 15.4 months and Cohort 1 (single
12.5mCi/m
2
dose) at 26.2 months. At the time of this document, Median OS data are still being collected and therefore
should not be considered quality controlled final data.
Phase
1 Study in R/R Pediatric Patients with select Solid tumors, Lymphomas and Malignant Brain Tumors.
On December 14, 2017, we filed an IND application
with the Division of Oncology at the FDA for a proposed Phase 1 study of CLR 131 in children and adolescents with select rare and
orphan designated cancers. The Phase 1 clinical trial of CLR 131 is an open-label, sequential-group, dose-escalation study to evaluate
the safety and tolerability of a single intravenous administration of CLR 131 in up to 30 children and adolescents with cancers
including neuroblastoma, sarcomas, lymphomas (including Hodgkin's lymphoma) and malignant brain tumors. Secondary objectives of
the study are to identify the recommended Phase 2 dose of CLR 131 and to determine preliminary antitumor activity (treatment response)
of CLR 131 in children and adolescents. In March 2018, the FDA granted orphan drug designation for CLR 131 for the treatment of
neuroblastoma, a rare pediatric cancer. We expect to initiate the Phase 1 study during the second quarter of 2018.
The study will be initiated with the pediatric oncologists
and Nuclear Medicine/Radiology Group at the
University of Wisconsin Carbone
Cancer Center (
UWCCC). Investigators at The University of Wisconsin have demonstrated uptake of CLR 131 and other fluorescently
and isotopically tagged PDCs across a wide range of childhood solid cancer cell lines including, Ewing sarcoma, rhabdomyosarcoma,
pediatric brain tumors such as high-grade gliomas, medulloblastoma and atypical teratoid rhabdoid tumor. In subsequent testing
in mouse xenograft models of neuroblastoma, Ewing sarcoma, rhabdomyosarcoma and osteosarcoma, CLR 131 provided significant benefits
on tumor growth rates and survival.
Phase
1 Study in R/R Head and Neck Cancer
In
August
2016, the UWCCC was awarded a five year Specialized Programs of Research
Excellence (SPORE) grant from the National Cancer Institute to improve treatments and outcomes for head and neck cancer (HNC) patients.
HNC is the sixth most common cancer across the world with approximately 56,000 new patients diagnosed every year in the United
States. As a key component of this grant, the UWCCC researchers will test CLR 131 in various animal HNC models as well as initiating
the first human clinical trial combining CLR 131 and external beam radiation in patients with recurrent HNC. The UWCCC is currently
anticipated to initiate this clinical trial in 2H 2018.
Pre-Clinical Pipeline
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CLR 1700 Series is an internally developed PDC program leveraging a payload which inhibits Burton’s tyrosine kinase (BTK) and is designed to treat a broad range of hematologic cancers. The payload provides further specificity by targeting a pathway within hematologic cancers that is significantly upregulated in comparison to normal tissue. We believe that this additional level of targeting will allow us to provide a new drug candidate that has the ability to significantly improve patient outcomes. Leveraging our iterative discovery and screening process, we have been able to accelerate the development of this program.
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CLR 1800 Series is a collaborative PDC program with Pierre Fabre that we entered into in December 2015 and extended in October 2017. Pierre Fabre is the third largest French pharmaceutical company with an extensive oncology research and development infrastructure. The objective of the research collaboration is to co-design a library of PDCs employing Pierre Fabre’s chemotherapeutics in combination with our proprietary cancer-targeting delivery vehicle. The newly developed PDCs may provide enhanced therapeutic indices to otherwise highly potent, non-targeted payloads through the targeted delivery to cancer cells provided by our cancer-targeting delivery vehicle. Significant progress has been achieved and the program continues to rapidly advance with a number of PDC molecules showing enhanced pharmacologic behavior over the parent compound alone.
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CLR 1900 Series is an internally developed proprietary PDC program leveraging a novel small molecule cytotoxic compound as the payload. The payload inhibits mitosis (cell division) and targets a key pathway required to inhibit rapidly dividing cells that results in apoptosis. We believe that this program could produce a product candidate targeted to select solid tumors. Currently, the program is in early preclinical development.
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CLR 2000 Series is a collaborative PDC program with Avicenna Oncology, or Avicenna, that we entered into in July 2017. Avicenna is a leading developer of antibody drug conjugates (ADCs). The objective of the research collaboration is to design and develop a series of PDCs utilizing Avicenna’s proprietary cytotoxic payload. Although Avicenna is a leading developer of ADCs, this collaboration was sought as a means to overcome many of the challenges associated with ADCs, including those associated with the targeting of specific cell surface epitopes.
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CLR 2100 and 2200 Series are collaborative PDC programs with Onconova Therapeutics, Inc., or Onconova, that we entered into in September 2017. Onconova is a biotechnology company specializing in the discovery and development of novel small molecule cancer therapies. The collaboration is structured such that we will design and develop a series of PDCs utilizing different small molecules that Onconova was developing as payloads with the intent to show improved targeting and specificity to the tumor. At least one of the molecules was taken into Phase 1 clinical trials previously by Onconova. We would own all new intellectual property associated with the design of the new PDCs and both companies will have the option to advance compounds.
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We believe our PDC platform has potential
to provide targeted delivery of a diverse range of oncologic payloads, as exemplified by the product candidates listed above, that
may result in improvements upon current standard of care (SOC) for the treatment of a broad range of human cancers.
Technology Overview
Our product candidates are based on a cancer-targeting
delivery platform of optimized Phospholipid Ether (PLE) analogs (phospholipid ether proprietary delivery vehicle) that interact
with lipid rafts. Lipid rafts are specialized regions of a cell’s membrane phospholipid bilayer that contain high concentrations
of cholesterol and sphingolipids and serve to organize cell surface and intracellular signaling molecules. As a result of enrichment
of lipid rafts in cancer cells, including cancer stem cells, our product candidates provide selective targeting preferentially
over normal healthy cells. The cancer-targeting PLE delivery vehicle was deliberately designed to be combined with therapeutic,
diagnostic and imaging molecules. For example, iodine can be attached via a very stable covalent bond resulting in distinct products
differing only with respect to the isotope of iodine they contain; CLR 131 contains radioactive I-131 and non-radioactive molecules,
including cytotoxic compounds can also be attached to the delivery vehicle.
We are focused on exploring the creation
of additional PDCs ranging from newly discovered to well-characterized chemotherapeutic payloads under its CLR hemotherapeutic
PDC program. The objective of our CTX program is to develop PDC chemotherapeutics through conjugation of our delivery vehicle and
non-targeted anti-cancer agents to improve therapeutic indices and expand potential indications through the targeted delivery of
chemotherapeutic payloads. Initial PDC product candidates include our CLR 1700, 1800, 1900, 2000, 2100 and 2200 series of conjugated
compounds currently being researched independently and through partnerships. All are small-molecule, cancer-targeting chemotherapeutics
in pre-clinical research. To date, multiple cancer-targeting product profiles have been generated from a single chemical core structure
that is the foundation of our technology platform. We also believe that additional cytotoxic PDCs may be developed possessing enhanced
therapeutic indices versus the original, non-targeted cytotoxic payload as a monotherapy.
Malignant tumor targeting, including targeting
of cancer stem cells, has been demonstrated
in vivo
. Mice without intact immune systems, and inoculated with Panc-1 (pancreatic
carcinoma) cells, were injected with CLR 1502, 24 or 96 hours prior to imaging.
In vivo
optical imaging showed pronounced
accumulation of CLR 1502 in tumors versus non-target organs and tissues. Similarly, positron emission tomography (PET) imaging
of tumor-bearing animals (colon, glioma, triple negative breast and pancreatic tumor xenograft models) administered the imaging
agent CLR 124 clearly shows selective uptake and retention by both primary tumors and metastases, including cancer stem cells.
PET/CT analysis following co-injection of CLR 131 (for therapy) and CLR 124 (for imaging) revealed time-dependent tumor responses
and disappearance over nine days in a cancer xenograft model. We believe that the capability of our technology to target and be
selectively retained by cancer stem cells
in vivo,
was demonstrated by treating glioma stem cell-derived orthotopic tumor-bearing
mice with another fluorescent-labeled PDC (CLR 1501), and then removing the tumor and isolating cancer stem cells, which continued
to display CLR 1501 labeling even after three weeks in cell culture.
The basis for selective tumor targeting
of our compounds lies in differences between the plasma membranes of cancer cells as compared to those of most normal cells. Data
suggests that lipid rafts serve as portals of entry for PDCs such as CLR 131 and our multiple series of drug conjugates. The marked
selectivity of our compounds for cancer cells versus non-cancer cells is due to the fact that cancer cells maintain an overabundance
of lipid rafts and have stabilized these microdomains within the plasma membrane as compared to normal cells. For example, following
cell entry via lipid rafts, CLR 131 is transported into the cytoplasm, where it traffics along the Golgi apparatus and is distributed
to various peri-nuclear organelles (mitochondria, endoplasmic reticulum) but not the nucleus. The pivotal role played by lipid
rafts is underscored by the fact that disruption of lipid raft architecture significantly suppresses uptake of our PDC delivery
vehicle into cancer cells.
Products in Development
CLR 131
CLR 131 is a small-molecule, cancer-targeting
molecular radiotherapeutic PDC that we believe has the potential to be the first radiotherapeutic agent to use PLEs to target cancer
cells. CLR 131 is comprised of our proprietary PLE, 18-(p-[I-131]iodophenyl) octadacyl phosphocholine, acting as a cancer-targeting
delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic (cell-killing) radioisotope with a half-life of
eight days that is already in common use to treat thyroid, pediatric tumors and other cancer types including non-Hodgkin’s
lymphoma. It is this “intracellular radiation” mechanism of cancer cell killing, coupled with delivery to a wide range
of malignant tumor types that we believe provides CLR 131 with anti-cancer activity. Selective uptake and retention has been demonstrated
in cancer stem cells compared with normal cells, offering the prospect of longer lasting anti-cancer activity.
Pre-clinical experiments in tumor models
have demonstrated selective killing of cancer cells along with a safe and tolerable product profile. CLR 131’s anti-tumor/survival-prolonging
activities have been demonstrated in more than a dozen models including breast, prostate, lung, brain, pancreatic, ovarian, uterine,
renal, and colorectal cancers as well as, melanoma and multiple myeloma. In all but two models, a single administration of a well-tolerated
dose of CLR 131 was sufficient to demonstrate efficacy. Moreover, efficacy was also seen in a model employing human uterine sarcoma
cells that have known resistance to many standard chemotherapeutic drugs. CLR 131 was also tested in combination with a standard
efficacious dose of gemcitabine in a pancreatic cancer model. Single doses of CLR 131 or gemcitabine given alone were equally efficacious,
while the combination therapy was significantly more efficacious than either treatment alone (additive). While single doses of
CLR 131 have been effective and well tolerated in multiple preclinical animal models, CLR 131 has been shown to provide a statistically
significant improvement in efficacy and survival when provided in a multi-dose format and remains well tolerated. In each study,
the dose of CLR 131 was ~100 µCi, which is approximately 50-fold less than the maximum tolerated dose (MTD) of CLR 131 determined
in a six-month rat radiotoxicity study.
Extensive IND-enabling, Good Laboratory
Practices (GLP)
in vivo
and
in vitro
pre-clinical pharmacokinetic/ distribution, toxicology and drug safety studies
were successfully completed in 2007 through 2009 using non-pharmacological concentrations/doses of PLE consistent with its role
as a delivery/retention vehicle in CLR 131. Tissue distribution studies supported prediction of acceptable human organ exposures
and body clearance for CLR 131. Importantly, and in sharp distinction from biological products labeled with I-131, the small-molecule
CLR 131 showed very minimal variation in excretion kinetics and tissue distribution among individuals within species or across
a 500-fold variation in dose. Single and repeat-dose animal toxicology studies indicated very high margins of safety with our PLE
delivery and retention vehicle even when administered at 80-200x over the amount required to deliver the anticipated maximum human
therapy dose of CLR 131.
In 2009, we filed an IND with the FDA to
study CLR 131 in humans. In February 2010, we completed a Phase 1 dosimetry trial with a single intravenous dose of 10 mCi/m
2
CLR 131 in eight patients with relapsed or refractory advanced solid tumors. Single doses of CLR 131 were well tolerated and the
reported adverse events were all considered minimal, manageable and either not dose limiting or not related to CLR 131. There were
no serious adverse events reported. Analysis of total body imaging and blood and urine samples collected over 42 days following
injection indicated that doses of CLR 131 expected to be therapeutically effective could be administered without harming vital
organs. Two subjects (one with colorectal cancer metastasized to lung and another with prostate cancer) had tumors that were imaged
with 3D nuclear scanning (SPECT/CT) on day 6 after administration of CLR 131. Uptake of CLR 131 into tumor tissue (but not adjacent
normal tissue or bone marrow) was clearly demonstrated in both subjects. Confirming animal studies, pharmacokinetic analyses demonstrated
a prolonged half-life of radioactivity in the plasma after CLR 131 administration (approximately 200 hours) and that there was
no significant variation in excretion or radiation dosimetry among subjects. The trial established an initial dose of 12.5 mCi/m
2
,
for the Phase 1b escalating dose trial that commenced in January 2012.
The primary objective of the multicenter
Phase 1b dose-escalation trial in patients with a range of advanced solid tumors was to define the MTD of CLR 131. In addition
to determining the MTD, the Phase 1b trial was intended to evaluate overall tumor response (using standard RESIST 1.1 criteria)
and safety. In September 2012, we announced that we had successfully completed the second cohort in this Phase 1b dose-escalation
trial. Dose escalation in four cohorts subsequently occurred with refractory cancer patients receiving single doses of 25 mCi/m
2
,
31.25 mCi/m
2
or 37.5 mCi/m
2
.
Tumor treatment with radioactive isotopes
has been used as a fundamental cancer therapeutic for decades. The goals of targeted cancer therapy — selective delivery
of effective doses of isotopes that destroy tumor tissue, sparing of surrounding normal tissue, and non-accumulation in vital organs
such as the liver and kidneys — remain goals of new therapies as well. We believe our isotope delivery technology has the
potential to achieve these goals. To date, CLR 131 has been shown in animal models to reliably and near-universally accumulate
in cancer cells, including cancer stem cells, and because the therapeutic properties of iodine-131 are well known, we believe the
risk of non-efficacy in human clinical trials is less than that of other cancer therapies at this stage of development, although
no assurance can be given.
In view of CLR 131’s selective uptake
and retention in a wide range of solid tumors and in cancer stem cells, its single-agent efficacy in animal models and its non-specific
mechanism of cancer-killing (radiation), we are initially developing CLR 131 as a monotherapy for cancer indications with significant
unmet medical need. While a number of indications were evaluated as the initial target treatment, multiple myeloma was selected
principally because it is an incurable hematologic disease that is highly radiosensitive, with significant unmet medical need in
the relapse or refractory clinical setting, and is designated as an orphan disease. As a result, this may provide an accelerated
regulatory pathway due to CLR 131’s unique benefits such as a novel mechanism of action, ease of administration, and positive
benefit/risk profile potential in various high unmet cancer populations. The IND application for multiple myeloma was accepted
by the FDA in September 2014. In December 2014, the FDA granted orphan drug designation for CLR 131 for the treatment of multiple
myeloma. We initiated our Phase 1 Study of CLR 131 for the treatment of relapsed or refractory multiple myeloma in April 2015,
and have provided periodic clinical updates. CLR 131 is being evaluated as a monotherapy and will subsequently be explored as a
combination therapy with chemotherapeutic agents, immunomodulatory agents and in combination with external beam radiotherapy. CLR
131 is being evaluated in a Phase 2 clinical study examining relapse refractory multiple myeloma patients as well as selected other
B-cell hematological malignancies. Patients will receive a 25 mCi/m
2
dose infused over approximately 30 minutes with
the option of a second 25 mCi/m
2
dose 75-180 days later based on physician assessment. This study is partially funded
through a $2,000,000 Fast Track NCI SBIR award which was granted in July 2016.
In September 2017, the CLR 131 Phase 1
Cohort 4 results were announced. These results showed that a single 30 minute infusion of 31.25mCi/m
2
of CLR 131 was
safe and well-tolerated by the three patients in the cohort. We are also monitoring signals of efficacy, including surrogate markers
M protein and FLC. IMWG defines a PR as a greater than or equal to 50 percent decrease in FLC levels (for patients in whom M protein
is unmeasurable) or 50 percent decrease in M protein. Additionally, all three patients in the cohort experienced clinical benefit
with one patient achieving a PR and two patients achieving stable disease. One patient experiencing stable disease attained a 44
percent reduction in M protein. The patient experiencing a partial response had an 82 percent reduction in FLC. This patient did
not produce M protein, received seven prior lines of treatment including radiation, stem cell transplantation and multiple combination
treatments including one with daratumumab that was not tolerated. Median OS for the study has not been reached at the time of this
document and data is still being collected for the Phase 1 study and will not be considered final until the end of the study. As
of November 3, 2017, patients in Cohort 1 who received a single 12.5mCi/m
2
dose experienced a median OS of 26.4 months
with all patients remaining alive. Median OS for Cohorts 2 and 3 also continue to mature with patients experiencing OS of 15.6
months and 10 months, respectively as of November 3, 2017. The company has initiated a Phase 2 clinical study using Cohort 3’s
dose of 25.0 mCi/m
2
with the option of a second 25 mCi/m
2
dose 75-180 days later based on physician assessment.
We may modify this dose based on safety and efficacy signals from the Phase 1 study’s ongoing Cohort 5 multi dose regimen.
On December 14, 2017, we filed an IND application
with the Division of Oncology at the FDA for a proposed Phase 1 study of CLR 131 in children and adolescents with select rare and
orphan designated cancers. The Phase 1 clinical trial of CLR 131 is an open-label, sequential-group, dose-escalation study to evaluate
the safety and tolerability of a single intravenous administration of CLR 131 in up to 30 children and adolescents with cancers
including neuroblastoma, sarcomas, lymphomas (including Hodgkin's lymphoma) and malignant brain tumors. Secondary objectives of
the study are to identify the recommended Phase 2 dose of CLR 131 and to determine preliminary antitumor activity (treatment response)
of CLR 131 in children and adolescents. The study will be initiated with the pediatric oncologists and Nuclear Medicine/Radiology
Group at UWCCC. Investigators at The University of Wisconsin have demonstrated uptake of CLR 131 and other fluorescently and
isotopically tagged PDCs across a wide range of childhood solid cancer cell lines including, Ewing sarcoma, rhabdomyosarcoma, pediatric
brain tumors such as high-grade gliomas, medulloblastoma and atypical teratoid rhabdoid tumor. In subsequent testing in mouse xenograft
models of neuroblastoma, Ewing sarcoma, rhabdomyosarcoma and osteosarcoma, CLR 131 provided significant benefits on tumor growth
rates and survival. In March 2018, the FDA granted orphan drug designation for CLR 131 for the treatment of neuroblastoma, a
rare pediatric cancer. We expect to initiate the Phase 1 study during the second quarter of 2018.
CLR 1700 Series
CLR 1700 Series is an internally developed
PDC program leveraging a payload which inhibits BTK and is designed to treat a broad range of hematologic cancers. The payload
provides further specificity by targeting a pathway within hematologic cancers that is significantly upregulated in comparison
to normal tissue. We believe that this additional level of targeting will allow us to provide a new drug candidate that has the
ability to significantly improve patient outcomes. Leveraging our iterative discovery and screening process, we have been able
to accelerate the development of this program.
CLR 1800 Series
CLR 1800 Series is a collaborative PDC
program with Pierre Fabre that we entered into in December 2015. Pierre Fabre is the third largest French pharmaceutical company
with an extensive oncology research and development infrastructure. The objective of the research collaboration is to co-design
a library of PDCs employing Pierre Fabre’s chemotherapeutics in combination with our proprietary cancer-targeting delivery
vehicle. The newly developed PDCs may provide enhanced therapeutic indices to otherwise highly potent, non-targeted payloads through
the targeted delivery to cancer cells provided by our cancer-targeting delivery vehicle. Significant progress has been achieved
and the program continues to rapidly advance with a number of PDC molecules showing enhanced pharmacologic behavior over the parent
compound alone.
CLR 1900 Series
CLR 1900 Series is an internally developed
proprietary PDC program leveraging a novel small molecule cytotoxic compound as the payload. The payload inhibits mitosis (cell
division) and targets a key pathway required to inhibit rapidly dividing cells that results in apoptosis. We believe that this
program could produce a product candidate targeted to select solid tumors. Currently, the program is in early preclinical development.
CLR 2000 Series
CLR 2000 Series is a collaborative PDC
program with Avicenna Oncology, or Avicenna, that we entered into in July 2017. Avicenna is a leading developer of antibody ADCs.
The objective of the research collaboration is to design and develop a series of PDCs utilizing Avicenna’s proprietary cytotoxic
payload. Although Avicenna is a leading developer of ADCs, this collaboration was sought as a means to overcome many of the challenges
associated with ADCs, including those associated with the targeting of specific cell surface epitopes.
CLR 2100 and 2200 Series
CLR 2100 and 2200 Series are collaborative
PDC programs with Onconova Therapeutics, Inc., or Onconova, that we entered into in September 2017. Onconova is a biotechnology
company specializing in the discovery and development of novel small molecule cancer therapies. The collaboration is structured
such that we will design and develop a series of PDCs utilizing different small molecules that Onconova was developing as payloads
with the intent to show improved targeting and specificity to the tumor. At least one of the molecules was taken into Phase 1 clinical
trials previously by Onconova. We would own all new intellectual property associated with the design of the new PDCs and both companies
will have the option to advance compounds.
Market Overview
Our target market is broad and represents
the market for the treatment of cancer. The American Cancer Society estimated that approximately 1.69 million new cancer cases
were expected to be diagnosed in the U.S. in 2016 and approximately 596,000 people were expected to die of cancer, which is the
equivalent of about 1,630 per day. The global market for cancer drugs reached $107 billion in annual sales (June 2015), and could
reach $150 billion by 2020, according to a report dated June 2016 by the IMS Institute for Healthcare Informatics, a unit of drug
data provider IQVIA. This growth will be driven by emerging targeted therapies, which are expected to change the cancer treatment
landscape (Cowen Report), and an increased use of cancer drug combination regimens.
Multiple Myeloma
According to the National Cancer Institute
SEER database, multiple myeloma is the second most common hematologic cancer with a U.S. incidence rate and a relapse or refractory
patient population of 10,000 to 15,000. The Global Data Report for 2015 estimated the Multiple Myeloma dollar market size to be
$8.9B in 2014 and is forecasted to increase to $22.4B in 2023. The increase in drug sales over this period will be mainly driven
by the increasing incidence of MM in each of the seven key markets with the U.S. market remaining the largest potential market.
Chronic Lymphocytic Lymphoma and
Small Lymphocytic Lymphoma/Lymphoplasmacytic Lymphoma/Mantle Cell Lymphoma/Maginal Zone Lymphoma
According to the National Cancer Institute
SEER data base, chronic lymphocytic lymphoma and small lymphocytic lymphoma represents about 47,000 cases per year in the US. Lymphoplasmacytic
lymphoma is one of the rarer forms of lymphoma with approximately 5,000 new cases per year in the U.S. Meanwhile, mantel cell and
marginal zone lymphomas combined represent approximately 22,000 patients per year. The incidence rate in these diseases significantly
increases with an aging population (majority of patients over the age of 60). According to a Datamonitor report from 2016, the
markets for these conditions are expected to grow at a compound annual growth rate of nearly 5.5% in the U.S. and 7.6% in Europe
until 2024 with combined sales of approximately $2B.
Diffuse Large B-Cell Lymphoma
Diffuse
large B-cell lymphoma (DLBCL) is an
aggressive
(fast-growing) lymphoma that can arise in lymph nodes or outside
of the lymphatic system, in the gastrointestinal tract, testes, thyroid, skin, breast, bone, or brain.
DLBCL is one of the
most common forms of lymphoma with an incidence of approximately 57,000 patients per year (National Cancer Institute SEER data
base). Datamonitor reports that the DLBCL market will expand at a compound annual growth rate of approximately 2.9%.
Neuroblastoma
Neuroblastoma,
a
neoplasm of the sympathetic nervous system,
is the most common extracranial solid tumor of childhood, accounting for approximately
7.8% of childhood cancers in the U.S. The National Cancer Institute states the incidence is about 10.54 cases per 1 million per
year in children younger than 15 years and 90% are younger than 5 years at diagnosis. Over 650 new cases are diagnosed each year
in North America. Approximately 50% of patients present with metastatic disease requiring systemic treatment. Clinical consequences
include abdominal distension, proptosis, bone pain, pancytopenia, fever and paralysis. Although the prognosis is favorable in children
under one year of age with an 86 to 95% 5-year survival, in children aged one to 14 years the 5-year survival ranges from 34 to
68%.
Pediatric High Grade Glioma
Pediatric high grade glioma (HGG) represent
a rare and orphan pediatric tumor that has limited treatment options. HGGs
are usually defined
as tumors of glial origin with the most common pediatric HGGs being anaplastic astrocytoma and glioblastoma multiform. The Central
for Brain Tumor Registry of the United States estimate the incidence at approximately 3,600 pediatric patients per year.
Manufacturing
In January 2018, we initiated the planned
shutdown of our radiopharmaceutical manufacturing facility in Madison, Wisconsin. This facility was designed to provide pilot and
small scale production of our lead clinical program CLR 131. In December 2017, we successfully transferred the manufacturing of
CLR 131 to Centre for Probe Development and Commercialization (CPDC), a validated cGMP manufacturing organization specializing
in radiopharmaceuticals, as our exclusive source to supply drug product for our ongoing research and clinical trials, including
our Phase 1 and Phase 2 studies of CLR 131. We believe that CPDC and our other third party manufactures have the ability to supply
large scale clinical and commercial scale material. Our third party manufacturing partners have been inspected and approved to
supply clinical and commercial radiopharmaceutical material by the FDA and the European Medicines Agency.
CLR 131 drug product is made via a five-step
synthetic scheme. The release specifications for the drug product have been established and validated. Through process improvements,
we have been able to achieve a longer expiry dating for the compound extending finished product shelf-life to further facilitate
ex-U.S. distribution from North America.
The drug substance base molecule is a dry
powder produced via a six-step synthetic scheme. The release specifications for the drug substance have been established
and validated. We have successfully executed large scale production of the drug substance via a contract manufacturing organization
that has been inspected and approved by the FDA and the European Medicines Agency. We have also demonstrated 60-month stability
for the drug substance in desiccated and refrigerated forms at small scale and are replicating this at large scale.
Sales and Marketing
We plan to pursue and evaluate all available
options to develop, launch and commercialize our compounds. These options presently include, but are not limited to: entering
into an agreement for a contract sales organization (CSO) or partnering arrangement with one or more biotechnology or pharmaceutical
company with strong product development and commercialization expertise and distribution infrastructure in the U.S., Europe and/or
Japan. While we currently do not plan to build our own commercial organization for the launch and commercialization of our compounds,
we may reconsider that in the future.
Competition for Our Clinical-Stage Compounds
Currently, several classes of approved
products with various mechanisms of action exist, including: immune-modulating agents, proteasome inhibitors, histone deacetylase
inhibitors, monoclonal antibodies, corticosteroids, and traditional chemotherapeutics for the treatment of liquid and solid tumors.
While a number of indications were evaluated as the initial target treatment for CLR 131, multiple myeloma and hematologic cancers
were selected for initial clinical development principally because of its highly radio-sensitive nature, single or multi-dose treatment,
and novel mechanism of action relative to all existing classes of approved drugs. As a result, we believe CLR 131 is a therapeutic
option in the relapse or refractory setting either as a monotherapy or in combination with currently approved agents, some of which
are radio-sensitizing and maintain a differential adverse event profile from that of CLR 131.
Intellectual Property
Our core technology platform is based on
research conducted at the University of Michigan in 1994, where phospholipid ether analogs were initially designed, synthesized,
radiolabeled, and evaluated. This research was transferred to the University of Wisconsin - Madison between 1998 and the subsequent
founding of Cellectar in 2002 to further develop and commercialize the technology. We obtained exclusive rights to the related
technology patents owned by University of Michigan in 2003 and continued development of the PDC platform while obtaining ownership
of numerous additional patents and patent applications (with various expiry until 2034 without extensions). We have established
a broad U.S. and international intellectual property rights portfolio around our proprietary cancer-targeting PLE technology platform
including CLR 131 and our PDC Programs.
PDC chemotherapeutic Programs
In November 2015, we converted our previously
filed provisional patent application for Phospholipid-Ether Analogs as Cancer Targeting Drug Vehicles to non-provisional US and
International (PCT) patent applications and were published by the U.S. Patent & Trade Office (USPTO) in May of 2016. These
patent applications further protect composition of matter and method of use for PDCs developed with our proprietary phospholipid-ether
delivery vehicle conjugated with any existing or future cytotoxic agents, including chemotherapeutics for targeted delivery to
cancer cells and cancer stem cells. Additional cytotoxic PDC compounds are covered by pending patent applications directed to the
composition of matter and method of use for cancer therapy provide intellectual property protection in the United States and up
to 148 additional countries. These applications, if granted, offer protection extending through at least 2035 in the U.S. and key
international markets.
CLR 131
We have taken a broad approach to creating
market exclusivity for CLR 131 both within the U.S, and globally, including all major markets. This approach includes numerous
patents, patent applications and regulatory filings to provide maximum market exclusivity. Our patent portfolio for CLR 131 includes
all of the typical filings as well as unique methods of use, methods of manufacturing, use in combinations, use to treat cancer
stem cells, novel formulations, etc. In addition, to our patents, we were granted orphan designation for CLR 131 for the treatment
of multiple myeloma by the U.S. FDA in December 2014 and expect to file additional orphan designations for other rare diseases.
We continue to evaluate CLR 131 in additional hematologic and solid tumor orphan designated indications. Our patents have a variety
expected expiry with some potentially being extended on a country-by-country basis. In March 2018, the FDA granted orphan drug
designation for CLR 131 for the treatment of neuroblastoma, a rare pediatric cancer. We expect to initiate a Phase 1 study during
the second quarter of 2018.
We expect to continue to file patent applications
and acquire licenses to other patents covering methods of use, composition of matter, formulation, method of manufacture and other
patentable claims related to CLR 131 and new PDCs. These patent applications will be filed in key commercial markets worldwide.
The issued patents will generally expire between 2025 and 2035, unless extended, most likely under clinical development extensions.
In addition to the above noted patents
/applications directed to CLR 131 and our PDC pipeline portfolio, we own other patents/applications directed to different forms
of phospholipid ethers, methods of use and methods of manufacturing of phospholipid ethers.
Separate from any patent protection and
following product approval by regulatory authorities, data exclusivity may be available for various compounds for up to 10 years
on a country-by-country basis (e.g., up to five years in the U.S. and up to ten years in Europe).
Licenses / Collaborations
On September 18, 2017, we entered into an
arrangement with Onconova Therapeutics, Inc. (Onconova). Under this arrangement, Onconova will provide us a selection of its proprietary
compounds. We will use our proprietary technology to perform research studies on such compounds with the goal of developing new
conjugates. We agree to perform the studies within 24 months. We granted Onconova an exclusive option to acquire a royalty-bearing
license with respect to each conjugate developed. In the event an executed license agreement for a particular conjugate is not
obtained, then Onconova’s exclusive option shall terminate with respect to such conjugate.
On July 9, 2017, we entered into an arrangement
with Avicenna Oncology GMBH (Avicenna). Under this arrangement, Avicenna will provide us a selection of its proprietary toxins.
We will use our proprietary conjugation capabilities to proceed with the conjugation in order to obtain PDCs. We will process various
in vitro
and
in cellulo
screening against such PDCs to develop new conjugates. We granted Avicenna an exclusive option
to acquire an exclusive license to our intellectual property with respect to each conjugate developed. In the event the parties
cannot reach agreement on the terms of a definitive agreement despite good faith negotiations, Avicenna’s exclusive option
terminates as to such conjugate. Avicenna also granted to us an exclusive option to acquire an exclusive license to its intellectual
property with respect to the material provided. In the event the parties do not reach agreement on the terms of a definitive agreement,
our exclusive option terminates as to the material of Avicenna.
On December 14, 2015, we entered into an
arrangement with Institut de Recherche Pierre Fabre (IRPF). Under this arrangement, IRPF will provide us a selection of its proprietary
cytotoxics for use in an
in vivo
proof-of-concept study to evaluate the potential to create new drug conjugates (NDCs) in
combination with our proprietary PDC platform technology. We are entitled to all intellectual property associated with the NDCs
developed as part of the research collaboration. If we decide to further develop any of the NDCs for pre-clinical studies, we will
enter into discussions with IRPF to acquire an option to in-license the IRPF materials. In the event that we propose to enter into
a business relationship with a third party for advancement of the NDCs, we will grant IRPF a right of first refusal to enter into
the same business relationship, which will be exercisable by IRPF within 60 days. In the event that we do not choose to further
develop the NDCs for preclinical studies and IRPF desires to do so within four years following expiration of this arrangement the
parties will enter into business discussions relating to IRPF’s use of the results of the study and certain of our proprietary
technologies relating to the IRPF materials. We agreed to perform the study by June 15, 2018 and our obligation to grant a right
of first refusal will continue for four years following the date on which we provide the results of the study to IRPF.
Research and Development
Our primary activity to date has been research
and development. The research has historically been conducted at our facility in Madison, Wisconsin and through third party laboratories
and academic universities. The clinical development has been completed primarily through contract research organizations at hospitals
and academic centers. We have established a collaboration outsourcing model to leverage third party expertise, accelerate project
timelines, improve productivity and limit spend and fixed costs. Our research and development expenses were approximately $9,466,000
and $4,750,000 for 2017 and 2016, respectively.
Regulation
The production, distribution, and marketing
of products employing our technology, and our development activities, are subject to extensive governmental regulation in the United
States and in other countries. In the United States, we are subject to the Federal Food, Drug, and Cosmetic Act, as amended,
and the regulations of the FDA, as well as to other federal, state, and local statutes and regulations, including the federal,
state and local laws and regulations governing the storage, use and disposal of hazardous materials, including radioactive isotopes.
These laws, and similar laws outside the United States, govern the clinical and pre-clinical testing, manufacture, safety, effectiveness,
approval, labeling, distribution, sale, import, export, storage, record-keeping, reporting, advertising, and promotion of drugs.
Product development and approval within this regulatory framework, if successful, will take many years and involve the expenditure
of substantial resources. Violations of regulatory requirements at any stage may result in various adverse consequences,
including the delay in approving or refusal to approve a product by the FDA or other health authorities. Violations of regulatory
requirements also may result in enforcement actions, which include civil money penalties, injunctions, seizure of regulated product,
and civil and criminal charges. The following paragraphs provide further information on certain legal and regulatory issues with
a particular potential to affect our operations or future marketing of products employing our technology.
Research, Development, and Product
Approval Process
The research, development, and approval
process in the United States and elsewhere is intensive and rigorous and generally takes many years to complete. The typical
process required by the FDA before a therapeutic drug may be marketed in the United States includes:
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pre-clinical laboratory and animal tests performed under the FDA’s Good Laboratory Practices regulations, referred to herein as GLP;
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submission to the FDA of an IND application, which must become effective before human clinical trials may commence;
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human clinical studies performed under the FDA’s Good Clinical Practices regulations, to evaluate the drug’s safety and effectiveness for its intended uses;
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FDA review of whether the facility in which the drug is manufactured, processed, packed, or held meets standards designed to assure the product’s continued quality; and
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submission of a marketing application to the FDA, and approval of the application by the FDA.
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Pre-Clinical Testing
During pre-clinical testing, studies are
performed with respect to the chemical and physical properties of candidate formulations. These studies are subject to GLP requirements.
Biological testing is typically done in animal models to demonstrate the activity of the compound against the targeted disease
or condition and to assess the apparent effects of the new product candidate on various organ systems, as well as its relative
therapeutic effectiveness and safety.
Submission of IND
An IND must be submitted to the FDA and
become effective before studies in humans may commence. The IND must include a sufficient amount of data and other information
concerning the safety and effectiveness of the compound from laboratory, animal, and human clinical testing, as well as data and
information on manufacturing, product quality and stability, and proposed product labeling.
Clinical Trials
Clinical trial programs in humans generally
follow a three-phase process. Typically, Phase 1 studies are conducted in small numbers of healthy volunteers or, on occasion,
in patients afflicted with the target disease. Phase 1 studies are conducted to determine the metabolic and pharmacological action
of the product candidate in humans and the side effects associated with increasing doses, and, if possible, to gain early evidence
of effectiveness. In Phase 2, studies are generally conducted in larger groups of patients having the target disease or condition
in order to validate clinical endpoints, and to obtain preliminary data on the effectiveness of the product candidate and optimal
dosing. This phase also helps determine further the safety profile of the product candidate. In Phase 3, large-scale clinical trials
are generally conducted in patients having the target disease or condition to provide sufficient data for the statistical proof
of effectiveness and safety of the product candidate as required by United States regulatory agencies.
In the case of products for certain serious
or life-threatening diseases, the initial human testing may be done in patients with the disease rather than in healthy volunteers.
Because these patients are already afflicted with the target disease or condition, it is possible that such studies will also provide
results traditionally obtained in Phase 2 studies. These studies are often referred to as “Phase 1/2” studies. However,
even if patients participate in initial human testing and a Phase 1/2 study is carried out, the sponsor is still responsible for
obtaining all the data usually obtained in both Phase 1 and Phase 2 studies.
United States law requires that studies
conducted to support approval for product marketing be “adequate and well controlled.” In general, this means that
either a placebo or a product already approved for the treatment of the disease or condition under study must be used as a reference
control. Studies must also be conducted in compliance with good clinical practice requirements, and informed consent must be obtained
from all study subjects. The clinical trial process for a new compound can take ten years or more to complete. The FDA may prevent
clinical trials from beginning or may place clinical trials on hold at any point in this process if, among other reasons, it concludes
that study subjects are being exposed to an unacceptable health risk. Trials may also be prevented from beginning or may be terminated
by institutional review boards, which must review and approve all research involving human subjects. Side effects or adverse events
that are reported during clinical trials can delay, impede, or prevent marketing authorization. Similarly, adverse events that
are reported after marketing authorization can result in additional limitations being placed on a product’s use and, potentially,
withdrawal of the product from the market.
Submission of NDA
Following the completion of clinical trials,
the data is analyzed to determine whether the trials successfully demonstrated safety and effectiveness and whether a product approval
application may be submitted. In the United States, if the product is regulated as a drug, an NDA must be submitted and approved
before commercial marketing may begin. The NDA must include a substantial amount of data and other information concerning the safety
and effectiveness of the compound from laboratory, animal, and human clinical testing, as well as data and information on manufacturing,
product quality and stability, and proposed product labeling.
Each domestic and foreign manufacturing
establishment, including any contract manufacturers we may decide to use, must be listed in the NDA and must be registered with
the FDA. The application generally will not be approved until the FDA conducts a manufacturing inspection, approves the applicable
manufacturing process and determines that the facility is in compliance with cGMP requirements.
Under the Prescription Drug User Fee Act,
as amended, the FDA receives fees for reviewing an NDA and supplements thereto, as well as annual fees for commercial manufacturing
establishments and for approved products. These fees can be significant. For fiscal year 2018, the NDA review fee alone is $2,421,495,
although certain limited deferral, waivers, and reductions may be available.
Each NDA submitted for FDA approval is
usually reviewed for administrative completeness and reviewability within 45 to 60 days following submission of the application.
If deemed complete, the FDA will “file” the NDA, thereby triggering substantive review of the application. The FDA
can refuse to file any NDA that it deems incomplete or not properly reviewable. The FDA has established performance goals for the
review of NDAs— six months for priority applications and ten months for standard applications. However, the FDA is not legally
required to complete its review within these periods, and these performance goals may change over time.
Moreover, the outcome of the review, even
if generally favorable, typically is not an actual approval but an “action letter” that describes additional work that
must be done before the application can be approved. The FDA’s review of an application may involve review and recommendations
by an independent FDA advisory committee. Even if the FDA approves a product, it may limit the approved therapeutic uses for the
product as described in the product labeling, require that warning statements be included in the product labeling, require that
additional studies be conducted following approval as a condition of the approval, impose restrictions and conditions on product
distribution, prescribing, or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval.
Post NDA Regulation
Significant legal and regulatory requirements
also apply after FDA approval to market under an NDA. These include, among other things, requirements related to adverse event
and other reporting, product advertising and promotion, and ongoing adherence to cGMP requirements, as well as the need to submit
appropriate new or supplemental applications and obtain FDA approval for certain changes to the approved product labeling, or manufacturing
process. The FDA also enforces the requirements of the Prescription Drug Marketing Act which, among other things, imposes various
requirements in connection with the distribution of product samples to physicians.
The regulatory framework applicable to
the production, distribution, marketing and/or sale of our product pipeline may change significantly from the current descriptions
provided herein in the time that it may take for any of our products to reach a point at which an NDA is approved.
Overall research, development, and approval
times depend on a number of factors, including the period of review at FDA, the number of questions posed by the FDA during review,
how long it takes to respond to the FDA’s questions, the severity or life-threatening nature of the disease in question,
the availability of alternative treatments, the availability of clinical investigators and eligible patients, the rate of enrollment
of patients in clinical trials, and the risks and benefits demonstrated in the clinical trials.
Other United States Regulatory Requirements
In the United States, the research, manufacturing,
distribution, sale, and promotion of drug and biological products are potentially subject to regulation by various federal, state,
and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, other divisions of the
United States Department of Health and Human Services (e.g., the Office of Inspector General), the United States Department of
Justice and individual United States Attorney offices within the Department of Justice, and state and local governments. For example,
sales, marketing, and scientific/educational grant programs must comply with the anti-fraud and abuse provisions of the Social
Security Act, the False Claims Act, the privacy provision of the Health Insurance Portability and Accountability Act, and similar
state laws, each as amended. Pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget
Reconciliation Act of 1990 and the Veterans Health Care Act of 1992, each as amended. If products are made available to authorized
users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these
activities are also potentially subject to federal and state consumer protection, unfair competition, and other laws.
Our research and development, manufacturing,
and administration of our drugs involve the controlled use of hazardous materials, including chemicals and radioactive materials,
such as radioactive isotopes. Therefore, we are subject to federal, state and local laws and regulations governing the storage,
use and disposal of these materials and some waste products and are required to maintain both a manufacturer’s license and
a radioactive materials license with State of Wisconsin agencies.
Moreover, we are now, and may become subject
to, additional federal, state, and local laws, regulations, and policies relating to safe working conditions, laboratory practices,
the experimental use of animals, and/or the use, storage, handling, transportation, and disposal of human tissue, waste, and hazardous
substances, including radioactive and toxic materials and infectious disease agents used in conjunction with our research work.
Foreign Regulatory Requirements
We, and any future collaborative partners,
may be subject to widely varying foreign regulations that may be quite different from those of the FDA governing clinical trials,
manufacture, product registration and approval, and pharmaceutical sales. Whether or not FDA approval has been obtained, we or
any future collaboration partners must obtain a separate approval for a product by the comparable regulatory authorities of foreign
countries prior to the commencement of product marketing in these countries. In certain countries, regulatory authorities also
establish pricing and reimbursement criteria. The approval process varies from country to country, and the time may be longer or
shorter than that required for FDA approval. In addition, under current United States law, there are restrictions on the export
of products not approved by the FDA, depending on the country involved and the status of the product in that country.
Reimbursement and Pricing Controls
In many of the markets where we, or any
future collaborative partners, would commercialize a product following regulatory approval, the prices of pharmaceutical products
are subject to direct price controls by law and to drug reimbursement programs with varying price control mechanisms. Public and
private health care payors control costs and influence drug pricing through a variety of mechanisms, including through negotiating
discounts with the manufacturers and through the use of tiered formularies and other mechanisms that provide preferential access
to certain drugs over others within a therapeutic class. Payors also set other criteria to govern the uses of a drug that will
be deemed medically appropriate and therefore reimbursed or otherwise covered. In particular, many public and private health care
payors limit reimbursement and coverage to the uses of a drug that are either approved by the FDA or that are supported by other
appropriate evidence (for example, published medical literature) and appear in a recognized drug compendium. Drug compendia are
publications that summarize the available medical evidence for particular drug products and identify which uses of a drug are supported
or not supported by the available evidence, whether or not such uses have been approved by the FDA. For example, in the case of
Medicare coverage for physician-administered oncology drugs, the Omnibus Budget Reconciliation Act of 1993, with certain exceptions,
prohibits Medicare carriers from refusing to cover unapproved uses of an FDA-approved drug if the unapproved use is supported by
one or more citations in the American Hospital Formulary Service Drug Information, the American Medical Association Drug Evaluations,
or the United States Pharmacopoeia Drug Information. Another commonly cited compendium, for example under Medicaid, is the DRUGDEX
Information System.
Employees
As of December 31, 2017, we had 15 full-time employees.
Risks Related to Our Business and Industry
We will require additional capital in order to continue our
operations, and may have difficulty raising additional capital.
We expect that we will continue to generate operating losses
for the foreseeable future. At December 31, 2017, our consolidated cash balance was approximately $10 million. We believe our cash
balance at December 31, 2017 is adequate to fund operations into early first quarter 2019. We will require additional funds to
conduct research and development, establish and conduct clinical and preclinical trials, establish commercial-scale manufacturing
arrangements and provide for the marketing and distribution of our products. Our ability to execute our operating plan depends
on our ability to obtain additional funding via the sale of equity and/or debt securities, a strategic transaction or otherwise.
We plan to actively pursue financing alternatives. However, there can be no assurance that we will obtain the necessary funding
in the amounts we seek or that it will be available on a timely basis or upon terms acceptable to us. If we obtain capital by issuing
debt or preferred stock, the holders of such securities could obtain rights that are superior to those of holders of our common
stock.
Our capital requirements and our ability to meet them depend
on many factors, including:
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the number of potential products and technologies in development;
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continued progress and cost of our research and development programs;
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progress with preclinical studies and clinical trials;
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the time and costs involved in obtaining regulatory clearance;
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costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
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costs of developing sales, marketing and distribution channels and our ability to sell our drugs;
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costs involved in establishing manufacturing capabilities for clinical trial and commercial quantities of our drugs;
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competing technological and market developments;
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claims or enforcement actions with respect to our products or operations,
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market acceptance of our products;
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costs for recruiting and retaining management, employees and consultants;
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our ability to manage computer system failures or security breaches;
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costs for educating physicians regarding the application and use of our products;
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whether we are able to maintain our listing on a national exchange;
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uncertainty and economic instability resulting from terrorist acts and other acts of violence or war; and
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the condition of capital markets and the economy generally, both in the U.S. and globally.
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We may consume available resources more rapidly than currently
anticipated, resulting in the need for additional funding sooner than expected. We may seek to raise any additional funds through
the issuance of any combination of common stock, preferred stock, warrants, through debt financings or by executing collaborative
arrangements with corporate partners or other sources, any of which may be dilutive to existing stockholders or have a material
effect on our current or future business prospects. If we cannot secure adequate financing when needed, we may be required to delay,
scale back or eliminate one or more of our research and development programs or to enter into license or other arrangements with
third parties to commercialize products or technologies that we would otherwise seek to develop and commercialize ourselves. In
the event that additional funds are obtained through arrangements with collaborative partners or other sources, we may have to
relinquish economic and/or proprietary rights to some of our technologies or products under development that we would otherwise
seek to develop or commercialize by ourselves. In such an event, our business, prospects, financial condition, and results of operations
may be adversely affected.
We are a clinical-stage company with a going concern qualification
to our financial statements and a history of losses, and we can provide no assurance as to our future operating results.
We are a clinical-stage company and have experienced net losses
and negative cash flows from operating activities since inception and we expect such losses and negative cash flows to continue
for the foreseeable future. Whether we achieve profitability or not will depend on our success in developing, manufacturing, and
marketing our product candidates. Our primary activity to date has been research and development and conducting clinical trials.
Development of our product candidates requires a process of preclinical and clinical testing during which our product candidates
could fail. We do not expect to have any products on the market for several years. We currently have no product revenues, and may
not succeed in developing or commercializing any products that will generate product or licensing revenues. We may not be able
to enter into agreements with companies experienced in the manufacturing and marketing of therapeutic drugs and, to the extent
that we are unable to do so, we may not be able to market any product candidates.
As of December 31, 2017, we had working capital of approximately
$8.8 million and stockholders’ equity of approximately $10.8 million. For the period from Cellectar, Inc.’s inception
in November 2002 until the business combination with Novelos Therapeutics, Inc. on April 8, 2011, and thereafter through December
31, 2017, the Company incurred aggregated net losses of approximately $84.3 million. The net loss for the twelve months ended December
31, 2017 was approximately $13.6 million. We may never achieve profitability.
Our financial statements as of December 31, 2017 were prepared
under the assumption that we will continue as a going concern. The independent registered public accounting firm that audited our
2017 financial statements, in their report, included an explanatory paragraph referring to our recurring losses since inception
and expressed substantial doubt in our ability to continue as a going concern. Our financial statements do not include any adjustments
that might result from the outcome of this uncertainty. Our ability to continue as a going concern depends on our ability to obtain
additional equity or debt financing, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate revenue.
We rely on a collaborative outsourced business model and
disruptions with these third-party collaborators may impede our ability to gain FDA approval and commercialization of any products
could be delayed or impaired.
We are in the pre-clinical and clinical trial phases of product
development and commercialization. In connection with our announcement that we have ceased manufacturing and are in process of
closing manufacturing operations located at our corporate headquarters in 2018, we have implemented a collaboration outsourcing
model to more efficiently manage spend and fixed costs. We rely, and will increasingly rely, on contracts with third parties to
use their facilities to conduct our research, development and manufacturing.
We have engaged CPDC, a validated cGMP manufacturing organization
specializing in radiopharmaceuticals, as our exclusive source to supply drug product for our ongoing research and clinical trials,
including our Phase 1 and Phase 2 studies of CLR 131. In addition, we are in the process of expanding capacity for a Phase 3 study
through our relationship with CPDC. In addition, we rely exclusively on contract research organizations (CROs) to conduct
research and development. Any inability of CPDC or other collaborators to fulfill the requirements of their agreements with us
may delay or impair our ability to gain FDA approval and commercialization of our drug delivery technology and products.
Our reliance on third-party collaborators may expose us to the
risk of not being able to directly oversee the activities of these parties. Furthermore, these collaborators, whether foreign or
domestic, may experience regulatory compliance difficulties, mechanical shutdowns, employee strikes, or other unforeseeable acts
that may delay fulfillment of their agreements with us. Failure of any of these collaborators to provide the required services
in a timely manner or on commercially reasonable terms could materially delay the development and approval of our products, increase
our expenses, and materially harm our business, prospects, financial condition, and results of operations.
We believe that we have a good working relationship with our
third-party collaborators. However, should the situation change, we may be required to relocate these activities on short notice,
and we do not currently have access to alternate facilities to which we could relocate our research, development and/or manufacturing
activities. The cost and time to establish or locate an alternate research, development and/or manufacturing facility to develop
our technology would be substantial and would delay obtaining FDA approval and commercializing our products.
In addition, if our products are approved for commercial sale,
we will need to work with our existing third-party collaborators to ensure sufficient capacity, or engage additional parties with
the capacity, to commercially manufacture our products in accordance with FDA and other regulatory requirements. There can be no
assurance that we would be able to successfully establish any such capacity, or identify suitable manufacturing partners on acceptable
terms.
Controls we or our third-party collaborators have in place
to ensure compliance with laws may not be effective to ensure compliance with all applicable laws and regulations.
We and our third party collaborators are subject to federal,
state and local laws and regulations governing the storage, use, and disposal of these materials and some waste products. Current
or future regulations may impair our research, development, manufacturing, and commercialization efforts. At our facility in Madison,
Wisconsin, research and development, manufacturing, and administration of our drugs involved the controlled use of hazardous materials,
including chemicals and radioactive materials, such as radioactive isotopes. We believe that our safety procedures for the storage,
use, and disposal of these materials has been in compliance with the standards prescribed by federal, state and local regulations.
However, we cannot completely eliminate the risk of accidental contamination or injury from these materials. If there were to be
an accident, we could be held liable for any damages that result, which could exceed our financial resources. We currently maintain
insurance coverage, with limits of up to $2,500,000 depending on the nature of the claim, for damages resulting from the hazardous
materials we use; however, future claims may exceed the amount of our coverage. Also, we do not have insurance coverage for pollution
cleanup and removal. In connection with the shutdown of our manufacturing, research and development activities in Madison, Wisconsin,
we are currently working with the State of Wisconsin agencies on transitioning our manufacturer’s license and the radioactive
materials license to a distribution license only.
If our third party collaborators are unable to maintain the
required licenses and permits for any reason, it will negatively impact our manufacturing, research and development activities.
In addition, we may be required to indemnify third party collaborators against certain liabilities arising out of any failure by
them to comply with such regulations and/or laws. If we or our third party collaborators fail to comply with any of these regulations
and/or laws a range of consequences could result, including, but not limited to, the suspension or termination of clinical trials,
failure to obtain approval of a product candidate, restrictions on our products or manufacturing processes, withdrawal of our products
from the market, significant fines, exclusion from government healthcare programs or other sanctions or litigation.
We may incur unanticipated costs in connection with our shutdown
of our manufacturing operations in Madison, Wisconsin.
In January 2018, we began implementing shutdown of our manufacturing
operations at our corporate headquarters in Madison, Wisconsin and announced a plan to terminate our manufacturing staff in 2018.
In connection with the shutdown of our manufacturing operations, we are responsible for decommissioning activities.
Should
the actual costs to fulfill these obligations exceed these estimated costs
financial condition, our financial condition,
and results of operations may be adversely affected
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We rely on a small number of key personnel who may terminate
their employment with us at any time, and our success will depend on our ability to hire additional qualified personnel.
Our success depends to a significant degree on the continued
services of our executive officers, including our Chief Executive Officer, James V. Caruso. Our management and other employees
may voluntarily terminate their employment with us at any time and there can be no assurance that these individuals will continue
to provide services to us. In addition, our success will depend on our ability to attract and retain other highly skilled personnel.
We may be unable to recruit such personnel on a timely basis, if at all. The loss of services of key personnel, or the inability
to attract and retain additional qualified personnel, could result in delays in development or approval of our products, loss of
sales and diversion of management resources.
At present, our success depends solely on the successful
development and commercialization of our compounds in development, which cannot be assured.
At present, our success is dependent on
one or more of the following to occur: the successful development of CLR 131 for the treatment of a hematologic or solid tumor
cancer including multiple myeloma and B-Cell lymphomas or solid tumor cancer types; the development of new PDCs, specifically new
products developed from our CLR CTX Chemotherapeutic PDC program and the advancement of our PDC agents through research and development;
and/or commercialization partnerships.
We are a biopharmaceutical company focused on the discovery,
development and commercialization of drugs for the treatment of cancer. We leverage our PDC platform to specifically target treatments
to cancer cells. The PDC platform possesses the potential for the discovery and development of the next generation of cancer-targeting
agents The PDC platform features include the capacity to link with almost any molecule, provide a significant increase in targeted
oncologic payload delivery and the ability to target all tumor cells. As a result, we believe that we can generate PDCs to treat
a broad range of cancers with the potential to improve the therapeutic index of oncologic drug payloads, enhance or maintain efficacy
while reducing adverse events by minimizing drug delivery to healthy cells, and increasing delivery to cancerous cells and cancer
stem cells.
Our proposed products and their potential applications are in
an early stage of clinical and manufacturing/process development and face a variety of risks and uncertainties including the following:
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future clinical trial results may show that our cancer-targeting and delivery technologies are not well tolerated by patients at their effective doses or are not efficacious;
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future clinical trial results may be inconsistent with testing results obtained to-date;
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even if our cancer-targeting and delivery technologies are shown to be safe and effective for their intended purposes, we may face significant or unforeseen difficulties in obtaining or manufacturing sufficient quantities at reasonable prices or at all;
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our ability to complete the development and commercialization of our cancer-targeting and delivery technologies for their intended use is substantially dependent upon our ability to raise sufficient capital or to obtain and maintain experienced and committed partners to assist us with obtaining clinical and regulatory approvals for, and the manufacturing, marketing and distribution of, our products;
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even if our cancer-targeting and delivery technologies are successfully developed, commercially produced and receive all necessary regulatory approvals, there is no guarantee that there will be market acceptance of our products; and
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our competitors may develop therapeutics or other treatments which are superior or less costly than our own with the result that our product candidates, even if they are successfully developed, manufactured and approved, may not generate sufficient revenues to offset the development and manufacturing costs of our product candidates.
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If we are unsuccessful in dealing with any of these risks, or
if we are unable to successfully advance the development of our cancer-targeting and delivery technologies for some other reason,
our business, prospects, financial condition, and results of operations may be adversely affected.
Failure to complete the development of our technologies,
obtain government approvals, including required FDA approvals, or to comply with ongoing governmental regulations could prevent,
delay or limit introduction or sale of proposed products and result in failure to achieve revenues or maintain our ongoing business.
Our research and development activities and the manufacture
and marketing of our intended products are subject to extensive regulation for safety, efficacy and quality by numerous government
authorities in the U.S. and abroad. Before receiving approval to market our proposed products by the FDA, we will have to demonstrate
that our products are safe and effective for the patient population for the diseases that are to be treated. Clinical trials, manufacturing
and marketing of drugs are subject to the rigorous testing and approval process of the FDA and equivalent foreign regulatory authorities.
The Federal Food, Drug and Cosmetic Act and other federal, state and foreign statutes and regulations govern and influence the
testing, manufacturing, labeling, advertising, distribution and promotion of drugs and medical devices. As a result, clinical trials
and regulatory approval can take many years to accomplish and require the expenditure of substantial financial, managerial and
other resources.
In order to be commercially viable, we must successfully research,
develop, obtain regulatory approval for, manufacture, introduce, market and distribute our technologies. This includes meeting
a number of critical developmental milestones including:
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demonstrating benefit from delivery of each specific drug for specific medical indications;
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demonstrating through pre-clinical and clinical trials that each drug is safe and effective; and
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demonstrating that we have established viable Good Manufacturing Practices capable of potential scale-up.
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The timeframe necessary to achieve these developmental milestones
may be long and uncertain, and we may not successfully complete these milestones for any of our intended products in development.
In addition to the risks previously discussed, our technology
is subject to developmental risks that include the following:
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uncertainties arising from the rapidly growing scientific aspects of drug therapies and potential treatments;
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uncertainties arising as a result of the broad array of alternative potential treatments related to cancer and other diseases; and
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expense and time associated with the development and regulatory approval of treatments for cancer and other diseases.
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In order to conduct the clinical trials that are necessary to
obtain approval by the FDA to market a product, it is necessary to receive clearance from the FDA to conduct such clinical trials.
The FDA can halt clinical trials at any time for safety reasons or because we or our clinical investigators do not follow the FDA’s
requirements for conducting clinical trials. If any of our trials are halted, we will not be able to obtain FDA approval until
and unless we can address the FDA’s concerns. If we are unable to receive clearance to conduct clinical trials for a product,
we will not be able to achieve any revenue from such product in the U.S., as it is illegal to sell any drug for use in humans in
the U.S. without FDA approval.
Even if we do ultimately receive FDA approval for any of our
products, these products will be subject to extensive ongoing regulation, including regulations governing manufacturing, labeling,
packaging, testing, dispensing, prescription, and procurement quotas, record keeping, reporting, handling, shipment and disposal
of any such drug. Failure to obtain and maintain required registrations or to comply with any applicable regulations could further
delay or preclude development and commercialization of our drugs and subject us to enforcement action.
Clinical trials involve a lengthy and expensive process with
an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.
In order to obtain regulatory approval for the commercialization
of our product candidates, we must conduct, at our own expense, extensive clinical trials to demonstrate safety and efficacy of
these product candidates. Clinical testing is expensive, it can take many years to complete, and its outcome is uncertain. Failure
can occur at any time during the clinical trial process.
We may experience delays in clinical testing of our product
candidates. We do not know whether planned clinical trials will begin on time, will need to be redesigned, or will be completed
on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval
to commence a trial, in reaching agreement on acceptable clinical trial terms with prospective sites, in obtaining institutional
review board approval to conduct a trial at a prospective site, in recruiting patients to participate in a trial, or in obtaining
sufficient supplies of clinical trial materials. Many factors affect patient enrollment, including the size of the patient population,
the proximity of patients to clinical sites, the eligibility criteria for the trial, competing clinical trials, and new drugs approved
for the conditions we are investigating. Prescribing physicians will also have to decide to use our product candidates over existing
drugs that have established safety and efficacy profiles or other drugs undergoing development in clinical trials. Any delays in
completing our clinical trials will increase our costs, slow down our product development and approval process, and delay our ability
to generate revenue.
In addition, the results of pre-clinical studies and early clinical
trials of our product candidates do not necessarily predict the results of later-stage clinical trials. Product candidates in later
stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through initial clinical
testing. The data collected from clinical trials of our product candidates may not be sufficient to support the submission of a
New Drug Application or to obtain regulatory approval in the United States or elsewhere. Because of the uncertainties associated
with drug development and regulatory approval, we cannot determine if or when we will have an approved product for commercialization,
or will achieve sales or profits.
Our clinical trials may not demonstrate sufficient levels of
efficacy necessary to obtain the requisite regulatory approvals for our drugs, and our proposed drugs may not be approved for marketing.
We may be required to suspend or discontinue clinical trials
due to unexpected side effects or other safety risks that could preclude approval of our product candidates.
Our clinical trials may be suspended at any time for a number
of reasons. For example, we may voluntarily suspend or terminate our clinical trials if at any time we believe that they present
an unacceptable risk to the clinical trial patients. In addition, regulatory agencies may order the temporary or permanent discontinuation
of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable
regulatory requirements or that they present an unacceptable safety risk to the clinical trial patients.
Administering any product candidates to humans may produce undesirable
side effects. These side effects could interrupt, delay, or halt clinical trials of our product candidates and could result in
the FDA or other regulatory authorities denying further development or approval of our product candidates for any or all targeted
indications. Ultimately, some or all of our product candidates may prove to be unsafe for human use. Moreover, we could be subject
to significant liability if any volunteer or patient suffers, or appears to suffer, adverse health effects as a result of participating
in our clinical trials.
We expect to rely on our patents as well as specialized regulatory
designations such as orphan drug classification for our product candidates, but regulatory drug designations may not confer marketing
exclusivity or other expected commercial benefits.
We expect to file for orphan drug designation or other regulatory
designations (fast track, break-through, priority review, etc.) as appropriate for our product candidates. Orphan drug status confers
seven years of marketing exclusivity under the Federal Food, Drug, and Cosmetic Act in the United States, and up to ten years of
marketing exclusivity in Europe for a particular product in a specified indication. We have been granted orphan drug designation
in the United States for CLR 131 as a therapeutic for the treatment of multiple myeloma and neuroblastoma. While we have been granted
this orphan designation, we will not be able to rely on them to exclude other companies from manufacturing or selling products
using the same principal molecular structural features for the same indication beyond these timeframes without our patent portfolio.
For any product candidate for which we have been or will be granted orphan drug designation in a particular indication, it is possible
that another company also holding orphan drug designation for the same product candidate will receive marketing approval for the
same indication before we do. If that were to happen, our applications for that indication may not be approved until the competing
company’s period of exclusivity expires. Even if we are the first to obtain marketing authorization for an orphan drug indication,
there are circumstances under which a competing product may be approved for the same indication during the seven-year period of
marketing exclusivity, such as if the later product is shown to be clinically superior to the orphan product, or if the later product
is deemed a different product than ours. Further, the seven-year marketing exclusivity would not prevent competitors from obtaining
approval of the same product candidate as ours for indications other than those in which we have been granted orphan drug designation,
or for the use of other types of products in the same indications as our orphan product, or during such seven-year period for other
indications if not for our patent portfolio. Furthermore, although the orphan drug designation and exclusivity are in effect right
now, the FDA has the authority to modify this assessment at any time.
We are exposed to product, clinical and pre-clinical liability
risks that could create a substantial financial burden should we be sued.
Our business exposes us to potential product liability and other
liability risks that are inherent in the testing, manufacturing and marketing of pharmaceutical products. In addition, the use,
in our clinical trials, of pharmaceutical products that we, or our current or potential collaborators, may develop and then subsequently
sell, may cause us to bear a portion of, or all product liability risks. While we carry an insurance policy covering up to $5,000,000
per occurrence and $5,000,000 in the aggregate of liability incurred in connection with such claims should they arise, there can
be no assurance that our insurance will be adequate to cover all situations. Moreover, there can be no assurance that such insurance,
or additional insurance if required, will be available or, if available, will be available on commercially reasonable terms. Furthermore,
our current and potential partners with whom we have collaborative agreements, or our future licensees, may not be willing to indemnify
us against these types of liabilities, and may not themselves be sufficiently insured or have a net worth sufficient to satisfy
any product liability claims. A successful product liability claim or series of claims brought against us could have a material
adverse effect on our business, prospects, financial condition, and results of operations.
Acceptance of our products in the marketplace is uncertain
and failure to achieve market acceptance will prevent or delay our ability to generate revenues.
Our future financial performance will depend, at least in part,
on the introduction and customer acceptance of our proposed products. Even if approved for marketing by the necessary regulatory
authorities, our products may not achieve market acceptance. The degree of market acceptance will depend on a number of factors
including:
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receiving regulatory clearance of marketing claims for the uses that we are developing;
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establishing and demonstrating the advantages, safety and efficacy of our technologies;
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pricing and reimbursement policies of government and third-party payors such as insurance companies, health maintenance organizations and other health plan administrators;
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our ability to attract corporate partners, including pharmaceutical companies, to assist in commercializing our intended products; and
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our ability to market our products.
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Physicians, patients, payors, or the medical community in general,
may be unwilling to accept, use or recommend any of our products. If we are unable to obtain regulatory approval or commercialize
and market our proposed products as planned, we may not achieve any market acceptance or generate revenue.
The market for our proposed products is rapidly changing
and competitive, and new therapeutics, new drugs and new treatments that may be developed by others could impair our ability develop
our business or become competitive.
The pharmaceutical and biotechnology industries are subject
to rapid and substantial technological change. Developments by others may render our technologies and proposed products non-competitive
or obsolete, or we may be unable to keep pace with technological developments or other market factors. Technological competition
from pharmaceutical and biotechnology companies, universities, governmental entities, and others diversifying into the field, is
intense and expected to increase. Most of these entities have significantly greater research and development capabilities and budgets
than we do, as well as substantially more marketing, manufacturing, financial, and managerial resources. These entities represent
significant competition for us. Acquisitions of, or investments in, competing pharmaceutical or biotechnology companies by large
corporations could increase our competitors’ financial, marketing, manufacturing, and other resources.
Our resources are limited and we may experience management,
operational, or technical challenges inherent in such activities and novel technologies. Competitors have developed, or are in
the process of developing, technologies that are, or in the future may be, the basis for competition. Some of these technologies
may accomplish therapeutic effects similar to those of our technology, but through different means. Our competitors may develop
drugs and drug delivery technologies that are more effective than our intended products and, therefore, present a serious competitive
threat to us.
The potential widespread acceptance of therapies that are alternatives
to ours may limit market acceptance of our products even if they are commercialized. Many of our targeted diseases and conditions
can also be treated by other medication or drug delivery technologies. These treatments may be widely accepted in medical communities
and have a longer history of use. The established use of these competitive drugs may limit the potential for our technologies and
products to receive widespread acceptance if commercialized.
We may face litigation from third parties who claim that
our products infringe on their intellectual property rights, particularly because there is often substantial uncertainty about
the validity and breadth of medical patents.
We may be exposed to future litigation by third parties based
on claims that our technologies, products, or activities infringe on the intellectual property rights of others, or that we have
misappropriated the trade secrets of others. This risk is exacerbated by the fact that the validity and breadth of claims covered
in medical technology patents, and the breadth and scope of trade-secret protection, involve complex legal and factual questions
for which important legal principles are unresolved. Any litigation or claims against us, whether valid or not, could result in
substantial costs, could place a significant strain on our financial and managerial resources, and could harm our reputation. License
agreements that we may enter into in the future would likely require that we pay the costs associated with defending this type
of litigation. In addition, intellectual property litigation or claims could force us to do one or more of the following:
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cease selling, incorporating or using any of our technologies and/or products that incorporate the challenged intellectual property, which would adversely affect our ability to generate revenue;
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obtain a license from the holder of the infringed intellectual property right, which license may be costly or may not be available on reasonable terms, if at all; or
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redesign our products, which would be costly and time-consuming.
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If we are unable to protect or enforce our rights to intellectual
property adequately or to secure rights to third-party patents, we may lose valuable rights, experience reduced market share, assuming
any, or incur costly litigation to protect our intellectual property rights.
Our ability to obtain licenses to patents, maintain trade-secret
protection, and operate without infringing the proprietary rights of others, will be important to commercializing any products
under development. Therefore, any disruption in access to the technology could substantially delay the development of our technology.
The patent positions of biotechnology and pharmaceutical companies,
such as ours, that involve licensing agreements, are frequently uncertain and involve complex legal and factual questions. In addition,
the coverage claimed in a patent application can be significantly reduced before the patent is issued or in subsequent legal proceedings.
Consequently, our patent applications and any issued and licensed patents may not provide protection against competitive technologies
or may be held invalid if challenged or circumvented. To the extent we license patents from third parties, the early termination
of any such license agreement would result in the loss of our rights to use the covered patents, which could severely delay, inhibit,
or eliminate our ability to develop and commercialize compounds based on the licensed patents. Our competitors may also independently
develop products similar to ours or design around or otherwise circumvent patents issued or licensed to us. In addition, the laws
of some foreign countries may not protect our proprietary rights to the same extent as U.S. law.
We also rely on trade secrets, technical know-how, and continuing
technological innovation to develop and maintain our competitive position. Although we generally require our employees, consultants,
advisors and collaborators to execute appropriate confidentiality and assignment-of-inventions agreements, our competitors may
independently develop substantially equivalent proprietary information and techniques, reverse engineer our information and techniques,
or otherwise gain access to our proprietary technology. We may be unable to meaningfully protect our rights in trade secrets, technical
know-how and other non-patented technology.
We may have to resort to litigation to protect our rights for
certain intellectual property or to determine their scope, validity or enforceability of our intellectual property rights. Enforcing
or defending our rights is expensive, could cause diversion of our resources, and may not prove successful. Any failure to enforce
or protect our rights could cause us to lose the ability to exclude others from using our technology to develop or sell competing
products.
Confidentiality agreements with employees and others may
not adequately prevent disclosure of our trade secrets and other proprietary information and may not adequately protect our intellectual
property, which could limit our ability to compete.
We operate in the highly technical field of research and development
of small-molecule drugs, and rely in part on trade-secret protection in order to protect our proprietary trade secrets and unpatented
know-how. However, trade secrets are difficult to protect, and we cannot be certain that our competitors will not develop the same
or similar technologies on their own. We have taken steps, including entering into confidentiality agreements with our employees,
consultants, outside scientific collaborators, sponsored researchers, and other advisors, to protect our trade secrets and unpatented
know-how. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential
information developed by the party or made known to the party by us during the course of the party’s relationship with us.
Also, we typically obtain agreements from these parties, which provide inventions conceived by the party in the course of rendering
services to us, will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual
property rights to us. Enforcing a claim that a party has illegally obtained, and is using our trade secrets or know-how, is difficult,
expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing
to protect trade secrets or know-how. The failure to obtain or maintain trade-secret protection could adversely affect our competitive
position.
We may be subject to claims that our employees have wrongfully
used or disclosed alleged trade secrets of their former employers.
As is common in the biotechnology and pharmaceutical industry,
we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors
or potential competitors. Although no claims against us are currently pending, we may be subject to claims that we, or these employees,
have used or disclosed trade secrets or other proprietary information of their former employers, either inadvertently or otherwise.
Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation
could result in substantial costs and be a distraction to management.
Due to continued changes in marketing, sales and distribution,
we may be unsuccessful in our efforts to sell our proposed products, develop a direct sales organization or enter into relationships
with third parties.
We have not established marketing, sales, or distribution capabilities
for our proposed products. Until such time as our proposed products are further along in the development process, we will not devote
any meaningful time and resources to this effort. At the appropriate time, we will determine whether we will develop our own sales
and marketing capabilities or enter into agreements with third parties to sell our products.
We have limited experience in developing, training, or managing
a sales force. If we choose to establish a direct sales force, we may incur substantial additional expenses in developing, training,
and managing such an organization. We may be unable to build a sales force on a cost-effective basis or at all. In addition, we
will compete with many other companies that currently have extensive marketing and sales operations. Our marketing and sales efforts
may be unable to compete against these other companies. We may be unable to establish a sufficient sales and marketing organization
on a cost-effective or timely basis, if at all.
If we choose to enter into agreements with third parties to
sell our proposed products, we may be unable to establish or maintain third-party relationships on a commercially reasonable basis,
if at all. In addition, these third parties may have similar or more established relationships with our competitors.
We may be unable to engage qualified distributors. Even if engaged,
these distributors may:
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fail to adequately market
our products;
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fail to satisfy financial
or contractual obligations to us;
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offer, design, manufacture
or promote competing products; or
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cease operations with little
or no notice.
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If we fail to develop sales, marketing, and distribution channels,
we would experience delays in product sales and incur increased costs, which would have a material adverse effect on our business,
prospects, financial condition, and results of operation.
If we are unable to convince physicians of the benefits of
our intended products, we may incur delays or additional expense in our attempt to establish market acceptance.
Achieving use of our products in the target market of cancer
diagnosis and treatment may require physicians to be informed regarding these products and their intended benefits. The time and
cost of such an educational process may be substantial. Inability to successfully carry out this physician education process may
adversely affect market acceptance of our proposed products. We may be unable to educate physicians in a timely manner regarding
our intended proposed products, in sufficient numbers, to achieve our marketing plans or to achieve product acceptance. Any delay
in physician education may materially delay or reduce demand for our proposed products. In addition, we may expend significant
funds towards physician education before any acceptance or demand for our proposed products is created, if at all.
If users of our products are unable to obtain adequate reimbursement
from third-party payors, or if additional healthcare reform measures are adopted, it could hinder or prevent our product candidates’
commercial success.
The continuing efforts of government and insurance companies,
health maintenance organizations and other payors of healthcare costs to contain or reduce costs of healthcare may adversely affect
our ability to generate future revenues and achieve profitability, including by limiting the future revenues and profitability
of our potential customers, suppliers, and collaborative partners. For example, in certain foreign markets pricing or profitability
of prescription pharmaceuticals are subject to government control. The U.S. government is implementing, and other governments have
shown significant interest in pursuing, healthcare reform. Any government-adopted reform measures could adversely affect the pricing
of healthcare products and services in the U.S. or internationally and the amount of reimbursement available from governmental
agencies or other third-party payors. The continuing efforts of the U.S. and foreign governments, insurance companies, managed
care organizations, and other payors of healthcare services to contain or reduce healthcare costs may adversely affect our ability
to set prices for our products, should we be successful in commercializing them, and this would negatively affect our ability to
generate revenues and achieve and maintain profitability.
New laws, regulations and judicial decisions, or new interpretations
of existing laws, regulations and decisions, that relate to healthcare availability, methods of delivery or payment for healthcare
products and services, or sales, marketing or pricing of healthcare products and services, may also limit our potential revenue
and may require us to revise our research and development programs. The pricing and reimbursement environment may change in the
future and become more challenging for several reasons, including policies advanced by the current or future executive administrations
in the U.S., new healthcare legislation, or fiscal challenges faced by government health administration authorities. Specifically,
in both the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the
healthcare system in ways that could affect our ability to sell our products profitably. In the U.S., changes in federal healthcare
policy were enacted in 2010 and are being implemented. Some reforms could result in reduced reimbursement rates for our product
candidates, which would adversely affect our business strategy, operations, and financial results. Our ability to commercialize
our products will depend in part on the extent to which appropriate reimbursement levels for the cost of our products and related
treatment are obtained by governmental authorities, private health insurers, and other organizations such as health maintenance
organizations (HMOs). Third-party payors are increasingly challenging the prices charged for medical drugs and services. Also,
the trend toward managed healthcare in the U.S. and the concurrent growth of organizations such as HMOs that could control or significantly
influence the purchase of healthcare services and drugs, as well as legislative proposals to reform healthcare or change government
insurance programs, may all result in lower prices for or rejection of our drugs. The cost containment measures that healthcare
payors and providers are instituting, and the effect of any healthcare reform, could materially harm our ability to operate profitably.
Our business and
operations may be materially adversely affected in the event of computer system failures or security breaches.
Despite the implementation
of security measures, our internal computer systems, and those of our third-party manufactures, CROs and other third parties on
which we rely, are vulnerable to damage from computer viruses, unauthorized access, cyber-attacks, natural disasters, fire, terrorism,
war, and telecommunication and electrical failures. If such an event were to occur and interrupt our operations, it could result
in a material disruption in our business. For example, the loss of clinical trial data from ongoing or planned clinical trials
could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
To the extent that any disruption or security breach results in a loss of or damage to our data or applications, loss of trade
secrets or inappropriate disclosure of confidential or proprietary information, including protected health information or personal
data of employees or former employees, access to our clinical data, or disruption of the manufacturing process, we could incur
liability and the further development of our drug candidates could be delayed. We may also be vulnerable to cyber-attacks by hackers
or other malfeasance. This type of breach of our cybersecurity may compromise our confidential information and/or our financial
information and adversely affect our business or result in legal proceedings. Further, these cybersecurity breaches may inflict
reputational harm upon us that may result in decreased market value and erode public trust.
Failure to maintain effective internal controls could adversely
affect our ability to meet our reporting requirements.
We are required to establish and maintain appropriate internal
controls over financial reporting. Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require an
annual assessment of internal controls over financial reporting, and for certain issuers an attestation of this assessment by the
issuer’s independent registered public accounting firm. The standards that must be met for management to assess the internal
controls over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible
remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources to Section 404 compliance
on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to complete the assessment of
the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal
control over financial reporting. As a result, we may not be able to complete the assessment and remediation process on a timely
basis. In addition, although attestation requirements by our independent registered public accounting firm are not presently applicable
to us we could become subject to these requirements in the future and we may encounter problems or delays in completing the implementation
of any resulting changes to internal controls over financial reporting.
Effective internal controls are necessary for us to provide
reasonable assurance with respect to our financial reports and to effectively prevent fraud. Failure to maintain effective internal
controls could adversely affect our public disclosures regarding our business, prospects, financial condition or results of operations.
In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions
that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors.
Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting or
disclosure of management’s assessment of our internal controls over financial reporting our business and results of operations
could be harmed, we could fail to meet our reporting obligations, and there could be a material adverse effect on our common stock
price.
Risks Related to Our Equity Securities
We have in the past received notices from Nasdaq of non-compliance
with its listing rules and delisting with Nasdaq could impact the price of our common stock and our ability to raise funds.
On January 21, 2016 we received a notice from Nasdaq of non-compliance
with its listing rules regarding the requirement that the listed securities maintain a minimum bid price of $1 per share. Based
upon the closing bid price for the 30 consecutive business days preceding the notice, we no longer met this requirement. However,
the rules also provide us a period of 180 calendar days in which to regain compliance. On March 4, 2016, we effected a reverse
stock split at a ratio of 1-for-10, which, among other things, resulted in an increase in the bid price adequate to allow us to
regain compliance with the minimum bid price requirement. On March 21, 2016, Nasdaq notified us that we had regained compliance
with the minimum bid price requirement.
On August 14, 2015 we received a notice from Nasdaq of non-compliance
with its continuing listing rules, namely that our stockholders’ equity at June 30, 2015 of $2,373,371, as reported in our
Form 10-Q for the quarter then ended, was less than $2,500,000 minimum. The failure to meet continuing compliance standards subjects
our common stock to delisting. We submitted a plan to Nasdaq to regain compliance, which was approved by Nasdaq, that required
a number of actions to be completed by February 10, 2016, including the filing of a registration statement with the SEC for an
underwritten public offering of equity and the closing of that offering. The registration statement was timely filed, however we
did not complete the offering by that date. Nasdaq issued a second notice of non-compliance on February 11, 2016, which the Company
appealed. At a hearing on March 31, 2016, we requested, and Nasdaq subsequently granted, an extension of time to effect transactions
to allow us to regain compliance and to report the same. On April 20, 2016, we closed an underwritten offering, and on May 16,
2016, Nasdaq issued a determination that we had evidenced compliance with all requirements for continued listing on The Nasdaq
Capital Market and, accordingly, the listing qualifications matter had been closed.
We have not received any other notices of non-compliance with
Nasdaq listing rules. However, any future failure to comply with Nasdaq’s listing rules and any resulting d
elisting
from the Nasdaq would reduce the visibility, liquidity and price of our common stock and could limit our ability to raise funds
in the future.
Our stock price has experienced price fluctuations.
There can be no assurance that the market price for our common
stock will remain at its current level and a decrease in the market price could result in substantial losses for investors. The
market price of our common stock may be significantly affected by one or more of the following factors:
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announcements or press releases relating to the biopharmaceutical sector or to our own business or prospects;
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regulatory, legislative, or other developments affecting us or the healthcare industry generally;
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sales by holders of restricted securities pursuant to effective registration statements, or exemptions from registration;
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market conditions specific to biopharmaceutical companies, the healthcare industry and the stock market generally; and
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our ability to maintain our listing on the Nasdaq exchange.
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Our common stock could be further diluted as the result of
the issuance of additional shares of common stock, convertible securities, warrants or options.
In the past, we have issued common stock, convertible securities
(such as convertible preferred stock and notes) and warrants in order to raise capital. We have also issued equity as compensation
for services and incentive compensation for our employees and directors. We have shares of common stock reserved for issuance upon
the exercise of certain of these securities and may increase the shares reserved for these purposes in the future. Our issuance
of additional common stock, convertible securities, options and warrants could dilute our common stock, affect the rights of our
stockholders, reduce the market price of our common stock, result in adjustments to exercise prices of outstanding warrants (resulting
in these securities becoming exercisable for, as the case may be, a greater number of shares of our common stock), or obligate
us to issue additional shares of common stock to certain of our stockholders.
Provisions of our certificate of incorporation, bylaws, and
Delaware law may make an acquisition of us or a change in our management more difficult.
Certain provisions of our certificate of incorporation and bylaws
could discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including
transactions in which an investor might otherwise receive a premium for their shares. These provisions also could limit the price
that investors might be willing to pay in the future for shares of our common stock or warrants, thereby depressing the market
price of our common stock. Stockholders who wish to participate in these transactions may not have the opportunity to do so.
Furthermore, these provisions could prevent or frustrate attempts
by our stockholders to replace or remove our management. These provisions:
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provide for the division of our board of directors (the Board) into three classes as nearly equal in size as possible with staggered three-year terms and further limit the removal of directors and the filling of vacancies;
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authorize our Board to issue without stockholder approval blank-check preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our Board;
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require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent;
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establish advance notice requirements for stockholder nominations to our Board or for stockholder proposals that can be acted on at stockholder meetings;
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limit who may call stockholder meetings; and
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require the approval of the holders of 75% of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our certificate of incorporation and bylaws.
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In addition, because we are incorporated in Delaware, we are
governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain criteria are met,
prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining
with us for a prescribed period of time.
We have not paid dividends in the past and do not expect
to pay dividends for the foreseeable future. Any return on investment may be limited to the value of our common stock.
No cash dividends have been paid on our common stock. We do
not expect to pay cash dividends in the near future. Payment of dividends would depend upon our profitability at the time, cash
available for those dividends, and other factors as our Board may consider relevant. If we do not pay dividends, our common stock
may be less valuable because a return on an investor’s investment will only occur if our stock price appreciates.