Item
1. Business
Company
Overview
Immune
Therapeutics, Inc. (the “Company”) was initially incorporated in Florida on December 2, 1993 as Resort Clubs International,
Inc. (“Resort Clubs”). It was formed to manage and market golf course properties in resort markets throughout the
United States. Galliano International Ltd. (“Galliano”) was incorporated in Delaware on May 27, 1998 and began trading
in November 1999 through the filing of a 15C-211. On November 10, 2004, Galliano merged with Resort Clubs. Resort Clubs was the
surviving corporation. On August 23, 2010, Resort Clubs changed its name to pH Environmental Inc. (“pH Environmental”).
On
April 23, 2012, pH Environmental completed a name change to TNI BioTech, Inc., and on April 24, 2012, we executed a share exchange
agreement for the acquisition of all of the outstanding shares of TNI BioTech IP, Inc. On September 4, 2014, a majority of our
shareholders approved an amendment to our Amended and Restated Articles of Incorporation, as amended, to change our name to Immune
Therapeutics, Inc. We filed our name change amendment with the Secretary of State of Florida on October 27, 2014 changing our
name to Immune Therapeutics, Inc.
The
Company currently operates out of Orlando, Florida. In July 2012, the Company’s focus turned to acquiring patents that would
protect and advance the development of new uses of opioid-related immune- therapies, such as low dose naltrexone (“LDN”)
and Methionine [Met5]-enkephalin (“MENK”). The Company’s therapies are believed to stimulate and/or regulate
the immune system in such a way that they provide the potential to treat a variety of diseases. We believe our therapies may be
able to correct abnormalities or deficiencies in the immune system in diseases such as HIV infection, autoimmune disease, immune
disorders, or cancer; all of which can lead to disease progression and life-threatening situations when the immune system is not
functioning optimally.
In
October 2012, the Company formed TNI BioTech International, Ltd., a BVI company in Tortola, British Virgin Islands, which was
set up to allow the Company to market and sell LDN in those countries outside the U.S. in which we have been able to obtain approval
to sell the Company’s products.
In
August 2013, the Company formed its United Kingdom subsidiary, TNI BioTech, LTD (the “UK Subsidiary”). The UK Subsidiary
received approval to be considered a micro, small or medium-sized enterprise (“SME”) with the European Medicines Agency
(“EMA”) on August 21, 2013. The designation provides the UK Subsidiary with significant discounts when holding meetings
or submitting filings to the EMA. On September 19, 2013, the UK Subsidiary submitted a pre-submission package to the EMA regarding
Crohn’s Disease. The EMA granted the UK Subsidiary a meeting that took place on September 27, 2013. The UK Subsidiary is
eligible to benefit from the provisions for administrative and financial assistance for SMEs set out in Regulation (EC) No 2049/2005.
The Company will apply to obtain EMA benefits once funding becomes available.
In December
2013, the Company formed a subsidiary, Cytocom Inc., to focus on conducting LDN and MENK clinical trials in the United States.
In December 2014, the Company finalized the distribution of common stock of Cytocom Inc. to its shareholders. As part of the transaction,
the Company transferred to Cytocom certain of its rights, title and interest in or relating to intellectual property (i) patents,
patent applications, and all divisional, continuations and continuations-in-part thereof, together with all reissues, reexaminations,
renewals and extensions thereof and all rights to obtain such divisionals, continuations and continuations-in-part, reissues,
reexaminations, renewals and extensions, and all utility models and statutory invention registrations and any other such analogous
rights, (ii) trademarks, service marks, Internet domain names, trade dress, trade styles, logos, trade names, services names,
brand names, corporate names, assumed business names and general intangibles and other source identifiers of a like nature, together
with the goodwill associated with any of the foregoing, and all registrations and applications for registrations thereof, together
with all renewals and extensions thereof and all rights to obtain such renewals and extensions, (iii) copyrights, mask work rights,
database and design rights, moral rights and rights in Internet websites, whether registered or unregistered and whether published
or unpublished, all registrations and recordings thereof and all applications in connection therewith, together with all renewals,
continuations, reversions and extensions thereof and all rights to obtain such renewals, continuations, reversions and extensions,
and (iv) confidential and proprietary information, including, trade secrets and know-how. Cytocom licensed back to the Company
a perpetual, non-exclusive, royalty-free right and license to use the assigned intellectual property for veterinary indications
and for the marketing rights to emerging markets, access to all clinical data, use of the formulation for LDN and MENK. The parties
have informally agreed that until such time as Cytocom was funded, the Company would be responsible for all payments to employees,
ongoing general and administrative expenses, licensing fees, patent fees, and drug development costs. When Cytocom becomes self-sustaining
and fully funded, it expects to reimburse the Company for all funds spent by the Company since the spin-out.
On
December 8, 2014, the number of Cytocom Inc. shares of common stock that were issued to our shareholders totaled 113,242,522 shares.
In connection with the transaction, Cytocom Inc. issued 140,100,000 shares of its common stock to the Company, which gave the
Company a 55.3% stake in Cytocom Inc. on that date. In April 2016, the Board of Directors and a majority of shareholders of Cytocom
approved a reverse stock split of Cytocom’s outstanding common stock with one new share of stock for each twenty old shares
of common stock. Cytocom effectuated and finalized the reverse split in June 2016. At December 31, 2017, the Company’s equity
interest had been further reduced to 9.3%, by subsequent issuances of Cytocom common stock.
In
March 2014, the Company incorporated Airmed Biopharma Limited, an Irish corporation with an address in Dublin, Ireland, and Airmed
Holdings Limited, an Irish company domiciled in Bermuda. The Irish companies were set up to benefit from incentives granted by
the Irish government for the establishment of pharmaceutical companies (many of the world’s leading pharmaceutical companies
have located in Ireland), and so that the Company could take advantage of Ireland’s status as a member of the European Union
and the European Economic Area. An Irish limited liability company enjoys a low corporate income tax rate of 12.5%, one of the
lowest in the world. The Irish-domiciled company hopes to qualify for tax incentives for Irish holding/headquartered companies
and to benefit from the network of double tax treaties that reduce withholding taxes. TNI BioTech International, Ltd. will manage
our international distribution, using product that is manufactured in Ireland and elsewhere.
Today,
Immune Therapeutics is focused on the commercialization of affordable non-toxic immunotherapies focused on the activation and
rebalancing of the body’s immune system. Stimulating the body’s immune system remains one of the most promising approaches
in the treatment of Cancers, HIV, Autoimmune Diseases, inflammatory conditions and other opportunistic infections for chronic
often life-threatening diseases through the mobilization of the body’s immune system in Emerging Nations using existing
clinical data.
Cytocom
Inc, is a clinical-stage pharmaceutical company focused on the development of the first affordable non-toxic immunodulator for
the treatment of inflammatory diseases, immune-related disorders, and cancer and is responsible for the development of our patented
therapies with the FDA and EMA.
As
of this date, neither we nor our collaboration partners are permitted to market our drug candidates in the United States until
we receive approval of a New Drug Application from the FDA. Neither we nor our collaboration partners have submitted an application
for or received marketing approval for any of our drug candidates. Obtaining approval of an NDA can be a lengthy, expensive and
uncertain process.
Some
of the Company’s more substantial risks include, but are not limited to, its lack of operating history, its high needs for
capital, strict government regulation, risk of law suits from trial participants and otherwise, requirement for drug approvals
which may never occur, changes in the industry, failure of the Company’s products to make it through trials, reliance on
third parties to conduct trials and manufacture and distribute the Company’s drugs, and fierce competition. All of these
factors and more could affect investors’ investments in the Company.
The
Company is a clinical late stage biopharmaceutical company focused on the development two immunomodulating therapies - IRT-103
Low-Dose Naltrexone, LDN or “Lodonal
TM
,” and IRT-101 Methionine Enkephalin or “MENK” - for
the treatment of autoimmune diseases, inflammatory diseases, cancer and HIV/AIDs. Our product candidates are also intended to
combine with other mechanisms of action across the oncology and autoimmune landscape including chemotherapy radiation, and immunosupressive
drugs.
Current
treatments for autoimmune disease are hampered by the non-specificity of immunomodulatory interventions, having to accept broad
suppression of immunoresponsiveness with potentially serious side effects, such as infection or malignancy.
The
development of antigen-specific approaches, downregulating pathogenic immune responses while maintaining protective immunity,
would be a major step forward. Clinical trials with our immunomodulating therapies have been shown to bolster immune response
without the serious side effects of existing therapies.
In
clinical trials, Lodonal has been shown to modulate the immune system by increasing the production of T cells, which block TLR
signaling and decrease glial cell activation, decrease cytokines, decrease neuroinflammation, modulate T and B lymphocyte production,
and shift of immune response from TH2 to TH1 to increase the benefit to patients. Lodonal potentially places the Company at a
central place in the treatment paradigm, including Crohn’s Disease, Rheumatoid Arthritis (RA), HIV/AIDs and Chronic Pain
due to inflammation.
LDN
and MENK work by triggering a number of receptors, including the opioid and T Cell receptors on immune cells, which then activate
or balance various cells of the immune system. Other receptors triggered by IRT-101 include tolling receptors to shift Th1 (pro-inflammatory)
to Th2 (anti-inflammatory), which is critical when dealing with autoimmune and inflammatory disease.
While
traditional drug development targets each drug to a particular disease, such as drug A for disease A, drug B for disease B, etc.,
we are approaching the process by identifying and targeting survival or activation immunology pathways that cross over between
different disease indication. Lodonal, our lead product, has shown the success of this model with the approval for use in Nigeria
as an immune system regulator in the management of HIV patients.
Lodonal/LDN
IRT-103/Lodonal/LDN
is an immune modulating drug “IMD” that inhibits Toll-Like receptors including TLR2, TRL4 and TRL9 as well as p receptors
to mediated inflammation. In addition to binding to Toll Like receptors, IRT-103 works on the body’s natural opioid system
to restore immune balance by Shifting Th1 (pro-inflammatory) to Th2 (anti-inflammatory-). Through its effect on the opiate receptor,
IRT-103 has been shown to increase production of Natural Kills Cells, Helper T-Cell CD4, CD8, T-Cells and cytokine production.
IRT-103 has completed over 40 Phase II clinical trials that have provided proof of concept for Crohn’s Disease, Fibromyalgia,
Complex Regional Pain Syndrome, Diabetic Neuropathy and Neuropathic Corneal Pain, Hematologic Cancer Patients, Advanced Brain
Tumor. At this time the Company is only focused on developing treatments for HIV/AIDS and Crohn’s Disease.
The
Company plans to initiate a Phase 3 study in Moderate to Severe Crohn’s Disease as an adjunct to the standard of care in
patients ages 12 and over,
using 505(b)(2) pathway study in
children with moderate to severe Crohn’s disease. The Company met recently with the FDA to review the planned
study. In addition to the trials for Crohn’s Disease, the Company plans to file for a New Drug Application for Crohn’s
Disease in patients with HIV/AIDS as HIV patients are unable to use the existing therapies. Currently, IMUN is marketing LDN in
Nigeria where it has obtained approval for the management of patients with HIV/AIDS. Since Naltrexone is a repurposed drug with
a strong safety profile, we hope we will be able to fast track our development program through the FDA for use in the U.S.
IRT-101/MENK
Our
second product candidate, IRT-101 or MENK, is a member of a group of agents collectively known as “Modulators of Opioid
and Receptor Activity.” MENK interacts directly with the OGFr, which, in nonclinical studies, has delayed the cell cycle
by modulating cyclin-dependent inhibitory kinase pathways. The IRT-101/MENK axis is an inhibitory pathway that plays a role in
the onset and progression of autoimmune diseases, viral diseases, such as HIV/AIDS, and cancer. MENK’s role is to maintain
cell growth, function and homeostasis. Exogenous MENK administration has been shown to significantly inhibit growth of multiple
cancer cell lines in culture compared to control cells; these cancer types include: thyroid cancer, ovarian cancer, triple negative
breast cancer, hepatocellular carcinoma, squamous cell carcinoma of the head and neck, pancreatic cancer, renal cancer, neuroblastoma,
and colon cancer.
MENK
has established Proof of Concept in HIV/AIDS, Pancreatic Cancer and Kaposi Sarcoma. Clinical Trials suggest activity in treatment
of solid tumors, blood cancer, lung and melanoma.
In
clinical trials MENK showed significant increase in a subpopulations of individual CD4+T cells, CD8+T cells, CD4+CD25+ regulatory
T-cells (Treg), natural killer cells (NK). Our results indicated that MENK showed a strong inhibiting effect on Treg cells while
it stimulated marked proliferation of other lymphocyte subpopulations. MENK when you in conjunction with the standard of care
provided evidence of to extend life and most importantly, there were no changes in the blood laboratory tests with MENK. Compared
to standard chemotherapy that reduces the blood count from bone marrow toxicity, the blood count remained stable with MENK. Lin
E, Freedman JE, Beaulieu LM. Cardiovasc Ther. 2009 Summer; 27(2):117-23. doi: 10.1111/j.1755-5922.2009.00077.x. Review. The role
of inflammation in regulating platelet production and function: Toll-like receptors in platelets and megakaryocytes. Beaulieu
LM, Freedman JE.
The
recent scientific literature suggests that tackling the initiating pathways of the innate immune system, e.g. the Toll-Like Receptors
(TLRs) (Opiate Receptor) and inflammation, may lead to improved drugs for the treatment and prevention of autoimmune and inflammatory
diseases. (Infect Disord Drug Targets. Author manuscript; available in PMC 2009 Sep 15, and Journal List HHS Author
Our
Product Pipeline
The
following table describes our intended product pipeline:
Our
goal is to become a leading biopharmaceutical company focused on the development of novel immunotherapy treatment of autoimmune
diseases, HIV and cancer without the toxic side effects of existing drugs. The Company plans to use Cytocom, Inc. to supervise
and perform all development work for Lodonal and MENK that will require approval of the FDA, EMA or any of the G7 countries. The
Company will submit all trials and pay fees on Cytocom’s behalf until such time as Cytocom is sufficiently funded to cover
the cost of these trials. At this time, the INDs have not been transferred to Cytocom. Studies and trials in countries that are
not part of the G7 are being conducted directly by the Company.
The
key elements of our strategy include:
●
|
Advance
the development of Lodonal
TM
for autoimmune diseases
. Our short-term focus on finalizing our Phase IIB/III
pivotal trials with the FDA. We will have interim analysis (24 weeks post enrollment of final subjects) confirming efficacy
of this product in the clinic in these indications. We will file for an New Drug Application and IRB for an exploratory trial
leading in patients with HIV/AID’s Once this data is obtained, if compelling we will proceed with Phase 3 confirmatory
studies to support NDA submissions with the FDA. As data is obtained in these indications, we will examine the initiation
of clinical trials in other autoimmune disorders in which there is nonclinical and/or clinical data to suggest efficacy, such
as in patients with MS or fibromyalgia.
|
|
|
●
|
Advance
the development of IRT-101/MENK for solid tumors.
After a Type C meeting with the FDA, we agreed to complete a dosing
and PK study in parallel with a Phase 2b clinical trial. Providing Phase 2b data that is statistically robust in patients
with solid tumor cancers will assist in confirming efficacy of this product as a therapy or as an adjunct treatment to chemotherapy.
Once this data is obtained, we will proceed with Phase 3 confirmatory studies in the appropriate tumor types that will support
filing an NDA with the FDA.
|
Industry
Immunology
Therapeutics Markets
The
immune system is a network of cells and tissues throughout the human body that work together to protect the body from invasion
and/or infection. The immune system consists of two parts: acquired and innate immunity. Acquired immunity is developed by the
body as a person ages and the body is exposed to invasions; the body “remembers” these invaders so that it can fight
if they return. When the immune system is working properly, foreign invaders provoke the body to activate immune cells against
the invaders and to produce antibodies that will recognize and destroy the foreign invaders. Innate immunity activates white blood
cells to destroy invaders, without the use of the antibodies.
When
a person has an autoimmune disease they have a problem with the acquired immune system’s reactions. In an autoimmune reaction,
antibodies and immune cells will target and attack the body’s own healthy tissues. Autoimmune diseases can affect almost
any part of the body, including the heart, brain, nerves, muscles, skin, eyes, joints, lungs, kidneys, digestive tract and blood
vessels. A typical symptom of an autoimmune disease is inflammation, which can cause redness, heat, pain, and swelling. Many autoimmune
diseases don’t restrict themselves to one part of the body and can affect many parts of the body simultaneously. The cause
of autoimmune diseases is not fully understood and in most cases, a combination of factors may be the underlying cause.
Prevalence
rates for all autoimmune disorders are expected to continue to rise in the next several years. Autoimmune diseases represent a
diverse collection of diseases in terms of their demographic profile and primary clinical manifestations. There are as many as
80 types of autoimmune diseases. Many of them have similar symptoms, which makes them very difficult to diagnose. It is also possible
to have more than one at the same time. They usually fluctuate between periods of remission (little/no symptoms) and flare-ups
(worsening symptoms). There are currently no cures for autoimmune diseases, so treatment focuses on relieving the symptoms.
Autoimmune
disorders include inflammatory bowel disease, such as Crohn’s disease and ulcerative colitis, MS, rheumatoid arthritis,
lupus, myasthenia gravis and type-1 diabetes. According to a 2015 report from the Centers for Disease Control and Prevention (“CDC”),
it is estimated 1.3% of U.S. adults (3 million) reported being diagnosed with IBD (either Crohn’s disease or ulcerative
colitis).
1
. This was a large increase from 1999 (0.9% or 2 million adults).
2
. According to the CDC, fibromyalgia
prevalence in the U.S. affects about 4 million US adults, about 2% of the adult population. The USA had approximately 1.12 million
people living with HIV at the end of 2015 (https://www.cdc.gov/hiv/statistics/overview/ataglance.html). Nearly one in eight of
these people are unaware they have HIV. A crude estimate of the prevalence of myasthenia gravis in the U.S. is approximately 50,000
patients and Multiple sclerosis (MS) is the most widespread disabling neurological condition of young adults around the world.
The Multiple Sclerosis Foundation estimates that more than 400,000 people in the United States and about 2.5 million people around
the world have MS. About 200 new cases are diagnosed each week in the United States. For many of these autoimmune diseases, there
is a chronic inflammation without known cause and continuous chronic therapy is required to maintain remission.
Thus,
the identification of an alternative, safer therapy prior to the use of medications that hold the potential for severe side effects,
like TNF-alpha inhibitors, is very important; especially for those patients who cannot tolerate or who do not want to be placed
on such medications. With its excellent safety profile and potential clinical efficacy, Lodonal
TM
may be able to address
this unmet medical need as a first line therapy in patients with autoimmune diseases.
Crohn’s
Disease, a form of inflammatory bowel disease, is an autoimmune disease that is characterized by transmural, patchy, granulomatous
inflammation of the ileum and/or colon, resulting in symptoms such as abdominal pain, diarrhea, malabsorption, and weight loss.
Crohn’s disease accounts for significant morbidity and decreased quality of life. Although clinical response rates to anti-TNF
agents are about 50%, mucosal healing is reported in only approximately 30% of patients with Crohn’s disease (SONIC trial,
Colombel, J. F., Sandborn, W. J., Reinisch, W., Mantzaris, G. J., Kornbluth, A., Rachmilewitz, D., Lichtiger, S., D’Haens,
G., Diamond, R. H., Broussard, D. L., Tang, K. L., van der Woude, C. J., and Rutgeerts, P. Infliximab, azathioprine, or combination
therapy for Crohn’s disease. N.Engl.J.Med. 2010; 362: 1383-1395).Clinical Trials and data have shown that antiretroviral
therapy for the treatment of HIV/AID treatments do not fully restore immune health; in fact suppress the immune system as a consequence,
a number of inflammation-associated and/or immunodeficiency complications such as cardiovascular disease, chronic infections and
cancer are increasing in numbers. Cumulative toxicities from exposure to antiretroviral drugs for decades cause clinically relevant
metabolic disturbances and end-organ damage.
There
are growing concerns that the multi-morbidity associated with HIV disease may impact healthy aging and could overwhelm some health
care systems, particularly those in resource-limited regions that have yet to fully develop a chronic care model. Given the problems
inherent in treating and caring for a chronic disease that might persist for several decades, a global effort to identify a cure
or a therapy to offset the toxic side effects if needed.
Lodonal™
in clinical trials has shown to provide an alternative and safe approach for immune dysfunction, cancer and chronic inflammatory
state. In FDA phase II trials for HIV, Crohn’s Disease, Fibromyalgia, Adjunct to Chemotherapy, MS, RA, that have been proven
to increase CD 4 count, decrease viral loads, suppress autoimmune reactions; decrease inflammatory cytokines, slows growth of
malignant cells and Increases production of T-Cell, Helper, NK, Toll-Like receptor TRL4 and TRL9 as well as p receptors. Lodonal
works on the body’s natural opioid system to restore immune balance by Shifting Th1 (pro-inflammatory) to Th2 (anti-inflammatory).
TNI BioTech International, a subsidiary of Immune, received
NAFDAC (National Agency for Food and Drug Administration and Control)
approval to market and distribute Lodonal
TM
, the Company’s breakthrough treatment for HIV/AIDS. The Company
and its strategic partners received regulatory approvals and contracts for the first sales of the product in Nigeria in 2018.
The
approval is for a one-day Immune System Regulator for the management of HIV/AIDS, which is based on the results of the Company’s
90-day bridging trial in Nigeria that resulted in a 44% increase in CD4 count versus an 11% increase for standard of care patients.
Additionally, there was a reduction in opportunistic infections plus several Phase II multi-center, randomized studies that demonstrated
improvements for patients treated with Lodonal™ when compared to placebo or standard of care.
MS
is an autoimmune inflammatory disease of the central nervous system that is characterized by progressive neuronal loss that manifests
clinically as worsening physical disability occurs. The key pathophysiological hallmark of MS is the loss of myelin, a layer of
lipids and proteins produced by cells called oligodendrocytes that wrap around the neuron and act like an insulating sheath to
facilitate electrical conduction along the nerve. Destruction of myelin by an inflammatory cascade leads to neuronal degeneration.
As a result, we believe that there is a substantial unmet need for effective treatments for chronic progressive MS as well as
a need for therapies that are more conveniently delivered, such as oral agents or less frequently administered injectable drugs.
Fibromyalgia
is an autoimmune disorder characterized by widespread musculoskeletal pain accompanied by fatigue, sleep, memory and mood issues.
Researchers believe that fibromyalgia amplifies painful sensations by affecting the way your brain processes pain signals. Symptoms
sometimes begin after a physical trauma, surgery, infection or significant psychological stress. In other cases, symptoms gradually
accumulate over time with no single triggering event. Women are much more likely to develop fibromyalgia than are men. Many people
who have fibromyalgia also have tension headaches, temporomandibular joint disorders, irritable bowel syndrome, anxiety and depression.
While there is no cure for fibromyalgia, a variety of medications can help control symptoms. Most of those drugs are immuno-suppression
drugs with numerous side effects.
Myasthenia
gravis is an autoimmune neuromuscular disease that leads to fluctuating muscle weakness and fatigue. The hallmark symptom of myasthenia
gravis is muscle weakness that increases during periods of activity and improves after periods of rest. Certain muscles such as
those that control eye and eyelid movement, facial expressions, chewing, talking, and swallowing are often involved in the disorder.
The muscles that control breathing and neck and limb movements may also be affected. Current therapies help patients to have a
normal life expectancy; however, quality of life and relief from symptoms still needs significant improvements in patients with
this disease.
Oncology
Therapeutics Markets
Cancer
is a term used for diseases in which abnormal cells divide without control and these cells have the ability to invade other tissues
within the body by traveling through the blood and lymph systems. Cancer consists of many different types of diseases. Currently,
there are more than 100 different types of cancer with the majority of cancers named for the organ or type of cell in which they
start. For example, cancer that begins in the colon is called colon cancer. Cancer can also be grouped into broader categories,
which include:
●
|
Carcinoma
- cancer that begins in the skin or in tissues that line or cover internal organs;
|
|
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●
|
Sarcoma
- cancer that begins in the bone, cartilage, fat, muscle, blood vessels, or other connective or supportive tissue;
|
|
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●
|
Leukemia
- cancer that starts in blood-forming tissue such as the bone marrow and causes large numbers of abnormal blood cells
to be produced and enter the blood;
|
|
|
●
|
Lymphoma
and myeloma
- cancers that begin in cells of the immune system; and
|
|
|
●
|
Central
nervous system cancers
- cancers that begin in tissues of the brain and/or spinal cord.
|
The
American Cancer Society estimates that in 2014 over 1.6 million people in the United States are expected to be diagnosed with
cancer and over 585,000 people will die from cancer. Cancer remains the second most common cause of death in the U.S. contributing
to one in four deaths. As evidence by these numbers, and despite advances in the field of cancer research, there remains a significant
unmet medical need in the treatment of cancer.
A
common treatment option for cancer is surgery, chemotherapy and/or radiation therapy. While these therapies are the most widely
used class of anti-cancer agents, they are associated with extremely high levels of toxicity, potentially severe adverse events
and at times a lack of efficacy. As a result, there is a substantial unmet medical need for alternatives or adjunct treatments
to existing chemotherapy drugs and/or radiation therapy in order to address the associated toxicities and lack of efficacy from
these drugs.
Background
Naltrexone
is short for Naltrexone Hydrochloride and is an orally effective opioid receptor antagonist, used as a treatment for opiate addiction.
Naltrexone was originally synthesized in 1963 and was originally patented in 1967 by the specialty pharmaceutical company Endo
Health Solutions Inc. At the time, it seemed unlikely that naltrexone would be developed because the experimental drug had relatively
low market potential, and naltrexone’s patent protection would likely expire before the completion of clinical trials. With
the assistance of DuPont, a division of Merck & Co. that acquired Endo Health Solutions, Inc. in 1969, the U.S. government’s
National Institute on Drug Abuse advanced naltrexone through the FDA approval process, leading to approval for marketing as a
treatment for heroin addiction in a 50 mg dose in 1984. Although its patent expired that same year, Naltrexone gained seven additional
years of marketing exclusivity for DuPont when the FDA designated it an orphan drug.
Marketing
exclusivity provides a pharmaceutical company the right to sell its drug for a certain length of time free of competition from
generic versions of the drug and is often granted to encourage companies to develop a use for a drug whose patent has expired
or to encourage a company to develop an already approved drug for a new use. With market exclusivity, the anticipated returns
on investment are higher, improving the profitability of a drug. With funding provided by the U.S. National Institute on Alcohol
Abuse and Alcoholism and the potential to gain three additional years of post-approval market exclusivity for naltrexone, DuPont
advanced naltrexone through additional clinical trials, and gained FDA approval for a 50 mg dose as a treatment for alcohol abuse
in 1995. As naltrexone had already been on the market for 10 years as a treatment for heroin addiction, the FDA’s confidence
in its safety resulted in approval only six months after naltrexone’s regulatory application was submitted.
Naltrexone
has a black box warning for liver toxicity, which is included based on liver enzyme elevations reported with daily dosing at 100
mg-300 mg. These doses were evaluated in clinical trials conducted by third parties for obesity; however, they have not been approved
for this use. Review of the literature and adverse effect reports in naltrexone clinical trials did not demonstrate a risk for
liver damage with daily dosing at 50 mg or lower. Although the black box warning does remain, the FDA has stated that Naltrexone
does not appear to be a hepatotoxin at the recommended doses for the currently approved indications. Other than its small potential
association with liver toxicity at high doses, the most common adverse effects reported with naltrexone are non-specific gastrointestinal
complaints such as diarrhea, mild nausea, and abdominal cramping. Naltrexone has not shown any significant increase in adverse
effects in placebo-controlled trials in patients known to be free of opioids for at least seven days.
At
lower doses (approximately 1-10 mg/day), Naltrexone has been termed LDN and has been gaining popularity as a treatment for signs
and symptoms of autoimmune diseases and immune disorders such as Crohn’s disease, viral infections such as HIV/AIDS and
cancer. Research studies conducted by Dr. Zagon and colleagues at Penn State University have indicated that the short-term blockage
of opioid receptors on circulating and tissue cells by administration of LDN was followed by a substantial rebound in opioid receptor
expression and increased levels of β-endorphin and met-enkephalin. In addition to Dr. Zagon’s findings, Dr. Bernard
Bihari, a New York physician who previously studied immune responses primarily in AIDs patients, provided a 3-fold mechanistic
approach to the use of LDN, showing that LDN administration has the following effects on the immune system:
●
|
Increase
in met-enkephalin (an endorphin produced in large amounts in the adrenal medulla) and β-endorphin in the blood stream;
|
|
|
●
|
Increase
in the number and density of opiate receptors on the tumor cell membranes, thereby making them more responsive to the growth-inhibiting
effects of the already present levels of endorphins, which in turn induces apoptosis in the cancer cells; and
|
|
|
●
|
Increase
in absolute numbers of circulating cytotoxic T cells (CD8+/TH1) and natural killer cells (“NK cells”) as well
as NK cell activity.
|
To
date, Lodonal™ (“low dose naltrexone” and “LDN”) has been administered to patients across multiple
indications to include autoimmune diseases and disorders, viral infections and cancer; both under clinical trials and through
off-label prescription use. It has been estimated, based upon Dr. Bihari’s research and direct interactions with pharmacies,
that just within the U.S. there are approximately 30,000-40,000 people taking Lodonal™ daily. Most of the states in the
U.S. have licensed compounding pharmacies to prepare the appropriate formulations of LDN for these indications and at least one
compounding pharmacy in the U.S. is licensed to dispense LDN to 48 of the 50 states.
LDN
is currently being studied in a number of clinical trials by other companies in the U.S., as is shown in the following tabular
summary.
Title
|
Indication
|
Dose
|
Status
|
Low
Dose Naltrexone for the treatment of Complex Regional Pain
|
Complex
Regional pain
|
4.5mg
|
Recruiting
|
Low
Dose Naltrexone for Chronic Pain Arthritis
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Osteoarthritis
Arthritis, Rheumatoid
Arthritis, Psoriatic Arthritis
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4.5mg
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Not
yet recruiting
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Clinical
Data has shown that LDN has the potential to be a successful treatment for immune dysfunction, immune dysregulation, inflammatory
diseases, autoimmune diseases and cancer. LDN in HIV/AID’s has shown to slow disease progression, reduce inflammation that
cannot only control the disease itself, with no toxic side effects. For example, in Crohn’s disease, five published clinical
trials in patients with moderate to severe disease have been conducted, two in adults and one in children, and have shown significant
disease and quality of life improvement by 12-weeks. LDN was able to reverse the inflammatory activity, promote mucosal healing,
and significantly decrease histologic inflammation when compared to placebo-treated controls.
Clinical
Trials
Significant
published clinical trial evidence indicates that LDN, particularly daily dosing at 3mg - 4.5 mg, stimulates the immune system
and is effective in the treatment of some immunodeficiency diseases, such as HIV/AIDS, and advanced cancer. In addition, LDN has
been used quite widely for treatment of a variety of autoimmune diseases and immune disorders.
Clinical
Trials: Crohn’s Disease
The
first clinical trial results with LDN for immune disorders were published only recently in a peer-reviewed medical journal in
2007 which evaluated LDN treatment in a pilot Phase II study of 17 patients with moderate to severe, active Crohn’s disease.
The open-label pilot study was conducted by Penn State University to evaluate LDN response, safety and toxicity. Patients were
treated with LDN orally each evening at a dose of 4.5 mg for 3 months. A total of 17 patients were enrolled, 16 of whom completed
the study. No laboratory abnormalities were noted. The most common side effect was sleep disturbances (occurred when dosing at
night, at about bed-time), occurring in seven patients (41%). Two-thirds of patients in this study went into remission after 4.5
mg daily LDN treatment (p < 0.001), with 89% of patients overall showing some degree of response. Blood inflammatory markers
were also analyzed, specifically c-reactive protein, or c-RP and erythrocyte sedimentation rate, or ESR. C-RP levels decreased
from a median value of 2.6 (normal <0.8) at baseline to a value of 0.9 by the twelfth week of treatment, which was statistically
significant (p = 0.03). The ESR decreased from a mean baseline value of 23.3 ± 0.4 mm/h to 17.9 ± 0.3 mm/h, which
was also significant (p = 0.04). Baseline plasma enkephalin levels were 9.5 ± 2.8 pg/mL, and decreased to a value of 3.6±1.0
pg/mL at week 12 of LDN therapy.
A
second clinical study was conducted by Penn State University as a randomized double-blind, placebo-controlled study to test the
efficacy and safety of LDN for 12 weeks in adults with moderate to severe active Crohn’s disease. Forty subjects were enrolled
in the study. Randomized patients received daily oral administration of LDN (4.5 mg/day) or placebo. Fatigue was the only side
effect reported of statistical significance, and it was greater in subjects receiving placebo. Thirty percent of patients in this
study went into remission (defined as a Crohn’s Disease Activity Index (“CDAI”) score ≤ 150), with 88% of
patients overall showing some degree of response. Blood inflammatory markers, c-RP and ESR, were analyzed. Patients who exhibited
a 70-point drop in CDAI scores with LDN had higher c-RP values at baseline (2.0 ± 0.5 mg/dl) compared to those subjects
on LDN who did not exhibit a response (0.8 ± 0.3 mg/dl); however, this difference was not statistically significant (all
values were included in the analysis including those subjects who flared during the study). Based upon this data, patients with
high c-RP levels may be more likely to demonstrate a clinical response to treatment with LDN.
A
pilot Phase II clinical trial was conducted by Penn State University in children with moderate to severe active Crohn’s
disease. Fourteen subjects were enrolled, 12 subjects were randomized and treated with a mean age of 12.3 years (range 8-17 years).
Children were randomized to placebo or LDN (0.1 mg/kg or a maximum dose of 4.5 mg) orally for 8 weeks followed by open-label treatment
for an additional 8 weeks of LDN at the same dose of 0.1 mg/kg or 4.5 mg. Results showed a significantly greater reduction of
baseline pain in those taking LDN than in those taking placebo (28.8% reduction versus 18.0% reduction; p = 0.016). LDN was also
associated with improved general satisfaction with life (p = 0.045) and with improved mood (p = 0.039), but not improved fatigue
or sleep. Thirty-two percent of participants met the criteria for response (defined as a significant reduction in pain plus a
significant reduction in either fatigue or sleep problems) during LDN therapy, as contrasted with an 11% response rate during
placebo therapy p = 0.05). LDN was rated equally tolerable as placebo and no serious side effects were reported. Laboratory parameters
for inflammation, specifically white blood count, c-RP and ESR all improved from baseline to Week eight; however, the results
were not significant.
An
open-label Phase II trial was conducted for Naltrexone as Therapy for Inflammatory Bowel Disease: Ulcerative Colitis and Crohn’s
Disease Twelve patients received naltrexone 4.5 mg/day. Duration (mean ±SD) of naltrexone treatment was 46 ±75 weeks
(maximum 270 weeks). One patient withdrew after 8 weeks owing to insomnia. Positive clinical responses were reported in 6/12 patients.
Two clinical responders had colonoscopy before and after naltrexone and each had complete mucosal healing. (Leonard B. Weinstock,
MD, FACG Journal of Clinical Gastroenterology: September 2014 - Volume 48 - Issue 8 - p 742)
Low
Dose Naltrexone Reduces In Vitro Endoplasmic Reticulum Stress and Stimulates Wound Healing in Intestinal Epithelial Cells: A total,
40 patients (43% male, median age 40y, IQR 28–52 years) were treated with 5 mg NTX/day. Response was seen in 23 patients
(13 CD; 10 UC), with a median duration of 2 months Conclusion
Low
Dose Naltrexone may have a beneficial effect in the treatment of IBD by directly stimulating epithelial wound healing and reducing
intestinal ER stress. G. Fuhler*, M. Lie, P. Dimitrijevic, C. J. van der Woude, M. Peppelenbosch Erasmus MC University Medical
Centre Rotterdam, Gastroenterology and Hepatology, Rotterdam, Netherlands
Low
Dose Naltrexone in the treatment of Crohn’s Disease open label 17 patients were treated with LDN for 12 weeks and showed
a 70% reduction in CDAI score with endoscopy 88% in the LDN group and 28% in the control group endoscopic remission 33% in the
LDN group 8% in the control group with no adverse events. 10 Dig Dis Sci 2011 Jul;56(7):2088-9 7Michael Arata, MD.
Low
Dose Naltrexone in the Treatment of Crohn’s Disease: A Case Series 56 patients on 4.5mg IBS patients show clinical response
to LDN (54%) and should be considered as an adjunct to conventional therapy in patients with resistant disease or as a bridge
while another treatment plan is formulated. Further studies are required to evaluate the degree of mucosal healing while on LDN.
University of Florida http://www.gastrojournal.org/article/S0016-5085(15)32952-8/abstract.
Clinical
Trials: HIV/AIDS
A
single blind 90 day with 4 week f/u randomized completed a 90-day bridging trial for the treatment of patients with HIV AIDS.
The National Agency for Food and Drug Administration and Control (NAFDAC) approval is based on previous clinical data and the
Nigeria Bridging Trial. The trial was a single center, open labeled, randomized, bridging study consisting of one hundred and
fifty [150] patients of both genders between the ages of 18-60, each of whom was infected with the human immunodeficiency virus
(HIV).
The
90-Day Bridging Trial was undertaken at the State Specialist Hospital in Asubiaro, Osogbo, Osun State, Nigeria with the primary
objective to confirm Lodonal™ has a beneficial effect on the immune system of immune deficient patients and that it is safe.
The trial separated the patients into a Control (placebo) Group and a Treatment Group (which was administered Lodonal™).
The efficacy of increasing CD4 count [cell/mm3] between Day-1 and Day-90 by at least 25% was set as the criteria for demonstrating
beneficial effect on the immune system. Safety was demonstrated through quality of life assessment and vitals both of which were
not adversely affected. Treatment Group patients were given a daily dose of 4.5-mg/kg of Lodonal™.
The
results yielded an average increase of 44% increase in CD4 count in the Lodonal™ Treatment Group compared to an 11% increase
in the Control Group. Additionally, there were no reported opportunistic infections and no toxicity levels uncovered. Liver function
remained normal and there was no negative impact on other systems based on blood results. No significant sleep disturbance or
vivid dreams were present enough to justify trial discontinuation. No significant adverse CNS, renal, cardiac, hepatic, musculoskeletal,
hematopoietic side effects were present. NAFDAC issued drug and marketing approval of Lodonal™ in July of 2017 in the management
of HIV/AID’s and immune dysfunction.
A
single blind nine-month randomize clinical trial and a single prospective cohort study were conducted in Mali to evaluate the
impact of LDN on asymptomatic HIV+ adults. Results of the nine-month study showed an improvement in cluster of differentiation
4 (“CD4”) count in the treatment groups that was significantly greater than the control group at 6 months (p = 0.041)
and marginally at 9 months (p = 0.067). Results of the single prospective cohort study showed 71% of subjects that completed the
study did not show any indication of clinical AIDS symptoms, side effects or a loss of CD4 count that would warrant initiation
of antiretroviral therapy (“ART”) medication.
A
12-week, placebo-controlled trial of LDN was conducted from 1985-1986 in 38 patients with AIDS by Dr. Bihari and his colleagues.
Patients who participated in this trial showed a significant difference in the incidence of opportunistic infections with 5 out
of 16 patients (31%) on placebo developing opportunistic infections in comparison to 0 of the 22 patients in the LDN group. Other
differences between placebo and LDN treated patients included: lymphocyte mitogen responses declined on placebo and not on LDN;
pathologically elevated levels of acid-labile alpha interferon declined significantly in the patients on LDN and not in those
patients on placebo.
After
the conclusion of the above clinical trial, Dr. Bihari began to use LDN in his own medical practice. Of 158 patients in his practice
that were evaluated, only ten (6%) were on antivirals. Patients of Dr. Bihari who had taken the drug regularly as prescribed showed
no drop in CD4 cells. The average CD4 number in these patients before starting LDN was 358, and the average 18 months later increased
to 368. There were 55 patients who had not taken the drug, or had taken it only sporadically (non-compliant). These patients showed
a drop of CD4 cells from an average of 297 to 176 in 18 months. This represented a drop in CD4 of approximately 80 per year, which
corresponds to the average drop observed in patients with HIV receiving no treatment. The stabilization of CD4 cells in patients
who were administered LDN was also accompanied by disease stabilization. The 55 patients who were non-compliant experienced 25
opportunistic infections, in comparison to the 103 compliant patients who only experienced eight. Survival between the two groups
was also significantly different, 13 deaths occurred in the 55 non-compliant patients compared to only one death in the compliant
group of 103. At the time of this referenced article (Bihari
et al.,
Sept 1996), patients in Dr. Bihari’s practice
had been on LDN for seven to eight years, with no disease progression, no drop in CD4 levels and no evidence of resistance to
the beneficial effects of LDN. None of the patients experienced side effects while on LDN.
Dr.
Bihari also examined CD4 changes in 19 patients who were on the combination treatment regimen of 3TC (Epivir), azidothymidine
(“AZT”), and LDN. The rise in CD4 counts at 6 months in Dr. Bihari’s patients was compared with the rise in
CD4 counts reported by an investigator working for Glaxo Smith Kline. In both groups, none of the patients had taken AZT previously;
however, Dr. Bihari’s patients simultaneously were treated with LDN, which the Glaxo Smith Kline group did not receive.
The patients on LDN had an average baseline CD4 count of 88 while the Glaxo Smith Kline group had an average baseline value of
352. The Glaxo Smith Kline patients experienced an average rise in CD4 of 40 at six months; or an increase of 11.3%. The LDN patients
experienced an average rise of 106 CD4’s at 6 months, representing a 128% increase. Of the 19 LDN patients, each patient
experienced an increase of at least 30%. In 18 of the 19 LDN patients, a significant increase in energy, appetite and mood was
observed. In those LDN patients who were severely underweight, weight gains of ten to 50 pounds were observed in the first two
months of treatment.
Clinical
Trials: Fibromyalgia
LDN
has been utilized in a number of trials to investigate its use for the treatment of fibromyalgia. Studies conducted to date in
adult patients have typically used an LDN dose of 4.5 mg/day in comparison to placebo.
LDN
was assessed for the treatment of fibromyalgia, in a single-blind, crossover trial in which ten women were enrolled. This study
utilized the following treatment schedule: Baseline (2 weeks) →Placebo (2 weeks) → LDN 4.5 mg/day (8 weeks) →Washout
(2 weeks) LDN reduced fibromyalgia symptoms in the entire cohort, with a greater than 30% reduction of symptoms over placebo.
As observed in other studies with LDN, side effects were rare, minor and transient, and included sleep disturbances such as insomnia
and vivid dreams.
In
a second study, 31 women with fibromyalgia participated in a randomized, double-blind, placebo-controlled, counterbalanced, crossover
study. During the active drug phase of the study, participants were administered oral LDN at a dose of 4.5 mg daily. This study
showed a benefit with LDN in comparison to placebo for the treatment of fibromyalgia. A significantly greater reduction of baseline
pain was observed in those taking LDN in comparison with those taking placebo (28.8% reduction versus 18.0% reduction). LDN was
also associated with improved general satisfaction with life and with improved mood. Thirty-two percent (32%, n=9) of participants
met the criteria for response (defined by the study as at least a 30% reduction in pain, plus a 30% reduction in fatigue or a
30% improvement in sleep) during LDN therapy, as contrasted with an 11% (n=3) response rate during placebo therapy. Both LDN and
placebo were tolerated equally and no serious adverse events were reported.
Clinical
Trials: MS
A
PILOT TRIAL OF LOW-DOSE NALTREXONE IN PRIMARY PROGRESSIVE MULTIPLE SCLEROSIS was run at the University of Pennsylvania by Dr.
Ian Zagon and Pat McLaughlin:
OBJECTIVE:
To evaluate the efficacy of 4.5mg nightly naltrexone on the quality of life of multiple sclerosis (MS) patients.
METHOD:
A sixth month phase II multicenter-pilot trial with a low dose of the opiate antagonist Naltrexone (LDN) has been carried out
in 40 patients with primary progressive multiple sclerosis (PPMS). The primary end points were safety and tolerability. Secondary
outcomes were efficacy on spasticity, pain, fatigue, depression, and quality of life. Clinical and biochemical evaluations were
serially performed. Protein concentration of beta-endorphins (BE) and mRNA levels and allelic variants of the mu-opioid receptor
gene (OPRM1) were analyzed.
RESULTS:
Five dropouts and two major adverse events occurred. The remaining adverse events did not interfere with daily living. Neurological
disability progressed in only one patient. A significant reduction of spasticity was measured at the end of the trial. BE concentration
increased during the trial, but no association was found between OPRM1 variants and improvement of spasticity. The data indicates
that LDN is safe and well tolerated in patients with PPMS.
PILOT
TRIAL ON LOW-DOSE NALTREXONE AND QUALITY OF LIFE IN MULTIPLE SCLEROSIS:
OBJECTIVE:
evaluate the efficacy of 4.5mg nightly naltrexone on the quality of life of multiple sclerosis (MS) patients.
METHODS:
This single-center, double-masked, placebo-controlled, crossover study evaluated the efficacy of 8 weeks of treatment with 4.5mg
nightly naltrexone (low-dose naltrexone, LDN) on self-reported quality of life of MS patients.
RESULTS:
Eighty subjects with clinically definite MS were enrolled, and 60 subjects completed the trial. Ten withdrew before completing
the first trial period: 8 for personal reasons, 1 for a non-MS-related adverse event, and 1 for perceived benefit. Database management
errors occurred in 4 other subjects, and quality of life surveys were incomplete in 6 subjects for unknown reasons. The high rate
of subject dropout and data management errors substantially reduced the trial’s statistical power. LDN was well tolerated,
and serious adverse events did not occur. LDN was associated with significant improvement on the following mental health quality
of life measures: a 3.3-point improvement on the Mental Component Summary score of the Short Form-36 General Health Survey (p
= 0.04), a 6-point improvement on the Mental Health Inventory (p < 0.01), a 1.6-point improvement on the Pain Effects Scale
(p =. 04), and a 2.4-point improvement on the Perceived Deficits Questionnaire (p = 0.05). LDN significantly improved mental health
quality of life indices. Further studies with LDN in MS are warranted.
A
PILOT TRIAL OF LOW-DOSE NALTREXONE IN PRIMARY PROGRESSIVE MULTIPLE SCLEROSIS:
OBJECTIVE: To
evaluate the efficacy of 4.5mg nightly naltrexone on the quality of life of multiple sclerosis (MS) patients some with relapsing-remitting
MS and some with secondary progressive MS.
METHODS:
This single-center, placebo-controlled, study evaluated the efficacy of 17 weeks of treatment with 4.5mg nightly naltrexone (low-dose
naltrexone, LDN) on self-reported quality of life of MS patients.
RESULTS:
The results on LDN’s effect on quality of life (as measured by physical and mental health) was not clearly proven, with
no statistically significant differences shown between the LDN-dosed group and the placebo group many have argued the reason for
the problem with this trial was the crossover design which have shown in the past not to provide good results when treating with
LDN. Data indicates that LDN is safe and well tolerated in patients with PPMS.
RETROSPECTIVE
CHART REVIEW OF MS PATIENTS RECEIVING LOW DOSE NALTREXONE (LDN) TO ASSESS SAFETY, TOLERABILITY, AND EFFECT ON FATIGUE:
OBJECTIVE:
This study investigated the safety, tolerability, and benefits (fatigue, reduction) of LDN in patients with MS. It reviewed the
number of patients who stopped taking LDN and if there were specific reasons for stopping the LDN. The frequency and variety of
side effects that were specific to LDN use are reported.
METHODS:
A retrospective review was performed on 435 charts of MS patients who were seen in the Penn State Hershey out- patient Multiple
Sclerosis Clinic between 1/1/2005 and 5/31/2012. There were 215 MS patients having exposure to LDN during the time of this study.
RESULTS: The study confirmed an improvement in quality of life with the use of LDN over a long period of time. In addition to
the assessment we review Brain MRIs and Spinal Cord MRIs that were obtained as part of the clinical status of the patient and
standard of care. There were essentially no MRIs obtained immediately before LDN was started as would have been ideal in a prospective
study. The average number of days of the Brain MRI before treatment with LDN was started was 444 days with a maximum of 4751 days.
The average number of days to the latest Brain MRI after LDN was started was 708 with a maximum of 1772 days of 215 patients on
LDN 113 MRI scans showed stable, 14 showed improvement, 28 slightly worse. The Slightly Worse MRI series indicated that new but
inactive lesion(s) were identified when compared to the pretreatment study MRI. On the quality of life surveys showed 83 patients
said they had improved, 92 patients said they were stable and 9 worse. The remainder of the patients did not continue on LDN.
Despite
the number of small studies conducted to date, as well as all of the antidotal evidence from patients and doctors that either
take LDN for MS or prescribe LDN for MS, Cytocom believes that results are promising, which the Company feels could bode well
in larger studies as existing treatments are not every effective.
Our
Clinical Trial Program for Lodonal™/LDN
The
Company held a Type C meeting in January 2018 with the FDA to discuss clinical protocol design and to seek guidance for
the clinical development program in the treatment of adult and pediatric patients with Crohn’s disease using a 505(b)(2)
pathway to support an NDA. Use of the 505(b)(2) pathway will allow us to seek FDA approval of Lodonal
TM
without
the need to conduct a full development program consisting of both safety and efficacy trials. This will help us to shorten our
development pathway and time to NDA submission. We plan to rely on the two drugs using naltrexone that have been approved by the
FDA. The first drug approved 50 mg product as the reference listed drug, published literature and historical data and all of the
historical data from the 50mg trials and to leverage recent Contrave® approval for safety/PK support at 4mg, 6mg and 8mg with
approval granted for Naltrexone at 16mg with Wellbutrin to support the Phase II/III clinical trials and the ultimate filing of
the NDA as a 505(b)(2) submission to the FDA. To date, nonclinical pharmacology and toxicology data and clinical safety data has
been established from these sources, in addition to multiple Phase I/II studies conducted under our INDs.
To
support the NDA filing, we plan to conduct the following pivotal studies:
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Phase
IIb, dose-response study/ies in patients with specific autoimmune disease(s); that will rollover into our
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Phase
III, randomized, double-blind study/ies based upon Phase IIB results.
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If
NDA approval of Lodonal is granted, in addition to the patents the FDA grants three-year marketing exclusivity granted by law,
we expect this product to be protected by patents that extend through at least 2023 for adults 7 year exclusive rights from date
of approval for pediatric Crohn’s disease due to orphan indication. During which time it should not be subject to generic
substitution. We plan to continue to support the Lodonal program with new patent applications as we obtain data from the clinical
evaluation of our new formulation in healthy human subjects and in patients.
If
the Phase 2B study of Lodonal is successful, we expect to quickly rollover into the Phase 3 confirmatory study to support product
registration.
Based
upon the indication chosen, the FDA has stated that a long-term (approximately 1 year) safety study of Lodonal™ will need
to be conducted; however, all nonclinical studies to support the safety of the product and NDA submission are complete.
Developing
LDN using the 505(b)(2) regulatory pathway lowers the hurdle for FDA approval. Because naltrexone is an FDA-approved product for
alcohol or opiate dependence, the FDA’s 505(b)(2) pathway for approval is available and opens the door for us to gain FDA
approval of LDN for new diseases. With the opportunity to use previous findings of safety, we intend to use the 505(b)(2) pathway
to study and gain approval for our own product.
IRT-101/MENK
The
role of opioid peptides in cancer cell growth have been examined in both tissue culture models and in vivo studies. These studies
have revealed that the pentapeptide MENK, or IRT-101, is the most potent opioid peptide that influences DNA synthesis and cell
growth. Because of MENK’s ability to have a direct impact on the growth factor action, MENK has also been termed Opioid
Growth Factor (“OGF”). MENK or OGF is an endogenous opioid peptide that interacts with the OGFr, which delays the
cell cycle by modulating cyclin-dependent inhibitory kinase pathways. The OGF-OGFr axis is an inhibitory pathway that plays a
role in the onset and progression of autoimmune diseases and cancer.
The
OGF-OGFr peptide and receptor have been detected in a wide variety of cancers, including thyroid cancer (e.g. follicular-derived
thyroid cancers), ovarian cancer, triple negative breast cancer, hepatocellular carcinoma, squamous cell carcinoma of the head
and neck, pancreatic cancer, renal cancer, neuroblastoma, and colon cancer.
It
has been shown in a number of research studies that the OGF-OGFr axis can be directly targeted by the administration of exogenous
MENK. MENK, at suitable doses, can inhibit cancerous cell growth by MENK’s direct interaction with OGFr creating a competitive
inhibition profile and subcellular location that is different from other well-known opioid receptors [mu (µ), delta (δ)
and kappa (κ)]. The other “classic” opioid receptors [mu (µ), delta (δ) and kappa (κ)] have
not been found to have any impact on cell growth; thus there is specificity in the MENK-OGFr interaction which regulates cell
proliferation. MENK has been shown to act directly on cells to inhibit proliferation as documented by tissue culture models that
lack feedback loops or whole animal autocrine systems. Studies
in vitro
have shown that MENK has no effects on the apoptosis
pathways or cell differentiation.
Based
upon data from multiple
in vivo
and
in vitro
studies conducted by Zagon
et al.
over the past 15 years, the
onset and/or progression of some cancers may be related to defects in MENK and/or OGFr, which would promote or exacerbate tumorigenesis.
These findings show there may be an advantage in up-regulating the peptide (e.g., MENK administration) to enhance anti-cancer
activity.
The
Ian Zagon/Patricia McLaughlin-led team at Penn State University has focused their non-clinical
in vitro
and
in vivo
research studies on the direct anti-tumor effects of MENK and inhibition of OGFr. These studies have shown that OGFr is required
for the action of MENK, and overexpression of OGFr can delay progression, or even prevent appearance of pancreatic tumors in nude
mice.
The
researchers at Penn State University have also demonstrated in tissue culture that the combination of MENK and gemcitabine show
a potent inhibitory effect on the growth
in vitro
of at least two cell lines of human pancreatic cancer. In a mouse xenograft
model of pancreatic cancer, the effects of MENK and/or gemcitabine on tumor incidence, appearance, and size, as well as metastasis,
were examined
in vivo
. MIA PaCa-2 cells of human origin (106 cells/mouse) were injected into the right scapular region
via a subcutaneous injection followed by treatment within one hour of the injection with MENK, gemcitabine or MENK + gemcitabine.
The anti-growth action of the combination of MENK and gemcitabine was greater than that observed with the individual drugs. In
a number of instances the effect of the combination of drugs exceeded that of the sum of the individual drugs, suggesting that
the action of a combination of MENK and gemcitabine was synergistic.
Dr.
Nicholas Plotnikoff, while a faculty member at Oral Roberts University, discovered that all three of the classical opioid receptors
are expressed on most subsets of immune cells, and that either
in vitro
incubation with MENK or parenteral administration
of MENK
in vivo
increased the number and functional activities of T cells, including cytotoxic CD8+ T cells, and also NK
cells. Several other investigators observed that administration of MENK to mice and humans, especially those with immunodeficiencies
associated with cancer or HIV/AIDS, increased CD4+ and CD8+ T cells, and increased various immune functions, including cytotoxic
activities of both T cells and NK cells. More recently, Drs. Fengping Shan and Nicholas Plotnikoff have reported that MENK treatment
of mice stimulates the cytotoxic activities of T cells and NK cells and reduces levels of T regulatory cells, and augments therapeutic
effects in tumor-bearing immunocompetent mice. Additional published results show that MENK alone or in combination with Interleukin-2
(“IL -2”) or Interferon-γ (“IFN-γ”) can enhance the production of IFN-γ or IL-2 from
CD4+T cells, respectively. MENK also appears to be more potent than IL-2 or IFN-γ, alone, two widely known cytokines that
have been approved by the FDA for marketing.
Studies
in the laboratories of Zagon and McLaughlin have demonstrated that MENK/OGF inhibited in a direct, receptor-mediated, and reversible
manner stimulated T and B cells isolated from spleens of normal mice and grown in culture. Thus, the immunomodulatory effects
of MENK/OGF appear to result from the repression of proliferative T and B lymphocytes.
Research
results to date indicate that MENK, at suitable doses, in addition to inhibiting cancerous cell growth, can also boost the immune
system through the following possible mechanisms:
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increasing
proliferation and functional activities of CD4+T-cells and CD8+T-cells which will play a role in anti-virus and anti-tumor
activities;
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increasing
maturation of dendritic cells which will initiate and intensify T-cell responses;
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increasing
secretion of cytokines such as IL-2, TNF, IL-12 and IFN-γ which will amplify the T-cell response and mediate interaction
among immune cells, forming a modulated and balanced immunity;
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increasing
functions of macrophages, resulting in enhanced cellular immunity through secreting a set of cytokines; and
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increasing
activity of NK cells which have the ability to kill cancer cells and virus-infected cells.
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Background
Standard
therapy for patients with advanced cancer include chemotherapy, or treatment options that are toxic to the cells, that suppress
the immune system and carry significant risks of life-threatening infections and other toxicities. Despite effective cancer therapies
that induce clinical response, including complete remission, minimal residual disease (“MRD”), a term referring to
disease that is undetectable by conventional morphologic methods, often remains and serves as a source of cancer recurrence. For
years, scientists have studied ways to enhance the patient’s immune system to target cancer cells, maintain remission and
possibly even eradicate all cancer cells in the body. Researchers believe that a cure for cancer might be possible if immunotherapy
is successfully applied to the treatment of cancer.
The
most common immunotherapy studied to date involves the use of targeted humanized monoclonal antibodies such as rituximab (anti-CD20)
or trastuzumab (anti-HER2/neu). These antibodies bind targets that are over-expressed on cancer cells and promote cell death by
a number of immune mechanisms, including antibody dependent cell-mediated cytotoxicity (“ADCC”). In ADCC, the most
common mechanism of tumor killing, the antibody tags the cancer cell and recruits the cells from the patient’s immune system
to attack the tumor. Immune cells recruited by the antibody to kill the cancer include granulocytes, macrophages and NK cells.
Another
common therapy that activates the innate immune system involves the administration of high dose Interleukin-2, or IL-2. Through
binding to the IL-2 receptor, IL-2 activates NK cells to attack cancer cells. After high-dose IL-2 therapy, NK cells are activated
to search out and kill cancer cells. Unfortunately, the use of IL-2 therapy is limited because of its severe side effects, which
include severe life-threatening infusion reactions and induction of autoimmune disease.
The
importance of cytokines to NK cells in the host system’s defense against cancer was recognized by Dr. Nicholas Plotnikoff
at Oral Roberts University in Tulsa and Dr. Ian Zagon and others from Penn State Medical Center at Hershey where they noted that
patients who could mount an immune response to their HIV/AIDS infection or cancer, specifically pancreatic or liver had a higher
survival rate compared to standard historical medications used. Researchers identified that a key to the successful immune response
of the patient’s immune system was the NK cell. Dr. Zagon and Dr. Plotnikoff both determined that activated NK cells were
the key to eliminating certain cancer cells and that NK cells require two signals to kill a tumor cell—a priming signal
followed by a trigger signal. The “priming signal” can be provided by either cytokines, such as high dose IL-2 or
IL-15 or possibly by administration of IRT-101. In contrast to IL-2 or IL-15, NK cells activated by IRT-101
ex vivo
retain
their activated state after cryopreservation and thawing. One of the most important features of IRT-101 therapy in cancer patients
with advanced metastatic disease is the marked improvement in clinical benefit that has been observed in the Phase I/II clinical
trials conducted to date. Clinical benefit is based upon parameters that reflect the overall wellbeing of the patient, including
pain control, performance status, and body weight.
Clinical
Trials
MENK
has been safely used in several clinical studies to treat human subjects with cancer. Wybran and Schandené (1987) administered
MENK intravenously to seven previously untreated patients with lung cancer and found significant increases in T-cell immunity.
Plotnikoff, Wybran and colleagues have reported improvement in the size and coloration of Kaposi’s sarcoma nodules in AIDS
patients. Phase I and Phase II studies have been conducted under IMUN’s IND (previously held by Penn State University) that
have demonstrated that MENK can be delivered safely to patients suffering from advanced pancreatic cancer, hepatocellular carcinoma
(PI: Eric Kimchi, M.D. at Penn State University) and advanced head and neck cancer (PI: David Goldenberg, M.D., FACS at Penn State
University).
The
maximum tolerated dose has been found to be 250 µg/kg using the intravenous route of administration over a 30-min infusion
time in a Phase I trial in fourteen normal volunteers and eight cancer patients. This maximum tolerated dose was later confirmed
in Phase I and Phase II trials in patients with advanced unresectable pancreatic cancer.
Patients
with Kaposi’s sarcoma (9 patients), lung cancer (12 patients), melanoma (3 patients), hypernephroma (1 patient), or pancreatic
cancer (1 patient) were treated with MENK for one week to 12 months at doses of 10 µg/kg three times per week up to 80 µg/kg
3 times per week. After 1-2 weeks increases in T cell subsets (CD3, CD4, CD8, and CD2 positive cells) were observed. An increase
also occurred in IL-2 receptor expression. NK cell activity was measured in 14 patients and an increased NK activity was present
in 12/14 patients. No toxicity attributable to treatment with MENK was observed in any patient.
Two
case studies have been reported in an infant and a 20-month old child who were treated with MENK. The infant was diagnosed with
hepatoblastoma and was treated with one course of neoadjuvant chemotherapy at approximately one week of age. Due to significant
complications from the chemotherapy (neutropenic fever, pneumonia and sepsis), the patient’s parents declined further chemotherapy,
and the infant was treated with surgical resection and MENK/LDN. She is currently close to ten years disease–free survival.
The 20-month-old child was diagnosed with hepatoblastoma. Due to existing comorbidities (including autosomal recessive polycystic
kidney disease and hypertension), and biopsy results that indicated the tumor might be insensitive to chemotherapy, the parents
elected not to proceed with neoadjuvant chemotherapy. The patient was treated with surgical resection and MENK/LDN, and is currently
at more than five years disease-free survival.
Multiple
clinical trials have been performed by Dr. Jill Smith and her colleagues at the Penn State University School of Medicine. A total
of five advance cancer studies have been conducted with MENK via intravenous infusion or subcutaneous injection. Three studies
were conducted in patients with advanced pancreatic cancer, one study in patients with hepatocellular carcinoma, and one study
in patients with advanced head and neck cancer. Across the five studies, MENK therapy has been observed to be safe with limited
toxicity when given to adults with advanced cancer. The patients with pancreatic cancer had failed prior chemotherapy regimens
and were either treated with MENK or were entered into a hospice program. Clinical benefits were experienced by 53% of MENK-treated
patients, whereas historical controls with similarly advanced disease had only 23.8% and 4.8% for gemcitabine and 5-fluorouracil
(5-FU), respectively. Of the MENK- treated patients surviving more than eight weeks, 62% showed either a decrease or stabilization
in tumor size by computed tomography. The median survival time for the MENK-treated patients was three times that of the untreated
hospice patients (65.5 versus 21 days, p < 0.001). No adverse effects on hematologic or chemistry parameters were noted, and
quality of life surveys suggested improvement with MENK.
The
use of MENK therapy at earlier stages of disease or in combination with chemotherapeutic agents may further improve the outcome
of these and other very aggressive malignancies.
Our
Clinical Trial Program for IRT-101/MENK
To
date MENK has been administered in multiple indications including a range of cancers (including pancreatic, hepatocellular, and
head and neck) and viral diseases, such as HIV/AIDS. When utilized for such indications, the typical dose administered to adults
for efficacy while not compromising safety has been 150-250 µg/kg. Dosages up to 400 µg/kg have been used in other
trials without toxicity in certain indications.
We
will rely on available information and historical data to support the Phase II/III clinical trials and the ultimate filing of
the NDA to the FDA. Clinical safety data has been established from multiple Phase I/II studies conducted under IMUN’s INDs
and initial toxicology studies that have been completed.
To
support the NDA filing, we plan to conduct the following studies:
●
|
Long-term
toxicology studies in two species;
|
●
|
Phase
I, PK assessment of MENK in healthy adult volunteers;
|
●
|
Phase
II, dose-response study in oncology patients; and
|
Phase
III, randomized, double-blind study in oncology patients is to be anticipated in Q2 2018 in Kenya and by Q4 of 2018 in the United
States.
International
Drug Development Plan
Nigeria
The
Company, through its wholly owned subsidiary TNI BioTech International., completed a 90-day bridging trial for the treatment of
patients with HIV/AIDS in Nigeria in 2017. The trial consisted of a total of one hundred and fifty patients of both genders between
the ages of 18-60, each of whom was infected with the human immunodeficiency virus (HIV). The trial was undertaken at the State
Specialist Hospital in Asubiaro, Osogbo, Osun State, Nigeria and the primary objective was to confirm that Lodonal
TM
has a beneficial effect on the immune system of immune deficient patients and that it is safe. The trial separated the patients
into a Control (placebo) Group and a Treatment Group (which was administered Lodonal
TM
). The efficacy of increasing
CD4 count [cell/mm
3
] between Day-1 and Day-90 by at least 25% was set as the criteria for demonstrating beneficial
effect on the immune system. Safety was demonstrated through quality of life assessment and vitals both of which were not adversely
affected. Treatment Group patients were given a daily dose of 4.5-mg/kg of Lodonal™.
The
results yielded an average increase of 44% increase in CD4 count in the Lodonal Treatment Group compared to an 11% increase in
the Control Group. Additionally, there were no reported opportunistic infections and no toxicity levels uncovered. Liver function
remained normal and there was no negative impact on other systems based on blood results. No sleep disturbance or vivid dreams
were present enough to justify trial discontinuation. No appreciable adverse CNS, renal, cardiac, hepatic, musculoskeletal, hematopoietic
side effects were present.
In
May 2017, the Company received approval from the National Agency for Food and Drug Administration and Control of Nigeria (“NAFDAC”)
to market and distribute LodonalTM in Nigeria. The approval is for a one-day Immune System Regulator for the management of HIV/AIDS
Malawi
The
Company, through its wholly owned subsidiary TNI BioTech International, received permission from the Pharmacy, Medicines and Poisons
Board (PMPB) and The College of Medicine, University of Malawi to initiate a clinical trial for a Single Visit Approach to Cervical
Cancer Prevention in the Republic of Malawi. The PMPB issued drug approval to import the drug in 2016 for the trial.
The
Malawi Clinical Trial’s primary endpoint includes Safety, Acceptability, and Feasibility of a Single Visit Approach to Cervical
Cancer Prevention in patients. (Trial number: VIA-LDN-401 -0 I). The secondary objective is to determine life extension; to improve
the immune system of HIV and Cancer positive patients by starting treatment with LDN (“Lodonal
TM”)
and
to ensure marked improvement in Clinical benefit based upon parameters that reflect the overall well- being of the patient, including
Pain control, performance status, and body weight under the supervision of Dr. Frank Taulo, Dr. Gladys Gadama, Dr. Effie Chipeta
as Principal Investigators. The recruitment of study participants, testing and follow up is still on-going. The first evaluation
report from the doctors involved is expected by the end of the second quarter as per the study protocol
.
The
Company intends to initiate a number of additional trials in Africa in the next 12 months, which will include trials as an adjunct
to chemotherapy in Kenya and Ghana and HIV/AIDS in Malawi.
Competitive
Advantage
The
Company believes many of the same advantages of our therapies apply to both the US market as well as the African market. Lodonal
TM
could provide the first affordable, non-toxic approach for treatment of immune dysfunction, cancer and chronic inflammatory
state.
Some
of the Competitive Advantages and Benefits of Lodonal
TM
include the following:
Lower
production costs and sales price of treatments
Today
the majority of the drugs under development are both more expensive and more toxic. We do not believe this is the right way to
move forward. Biologic agents cost between $12,000 and $150,000 a year.
Lodonal
TM
/
IRT-103 can be manufactured and delivered in Emerging Nations for under $.90 cents a day and we estimate a price of $3,600 a year
in developed country underwritten to $10 to $15 per month. When costs are not underwritten, the Company will provide Lodonal
TM
to patients for $30 a month.
Lodonal™
should be able to substantially reduce health care costs for a number of reasons, including:
●
|
Lodonal™
can provide a new, non-toxic inexpensive method of medical treatment by mobilizing the natural defenses of one’s own
immune system. It can be used as a stand-alone therapy or an adjunct to existing immunosuppressive therapies by reducing the
toxic side effects of immunosuppressive drugs.
|
●
|
Lodonal™
does not require the medical supervision of antiretroviral or immunosuppressive therapies.
|
●
|
Lodonal™
has not been found to have toxic side effects as it is an immunomodulator and activates and re-balances the immune system.
|
●
|
Lodonal™
as an immunomodulator has a way of helping what is now referred to as “non-AIDS morbidity”, and, in the popular
press, “premature aging”.
|
●
|
Lodonal™
studies show that the drug enhances maturation of bone marrow dendritic cells (BMDCs).
|
●
|
Lodonal™
studies show it does not compromise the immune system.
|
●
|
Lodonal™
has been shown to reduce the number of opportunistic infections with HIV/AIDS.
|
●
|
Lodonal™
may improve compliance. When used correctly, antiretroviral therapy (ART) is effective. However, according to recent studies,
ART regimens require 70–90% adherence in order to be effective. Sustaining adherence to ART over the long term requires
accurate and consistent monitoring, and this is a particular challenge for countries in sub-Saharan Africa.
|
Recent
Accomplishments
In
May 2017, the Company received approval from the National Agency for Food and Drug Administration and Control of Nigeria (“NAFDAC”)
to market and distribute LodonalTM in Nigeria. The approval is for a one-day Immune System Regulator for the management of HIV/AIDS,
which is based on the results of the Company’s 90-day bridging trial in Nigeria. The first shipments of product under this
approval took place in February 2018.
In
September 2017, the Company became registered under the U.S. Government’s System for Award Management to sell Lodonal
TM
to Nigeria through the United States Agency for International Development (“USAID”) and UNAIDS. At the same
time, the Company and AHAR filed for regulatory approval of the use of Lodonal
TM
with the National Agency for the Control
of AIDS in Nigeria (“NACA”). Once NACA approves the use of Lodonal
TM
as a treatment for AIDS, it will be
able to purchase Lodonal
TM
directly from the Company and AHAR.
In
addition to the work with NACA, USAID and UNAIDS, AHAR and the Company are moving forward with applications to NAFDAC to permit
the sale of Lodonal™ in Nigeria for additional indications. We expect to submit those applications in the first quarter
of 2018. Those indications include the use of the drug as an adjunct to treatment of chemotherapy, opportunistic infections and
cancer.
In
September of 2016, the Company retained the services of GLOBALMEDLINE SARL in Senegal to assist the drug registration of Lodonal™
in Senegal for HIV/AIDS and Cancer. The filing in Senegal is part of the Company’s program to register Lodonal™ throughout
the francophone (French-speaking) countries in Africa using our approval in Senegal to fast track the process.
The
Company is currently in the process of filing in Kenya, Ghana, Liberia, Mali, Senegal and Uganda. We expect to file in additional
countries in 2018. The Company expects to have responses from regulatory authorities in Kenya by the end of the second quarter
of 2018.
The
Company has been assigned three provisional patent applications in the United States: No. 62/296,759, a Method for Inducing a
Sustained Immune Response; No. 62/379,272, a Method for Treating and Preventing Protozoan Infection; and No. 62/450,635, Methods
and Compositions Useful for Treating Cancer Application. The Company expects to file additional patent applications in the U.S.
in the coming months. Our intellectual property portfolio includes biotech assets acquired either through acquisition or exclusive
licensing. The Company converted the provisional patent for method for inducing immune response into a US patent, and a PCT application
was filed on February 17, 2017 under number PCT/IB2017/000124.
The
Company’s Board has authorized continued discussions with a number of potential partners in Far East as well as discussion
with drug development partners in both the US and EU.
Patent
License Agreements
On
August 13, 2012, the Company signed an exclusive License Agreement with Ms. Jacqueline Young (the “Young Agreement”)
for the intellectual property developed by Dr. Bernard Bihari relating to treatments with opioid antagonists such as naltrexone
and Met-enkephalin for a variety of diseases and conditions including malignant lymphoma, chronic lymphocytic leukemia, Hodgkin’s
lymphoma, and non-Hodgkin’s lymphoma, chronic herpes virus infections, chronic herpes viral infections such as chronic genital
herpes caused by the herpes simplex virus Type 2 and chronic infections due to the Epstein-Barr virus and a treatment method for
humans infected with HTLV-III (AIDS) virus, including patients clinically diagnosed as suffering from AIDS and those suffering
from AIDS-related complex (ARC). The Bihari patents were acquired in exchange for 540,000 shares of the Company’s common
stock with a fair value of $972,000 and assumed liabilities of $400,000, which was payable to Ms. Young over a twenty-four month
period in equal installments to reimburse her for the costs of a New York City office in accordance with the Young Agreement.
The cost of the patent totaled $1,372,000. Additionally, the Company will pay the licensor a royalty payment of 1% of gross sales.
Due to the fact that there have been no sales of licensed product to date, the Company has been required, since the beginning
of 2015, to make a minimum royalty payment of $100,000 annually to the licensor. The Young Agreement is valid for the life of
the patents and expires on a country by country basis in each country where patent rights exist, upon the expiration of the last
to expire patent in each country or in the event the patent in such country is held to be invalid and/or unenforceable (by a court
or government body of competent jurisdiction) or admitted to be invalid or unenforceable. Additionally, the Company can cancel
the Young Agreement upon 120 days’ written notice and shall pay all royalties and fees that have accrued under the Young
Agreement. We have the exclusive rights to the intellectual property; however, Ms. Young retains a right to practice the patents
licensed under the Young Agreement solely for noncommercial, academic research purposes.
The
Young Agreement allows for the sub-license of the Bihari intellectual property from the Company to Cytocom. In accordance with
the Agreement, In December 2014 the Company assigned the sub-license to Cytocom. In 2017, Ms. Young wrote to the Company alleging
breach of the Young Agreement. The Company has responded denying any breach. Since inception of the Young Agreement, the Company
has made payments to Ms. Young in excess of US$650,000, which it believes meets the requirements of the Young Agreement.
On
December 24, 2012, the Company signed an agreement for the acquisition of patent rights (the “Smith Agreement”) for
the intellectual property of Dr. Jill Smith and LDN Research Group, LLC (collectively, the “Licensor Parties”), whose
members are Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Moshe Rogosnitzky and orphan drug designation by the FDA to a novel
late-stage drug, trademarked “LDN,” for the treatment of Pediatric Crohn’s disease. The patent covers methods
and formulations for treatment of the inflammatory and ulcerative diseases of the bowel, using naltrexone in low doses as an opioid
antagonist. These patents were acquired in exchange for 300,000 shares of our common stock with a fair value of $2,715,000 and
payment of $165,384 (consisting of a $100,000 initial license fee and payment of $65,384 of expenses), which totaled $2,880,384.
The
Smith Agreement requires the Company to (i) use commercially reasonable efforts to develop, commercialize, market and sell licensed
products in a manner consistent with a business plan, (ii) expend a minimum amount of funds per annum to develop and commercialize
licensed products as soon as practicable, (iii) obtain all requisite regulatory approvals needed to use or sell licensed products
in the field of use, and (iv) make the first commercial sale of a licensed product by March of 2017. As of December 31, 2017,
the Company had not made a commercial sale of licensed product. Under the Smith Agreement, if the licensors determine that the
Company has not fulfilled its obligations, they may furnish the Company with written notice of such determination, in which case
the Company must either fulfill the obligation or negotiate a mutually acceptable revised commitment. As of the date of the filing
of this Form 10-K, the licensors had not provided any such notice of determination under the agreement.
The
Company is required to pay an annual license fee, an annual running royalty on net sales of each licensed product or a minimum
royalty, whichever is greater, and a sublicense fee on payments received by the Company from sublicensees. The Company has an
exclusive, worldwide license to make, have made, use, lease, import, offer for sale and sell licensed products and to use the
method under the patent rights. The Smith Agreement will terminate on the expiration or abandonment of the last patent to expire
or ten years after the sale of the first licensed product. The Company may terminate the Smith Agreement upon 90 days’ written
notice, provided all sublicenses are terminated and all amounts due and owing are paid to the Licensor Parties. The Licensor Parties
may terminate the agreement ten days’ after notice to the Company if the Company is ten days late in payment or there is
a breach that remains uncured for ten days after written notice of such breach.
The
Company is also required to pay milestone payments after substantial achievement of certain milestone events for each licensed
product including payment: upon initiation of each Phase III trial; upon positive completion of each Phase III clinical trial
of the therapeutic use of an LDN compound in the field of use; when a New Drug Application (“NDA”) is accepted for
review by the FDA; and when FDA approval to market the NDA is approved. The Company will issue shares upon reaching certain milestones
including upon the first dosing of the first patient in a Phase III clinical trial for each licensed product, upon the first sale
of each licensed product, and upon the achievement of a set dollar amount in cumulative sales for each licensed product covered
by NDAs.
As
part of the Smith Agreement, the Company has the right to apply to the FDA for the transfer of the orphan drug status for the
use of naltrexone for the treatment of pediatric Crohn’s disease and ulcerative colitis, the Investigation New Drug Application
(“IND”), and the right to acquire the relevant clinical data set from Dr. Jill Smith. Dr. Jill Smith made arrangements
to transfer the IND to the Company as well as the relevant clinical data set, and the FDA has acknowledged that the Company is
now the sponsor for this IND.
On
September 24, 2014, the Company and the Licensor Parties jointly agreed to terminate the Smith Agreement, and in place thereof,
have the Licensor Parties grant a similar license in their patent rights to Cytocom Inc. pursuant to a Patent License Agreement
between the Licensor Parties, Cytocom Inc. and the Company with substantially similar terms as set forth in the Smith Agreement.
Pursuant to this agreement, the Company issued 1,000,000 shares of its common stock valued at $270,000 to the Licensor Parties
and the Company guaranteed the obligations of Cytocom Inc. to the Licensor Parties under the agreement.
On
January 18, 2013, the Company signed an exclusive licensing agreement with The Penn State Research Foundation to license all of
the intellectual property developed by Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Dr. Jill P. Smith for the treatment of
cancer titled “Opioid Growth Factor and Cancer” and “Combination Therapy with Opioid Growth Factor and Taxanes
for the Treatment of Cancer” (the “Foundation Agreement”).
The
Foundation Agreement requires the Company to: (a) use commercially reasonable efforts to develop, commercialize, market and sell
licensed products in a manner consistent with a business plan; (b) expend a minimum amount of funds per annum to develop and commercialize
licensed products as soon as practicable; (c) obtain all requisite regulatory approvals needed to use or sell licensed products
in the field of use; and (d) make the first commercial sale of a licensed product by December 31, 2016. As of December 31, 2017,
the Company had not made a commercial sale of licensed product. Under the Foundation Agreement, if the licensor determines that
the Company has not fulfilled its obligations, it may furnish the Company with written notice of such determination, in which
case the Company must either fulfill the obligation or negotiate a mutually acceptable revised commitment. As of the date of the
filing of this Form 10-K, the licensor had not provided any such notice of determination under the agreement.
The
Foundation Agreement provides that the Company must pay to the licensor an initial license fee, a license maintenance fee on each
anniversary of the effective date of the Foundation Agreement, and an annual running royalty on net sales for each licensed product
or a minimum royalty, whichever is greater. In addition, the Company must pay a sublicense fee on payments received by the Company
from sublicensees.
The
Foundation Agreement also requires the Company to make payments upon the achievement of certain milestone events including: initiation
of each Phase II trial; initiation of each Phase III trial; when the NDA is accepted for review by the FDA; and when FDA approval
to market is approved. The Company must also issue shares upon certain milestones including upon the first dosing of the first
patient in a Phase II clinical trial for each licensed product, upon the first dosing of the first patient in a Phase III clinical
trial for each licensed product, upon the first sale of each licensed product, and upon the achievement of a set dollar amount
of cumulative sales for each licensed product covered by NDAs.
The
Foundation Agreement terminates on the expiration or abandonment of the last patent to expire or become abandoned. The Company
may terminate the Foundation Agreement at any time upon 60 days’ prior written notice and ceasing to make and sell all licensed
products, the termination of all sublicenses and payment of all monies owed under the Foundation Agreement. The licensor may terminate
the agreement 30 days after notice to the Company if the Company is 30 days late in payment or a breach that remains uncured for
45 days after written notice of such breach.
The
Penn State Research Foundation has agreed to make the assignment of the Company’s rights to Cytocom under the Foundation
Agreement effective only when Cytocom is fully funded and able to meet its financial obligations independently. Until such time,
the Company is obligated to make all payments and perform all other obligations owed under the Foundation Agreement on behalf
of Cytocom
In
May of 2013, the Company executed a Patent License Agreement with Professor Fengping Shan (the “Shan Agreement”) pursuant
to which it obtained exclusive rights to develop and commercialize the licensed technology. The licensed technology is the intellectual
property developed and owned by Professor Shan (i) relating to the treatment of a variety of diseases and conditions with MENK
including multiple forms of lymphoma and cancer and (ii) a treatment method for humans infected with the HLTV-III (AIDS) virus
including AIDS and AIDS related complex (ARC). The licensed technology includes the methods and formulations for these treatments
including all INDs, communications with regulatory agencies, patient data, and letters relating to these treatments. The licensed
technology also includes certain patents developed by Professor Shan. Under the Shan Agreement, the Company must issue 500,000
shares to Professor Shan upon final transfer of the licenses, and reimburse Professor Shan for all out of pocket expenses in connection
with the patents. The Company will pay Professor Shan a running royalty on gross sales subject to decreases if third party intellectual
property is needed to complete such sale or product. The Shan Agreement lasts for the duration of each of the licensed patents
however the Company may terminate the Shan Agreement on 120 days’ written notice to Professor Shan.
On
August 6, 2014, Professor Fengping Shan executed an Assignment pursuant to which he transferred to the Company his entire right,
title and interest in and to the licensed patents under the Shan Agreement and CN 201210302259 Application of combination of low-dose
naltrexone and methionine-enkephalin to preparation of anti-cancer drug for the consideration of 500,000 shares of common stock
valued at $140,000. The Company has not assigned any of the patents in China to Cytocom.
Patents
Overview:
Patent:
|
|
Title:
|
|
Expiration:
|
|
License/Assigned:
|
|
Product
or Use:
|
|
|
|
|
|
|
|
|
|
U.S.
Patent Number
6,586,443
(Related
to US
5,356,900,
5,013,739 and 4,888,346 – all expired)
(No
related foreign
patents)
|
|
Multiple
sclerosis in a human patient is
treated
by the administration
preferably
via a pharmacologically effective route of an essentially pure opiate receptor antagonist.
|
|
January
3, 2019
|
|
Exclusive
License
from
Jacqueline
Young.
|
|
IRT-103
(LDN)
|
U.S.
Patent Number
6,384,044
(No
related foreign
patents)
|
|
Cancer
of the prostate
in
human male patients even at an advanced state with metastasis to other organs is preferably
treated by administration.
|
|
November
8,
2019
|
|
Exclusive
License
from
Jacqueline
Young.
|
|
IRT-103
(LDN)
|
|
|
|
|
|
|
|
|
|
U.S.
Patent Number
6,288,074
(No
related foreign
patents)
|
|
Lymphoproliferative
syndrome, including such diseases as malignant lymphoma, chronic lymphocytic leukemia,
Hodgkin’s lymphoma, and non-
Hodgkin’s
lymphoma,
are
treated in human patients via administration.
|
|
November
15,
2019
|
|
Exclusive
License
from
Jacqueline
Young.
|
|
IRT-103
(LDN)
|
|
|
|
|
|
|
|
|
|
U.S.
Patent Number
6,136,780
(Related
to US
6,737,397)
(No
related foreign
applications)
|
|
Control
of cancer
growth
through the interaction of [Met5] - Enkephalin and the
zeta
(s) receptor.
|
|
May
17, 2021
|
|
Exclusive
License:
Penn
State University.
|
|
IRT-101
(MENK)
and
IRT-103 (LDN)
|
|
|
|
|
|
|
|
|
|
U.S.
Patent No.
6,737,397
(Related
to US
6,136,780)
(No
related foreign
applications)
|
|
Control
of cancer
growth
through the interaction of [Met5]-
Enkephalin
and the
zeta
receptor.
|
|
May
17, 2021
|
|
Exclusive
license:
Penn
State University.
|
|
IRT-101
(MENK)
and
IRT-103 (LDN)
|
|
|
|
|
|
|
|
|
|
U.S.
Patent No.
7,879,870
(US
PgPub
2008/0015211)
(No
related foreign
patents)
|
|
Treatment
of inflammatory and ulcerative diseases of the bowel with opioid antagonists.
|
|
February
1, 2028
|
|
License
to Cytocom
Inc.:
Dr. Jill Smith and LDN Research Group, LLC.
|
|
IRT-103
(LDN)
|
|
|
|
|
|
|
|
|
|
Israeli
Patent mentioned in license
|
|
Treatment
of inflammatory and ulcerative diseases of the bowel with opioid antagonists.
|
|
Pending
|
|
License
to Cytocom
Inc.:
Dr. Jill Smith and LDN Research Group, LLC.
|
|
Treatment
of Crohn’s disease
|
|
|
|
|
|
|
|
|
|
U.S.
Application Number: 11/061,932
(Claims
Priority to
US60/548,021)
Canadian
Application
Number:
2,557,504
(Pending)
|
|
Combinatorial
therapies
for the treatment of neoplasias using the opioid
growth
factor receptor.
|
|
Pending
application
|
|
Exclusive
license: Penn State University.
|
|
IRT-101
(MENK)
|
U.S.
Patent No.
8,003,630
(Application
Number:
11/510,682)
(US
PgPub
2007/0053838)
(Claims
Priority to
US60/548,021)
|
|
Combinatorial
therapies for the treatment of neoplasias using the opioid growth factor receptor.
|
|
May
22, 2028
|
|
Exclusive
license: Penn State University.
|
|
IRT-101
(MENK)
|
|
|
|
|
|
|
|
|
|
U.S.
PgPub 2013/0084242 A1
(Application
Number: 13/660,129)
(Claims
Priority to US60/548,021)
Patent
Cooperation
Treaty
(PCT)
application:
PCT/US2010/030967
(Claims
priority to
US61/173,351)
|
|
Combinatorial
therapies for the treatment of neoplasias using the opioid growth factor receptor.
|
|
Pending
|
|
Exclusive
license: Penn State University.
|
|
IRT-101
(MENK)
|
|
|
|
|
|
|
|
|
|
US
7,807,368
(US
PgPub 2008-
0146512
A1)
(No
related foreign
applications)
|
|
Cyclin-dependent
kinase
inhibitors as targets for opioid
growth
factor
treatment.
|
|
October
4, 2027
|
|
Exclusive
license:
Penn
State University.
|
|
IRT-101
(MENK)
|
US
7,576,180
(Claims
priority to
US60/106,879)
(There
is a related PCT application
PCT/US1999/025802,
claiming
priority to the US60/106,879, but no
National
Phase
applications
were filed)
|
|
Opioid
growth factor receptors.
|
|
August
17, 2026
|
|
Exclusive
license: Penn State University.
|
|
IRT-101
(MENK)
|
|
|
|
|
|
|
|
|
|
US
7,122,651
(No
related foreign
applications)
|
|
Novel
nucleic acid molecules encoding opioid growth factor receptors.
|
|
October
17, 2023
|
|
Exclusive
license:
Penn
State University.
|
|
Treatment
of cancer
|
US
7,517,649
(US
PgPub
20060073565)
(No
related foreign
applications)
|
|
Methods
of detecting opioid growth factor receptor (OGFr) in tissue.
|
|
April
13, 2026
|
|
Exclusive
license: Penn State University.
|
|
IRT-101
(MENK)
|
CN
200910011030
(No
related U.S.
applications)
|
|
Shan
Fengping, Nikola Polonikov, Lu Changlong:
Application
of
naloxone
and composition thereof in preparing drug for treating cancer. Shan Fengping: August
26, 2009.
|
|
August
23, 2026
|
|
Assigned
by Fengping Shan.
|
|
IRT-101
(MENK)
and
IRT-103 (LDN)
|
|
|
|
|
|
|
|
|
|
CN
200710051586
(No
related U.S.
applications)
|
|
Huang
Jianyin, Zhang Ding, Shan Fengping, Luo Zhinong: Application of methionine enkephalin
in
preparing human or animal vaccination. Huang Jianyin:
August,
20 2008.
|
|
August
20, 2025
|
|
Assigned
by Fengping Shan.
|
|
IRT-101
(MENK)
|
|
|
|
|
|
|
|
|
|
CN
200710158742
(No
related U.S. applications)
|
|
Shan
Fengping, Lv Changlong, Nikola Polonikov, Huang Jianyin: Application of compounds Methionine Enkephalin for preparing medicine
for curing blood medulla hematopoietic system cancer. Dan Fengping: May 14, 2008.
|
|
May
13, 2025
|
|
Assigned
by Fengping Shan.
|
|
IRT-101
(MENK)
|
CN
200610046249
(No
related U.S. applications)
|
|
Shan
Fengping, Lv Changlong, Huang Jianyin, Zhang Ding, Luo Zhinong: Aerosol containing Met-Enkephalin. Shan Fengping: November
15, 2006.
|
|
November
14, 2023
|
|
Assigned
by Fengping Shan.
|
|
IRT-101
(MENK)
|
|
|
|
|
|
|
|
|
|
CN
200310120896
(No
related U.S. applications)
|
|
Shan
Fengping, Li Li: Integrated health food for regulating human body immune balance. Liaoning Academy of Microorganism Sciences:
July 6, 2005.
|
|
July
5, 2022
|
|
Exclusive
license: Nicholas Plotnikoff and Fengping Shan.
|
|
Oncology
treatments
and
cancer treatment
|
|
|
|
|
|
|
|
|
|
WO
2007/067753
(PCT/US2006/046925
|
|
Huang
John, Chang Ding, Lo Shi-Lung, Shan Fengping: Methods of reducing side effects in cancer therapy. Penta Biotech: June 14,
2007.
|
|
Pending
|
|
Exclusive
license: Fengping Shan.
|
|
IRT-101
(MENK)
|
CN
200510019964
|
|
Huang
Jianyin, Zhang Ding, Luo Zhinong, Shan Fengping: Use of Methionine Enkephalin in preparation of medicine for reducing toxic
side effects of chemical or radioactive therapy. Huang Jianyin: August 9, 2006.
|
|
August
8, 2023
|
|
Exclusive
license: Fengping Shan.
|
|
IRT-101
(MENK)
|
|
|
|
|
|
|
|
|
|
US
PgPub 2003/0148942 A1
(Application
Number: 10/146,999)
Our
Docket #6463-0101PUS1
(Claims
Priority to US60/291,237)
|
|
Methods
for inducing sustained immune response.
|
|
May
16, 2022
|
|
Assigned
and licensed: Nicholas Plotnikoff.
|
|
IRT-101
(MENK)
|
|
|
|
|
|
|
|
|
|
Russian
Application 2003136161/14
(Claims
Priority to US60/291,237)
|
|
Methods
for inducing sustained immune response.
|
|
May
16, 2022
|
|
Assigned
and licensed: Nicholas Plotnikoff.
|
|
IRT-101
(MENK)
|
|
|
|
|
|
|
|
|
|
PCT
application PCT/US2002/018529
(Claims
priority to the US60/291,237)
|
|
Methods
for inducing sustained immune response.
|
|
May
16, 2022
|
|
Assigned
and licensed: Nicholas Plotnikoff.
|
|
IRT-101
(MENK)
|
National
Phase entries filed off the PCT/US2002/018529
China
02814327.2
(Pending)
EP
App 2002746503 Granted: November 29, 2006
India
Patent No. 220265 (App 01627/KOLNP/2003)
Japan
App Withdrawn
|
|
Methods
for inducing sustained immune response.
|
|
May
16, 2022
|
|
Assigned
and licensed: Nicholas Plotnikoff.
|
|
IRT-101
(MENK)
|
|
|
|
|
|
|
|
|
|
China
Patent 200810229085
|
|
The
invention belongs to the technical field of treating tumors by immunization therapy. In particular, a method for treating
intestinal cancer and pancreatic cancer cells by Methionine Enkephalin under conditions of in-vivo injection and in-vitro
cell culture so as to achieve the treating aim.
|
|
March
21, 2026
|
|
Assigned
by Fengping Shan.
|
|
IRT-101
(MENK)
|
Employees
As
of December 31, 2017, the Company had 4 full time employees.
Reports
to Security Holders
Our
common stock is registered under the Securities Exchange Act of 1934 and we are required to file current, quarterly and annual
reports and other information with the SEC. You may read and copy any document that we file at the SEC’s public reference
facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its
public reference facilities. Our SEC filings are available to you free of charge at the SEC’s web site at www.sec.gov. We
are an electronic filer with the SEC and, as such, our information is available through the Internet site maintained by the SEC
that contains reports, proxy and information statements and other information regarding issuers that file electronically with
the SEC. This information may be found at www.sec.gov and posted on our website at www.immunetherapeutics.com.
Research
and Development
Our
research and development (“R&D”) organization focuses primarily on new uses for the opioid-related immuno-therapies,
such as LDN and MENK. These therapies stimulate the immune system in such a way that provides the potential to treat a variety
of diseases that have abnormalities in the immune system.
Our
R&D priorities include development of MENK IRT-101, a small synthetic pentapeptide that is naturally occurring in the body,
and LDN IRT-103, an opioid receptor antagonist. Our pipeline provides two therapies with an extremely wide range of indications
that can be pursued. Both molecules have the ability to stimulate and/or regulate the immune system in order to treat a variety
of autoimmune diseases including multiple sclerosis, immune disorders such as Crohn’s disease, cancer, and viral infections
such as HIV/AIDS.
Our
R&D is overseen and managed internally, working with individuals, universities, and Contract Research Organizations (“CROs”)
in order to utilize patents that we have licensed or acquired since our inception. We continue to seek to expand our pipeline
by reviewing other compounds, technologies or capabilities. We also seek out promising compounds and innovative technologies developed
by third parties to incorporate into our discovery and development processes or projects.
Drug
discovery and development is time-consuming, expensive and unpredictable. According to the Pharmaceutical Research and Manufacturers
of America (PhRMA), out of 5,000-10,000 screened compounds, only 250 enter preclinical testing, five enter human clinical trials
and one is approved by the FDA. The process from early discovery or design to development to regulatory approval can take more
than 10 years. Drug candidates can fail at any stage of the process, and candidates may not receive regulatory approval even after
many years of research.
As
of December 31, 2015, we had two compounds (IRT-101 and IRT-103) in research and development. In 2015 our development programs
focused on both compounds, one in oncology and one in Crohn’s disease; which we are expecting to move into Phase II clinical
trials.
The
following table provides information about notable regulatory actions by, and filings pending with the FDA and regulatory authorities
in the EU, as well as additional indications and new drug candidates in late-stage development.
NEW
DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT
|
CANDIDATE
|
INDICATION
|
REGULATORY
ACTIONS
|
IRT-101
|
Pancreatic Cancer
|
End-of-Phase 1 Meeting with FDA Complete 3Q
2013
|
IRT-103
|
Crohn’s Disease
|
Type
C Meeting with FDA Complete 2Q 2013
Scientific
Advice with EMA Complete 1Q 2014
Type
C meeting in January 2018 with the FDA to discuss clinical protocol design and to seek guidance for the clinical development
program in the treatment of adult and pediatric patients with Crohn’s disease using a 505(b)(2) pathway to support
an NDA.
|
The
Company expects it will incur future research and development expenditures in the next 12 months through Cytocom. Cytocom plans
to conduct a Phase III trial for patients with Moderate to Severe Crohn’s Disease age 12 and over as an adjunct
therapy to the standard of care and a phase IIb/III trial for Mild to Severe Crohn’s Disease in age 2 to 11. The cost of
both trials would be $16,500,000. If the trials do not commence before the end of 2018, the Company will be required to make
a payment of $100,000 in December 2018 under its license agreements. In prior years, the Company has been able to raise funds
through sales of notes payable, and it expects to do the same for the payment due in 2018. With its own funding, Cytocom will
be responsible for the development of IRT-101 MENK for pancreatic cancer.
Government
Regulations
United
States
The
research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug products are
subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries with regulations
differing from country to country. Neither we nor our collaboration partners are permitted to market our drug candidates in the
United States until we receive approval of a New Drug Application (“NDA”) from the FDA. Neither we nor our collaboration
partners have submitted an application for or received marketing approval for any of our drug candidates. Obtaining approval of
an NDA can be a lengthy, expensive and uncertain process.
Prior
to receiving approval to commercialize any of our drug candidates in the United States or abroad, we and our collaboration partners
must demonstrate with substantial evidence from well controlled clinical trials, and to the satisfaction of the FDA and other
regulatory authorities abroad, that such drug candidates are safe and effective for their intended uses. Results from preclinical
studies and clinical trials can be interpreted in different ways. Regulatory approval of an NDA or NDA supplement is not guaranteed,
and the approval process is expensive and may take several years.
Before
a drug can be tested in people, the sponsor (in this case the Company) performs laboratory and animal tests to discover how the
drug works and whether it’s likely to be safe and effective in humans. As LDN and MENK have previously been used in clinical
trials, this phase of development was not required by the Company to initiate clinical trials under its applications.
Next,
a series of tests in people (i.e. clinical trials) is begun to determine whether the drug is safe when used to treat a disease
and whether it provides a real health benefit. The clinical phase typically starts at Phase 1 and progresses to Phase 3. The Company
will have an abbreviated list of clinical trials that need to be conducted due to published literature on previously conducted
studies, as well as utilizing the approval of naltrexone previously at 50 mg by the FDA.
Upon
completion of the clinical trials, the Company will send the FDA and/or the EMA the evidence from these tests to prove the drug
is safe and effective for its intended use (New Drug Application (NDA) in the US or Marketing Authorization Application in the
EU). The regulatory bodies will review these data and determine if the sponsor has approval to market the product at the specified
dose(s) and formulation(s) for the specified indication(s) (
http://www.fda.gov/Drugs/DevelopmentApprovalProcess/default.htm)
.
Once
regulatory approval has been granted, the approved product and its manufacturer are subject to continual review by the FDA and/or
non-U.S. regulatory authorities. Any regulatory approval that we or our collaboration partners receive for our drug candidates
may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially
costly post-marketing follow-up studies to monitor the safety and efficacy of the product. In addition, if the FDA and/or non-U.S.
regulatory authorities approve any of our drug candidates, we will be subject to extensive and ongoing regulatory requirements
by the FDA and other regulatory authorities with regard to the labeling, packaging, adverse event reporting, storage, advertising,
promotion and recordkeeping for our products. In addition, manufacturers of our drug products are required to comply with current
cGMP regulations which include requirements related to quality control and quality assurance, as well as the corresponding maintenance
of records and documentation. Further, regulatory authorities must approve these manufacturing facilities before they can be used
to manufacture our drug products, and these facilities are subject to continual review and periodic inspections by the FDA and
other regulatory authorities for compliance with cGMP regulations.
European
Union
We
intend to seek distribution and marketing partners for IRT-101 (MENK) and IRT-103 (LDN) in the European Union (“EU”).
To market our future products in the European Economic Area (“EEA”) (which is comprised of the 27 member states of
the EU plus Norway, Iceland and Liechtenstein) and many other foreign jurisdictions, we must obtain separate regulatory approvals.
More concretely, in the EEA, medicinal products can only be commercialized after obtaining a Marketing Authorization (“MA”).
|
●
|
The
Community MA is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee
for Medicinal Products for Human Use of the EMA, and is valid throughout the entire territory of the EEA. The Centralized
Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products,
and medicinal products indicated for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and
viral diseases. The Centralized Procedure is optional for products containing a new active substance not yet authorized in
the EEA, or for products that constitute a therapeutic, scientific or technical innovation or which are in the interest of
public health in the EU.
|
|
●
|
National
MAs, which are issued by the competent authorities of the member states of the EEA and only cover their respective territory,
are available for products not falling within the mandatory scope of the Centralized Procedure. Where a product has already
been authorized for marketing in a member state of the EEA, this National MA can be recognized in another member state through
the Mutual Recognition Procedure. If the product has not received a National MA in any member state at the time of application,
it can be approved simultaneously in various member states through the Decentralized Procedure.
|
Under
the procedures described above, before granting the MA, the EMA or the competent authorities of the member states of the EEA make
an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and
efficacy.
Our
IND is being conducted per 21 Code of Federal Regulations Title 21, Part 312. In addition, we follow ICH guidelines, including
good clinical practices (ICH E6) and current good manufacturing practice (ICH Q7) throughout the development process. After completion
of Phase III clinical trials, the Company will file our NDA for LDN (IRT-103) as a 505(b)(2) application. IRT-103 products will
follow the 505(b)(2) pathway relying on the Reference Listed Drug (RLD) REVIA to support the safety of the product. Efficacy will
be submitted by the Company directly to the LDN NDA. IRT-101 products will follow the traditional approval pathway as a Reference
Listed Drug (“RLD”, a drug used to compare effects and safety with FDA trial drug) is not available for MENK. However,
published literature will support this program.
Nigeria
NAFDAC
is the equivalent in Nigeria of the FDA. It undertakes registration of food, drugs, medical devices, cosmetics, agrochemicals
and other similar products in Nigeria. At the end of the process, a registration number is given to the product and a registration
certificate is issued to the applicant.
In
May 2017, the Company received approval from NAFDAC to market and distribute Lodonal
TM
in Nigeria. The approval is
for a one-day Immune System Regulator for the management of HIV/AIDS, which is based on the results of the Company’s 90-day
bridging trial in Nigeria.
Many
of the African countries do not have a local FDA equivalent organization or agency. We plan to use the NAFDAC Registration as
the guideline for submission in Africa for countries that do not have their own application and approval procedures.
Malawi
No
formal governmental agency is in place in Malawi to govern the application of a new drug. Malawi is a member of the Southern Africa
Development Community (“SADC”). The SADC has been making efforts to synchronize the regulation of medication in the
SADC countries.
The
guidelines require filing an application prior to approval of registration. However, these guidelines are preliminary. The Regional
Indicative Strategic Development Plan (“RISDP”) is a comprehensive development and implementation framework guiding
the Regional Integration agenda of the SADC over a period of fifteen years (2005-2020). It is designed to provide clear strategic
direction with respect to SADC programs, projects and activities in line with the SADC Common Agenda and strategic priorities,
as enshrined in the SADC Treaty of 1992.
In
July 2014, the Republic of Malawi approved Lodonal™ as an adjunct for the treatment of cancer. Protocols for a Lodonal™
trial were approved in November 2015. The Brewer Group, Inc. paid for production of the first shipment to Malawi of Lodonal™
in 2015.
The
Company and the Brewer Foundation arranged for the donation of the Wallach LL100 Cryosurgical system that were necessary to run
the trial and treat patients with cervical cancer. In July 2014, the Republic of Malawi approved Lodonal™ as an adjunct
for the treatment of cancer. Protocols for a Lodonal™ trial were approved in November 2015.
In
2012, the Company started its collaboration with the Brewer Foundation and the Brewer Group. Over the last two years, The Brewer
Group and Foundation has worked directly with the Government of Malawi on the approval of the clinical trials and protocols. Once
the protocols were approved the Brewer Group help to arrange funding for the trials.
The
Brewer Group has entered into a distribution agreement with Airmed Bioparhma Limited, a wholly owned subsidiary of the Company,
to distribute Lodonal™ in emerging markets. The distribution agreement was entered into in 2014 and has a term of 5 years.
Pursuant to the distribution agreement the Company shall sell Lodonal™ to The Brewer Group at a 25% discount to the list
price. The Brewer Group has also arranged a number of meetings with various hedge funds in New York to assist with the funding
of the company.
The
Company’s relationships with the Brewer Group and Brewer Foundation are contractual, with the rights and obligations of
the parties dictated by their respective agreements. The Brewer Group, Brewer Foundation and certain of their affiliates may also
now own, or in the past owned, minority share positions in the Company via their investments or shares granted for services.
China
On
October 18, 2012, the Company and Hubei Qianjiang Pharmaceutical Co., Ltd. (“Qianjiang Pharmaceutical”), signed a
Venture Cooperation Agreement on New Drug Methionine Enkephalin (the “Venture Agreement”) pursuant to which Qianjiang
Pharmaceutical acquired an exclusive license for the production of MENK in China. The Venture Agreement requires that Qianjiang
Pharmaceutical conduct drug research and pilot testing for MENK, organize pre-clinical studies, and apply for clinical trials
for MENK with the Chinese State Food and Drug Administration. Under the Venture Agreement, Qianjiang Pharmaceutical must open
a co-administration account for the development of MENK in China. Qianjiang Pharmaceutical must pay the Company, upon the marketing
of MENK products, a half-year amount equaling 6% of its gross sales from MENK of the preceding half year.
Qianjiang
Pharmaceutical is required to obtain all approvals and permits required for the importation and sale of the Company’s products
in China.
The
Company may cancel the Venture Agreement if Qianjiang Pharmaceutical does not pay expenses for a period exceeding nine months
or does not commence clinical trials within 12-months after receiving certain approvals. Qianjiang Pharmaceutical may cancel the
Venture Agreement if the Company fails to perform its obligations for a period of nine months or the failure to receive approval
of clinical trials is due to the Company’s MENK technologies.
On
August 6, 2014, the Company entered into a Supplementary Agreement on New Drug Methionine – Enkephalin Cooperation (the
“Amendment”) with Qianjiang Pharmaceutical, amending the Venture Agreement, as amended. The Company and Qianjiang
Pharmaceutical executed the Amendment to accelerate clinical trials in both the United States and China, and agreed to immediately
initiate three month Good Laboratory Practice (“GLP”) Toxicology Studies (rat and dog) within 30 days of signing the
Amendment. The Amendment requires that the GLP Toxicology Studies Trials are conducted in China in accordance with international
standards and standards acceptable to the FDA.
The
Company modified the agreement one more time due to the fact toxicology studies were not completed by the end of 2015 as others
steps were required before the studies could start.
Qianjiang
has completed the formulation and required Chemistry, Manufacturing, and Controls (“CMC”) for Methionine–Enkephalin.
All work was completed in China in accordance with international cGMP standards acceptable to the U.S. Food and Drug Administration
with Chinese Peptide Company (“CPC”). CPC is among only a handful of companies in the world that can claim both ISO
Certification and cGMP licensing. In February 2012, we became the first peptide company to successfully pass US FDA inspection
outside of US and Europe regions.
Dominican
Republic
In
October 2016, the Company and Acromax Dominicana, SA (“Acromax”) entered into a contract for the manufacture of LDN
tablets, capsules and/or creams (“Agreement”). Acromax is located in Santo Domingo; in the Dominican Republic. It
is both cGMP certified and ISO 9001: 2008 certified. Acromax exports over 160 products and has sold throughout the Caribbean and
Central and South America. More information about Acromax is available at
http://acromaxdominicana.com/
.
The
Agreement has an initial term of five years unless terminated by either party in accordance with the terms. Subject to the terms
and conditions of the Agreement, Acromax will obtain all necessary licenses and permits to carry out the manufacturing and packaging
of LDN in exchange for a fixed fee per tablet plus an additional fee for packaging, shipping and customs clearance. In 2017, Acromax
received approval from the Ministry of Public Health and Social Assistance to manufacture and sell Naltrexone both in the Dominican
Republic as well as for export on behalf of TNI BioTech International under the trademark name Lodonal™. The company was
granted and issued a Certificate of Pharmaceutical Product (“COPP”) for the following countries: Nigeria, Senegal,
Kenya and Malawi. We expect to add additional countries to the COPP in 2017.
In
January of 2017, Acromax obtained from the Dominican Republic Ministry of Public Health and Social Assistance and Medications
a Specialized Pharmaceuticals Registration Certification for Lodonal
TM
, which allows for the manufacture and sale of
Lodonal
TM
in the Dominican Republic and for export. The Ministry also issued a Certificate of Pharmaceutical Product
for Nigeria, Kenya, Senegal and Malawi, which will allow for the export of Lodonal
TM
to those countries where we have
drug and marketing approval.
Business
Strategy
The
Company’s short-term business strategy focuses on several key areas described below, all of which are being undertaken simultaneously.
International
Regulatory Approval in 2017:
The Company has been in discussions with drug regulators regarding the regulatory and approvals
process for sale of its products in 2017 in a number of countries: South Africa, Nigeria, Malawi, Kenya, Angola, Niger, Gabon,
Egypt, Sri Lanka, and China. The process can take between four to 12 months depending on the local authorities. In May 2017, the
Company received approval from the National Agency for Food and Drug Administration and Control of Nigeria (“NAFDAC”)
to market and distribute Lodonal
TM
in Nigeria. The approval is for a one-day Immune System Regulator for the management
of HIV/AIDS, which is based on the results of the Company’s 90-day bridging trial in Nigeria.
In
2017, using the results from the trial in Nigeria, the Company applied to the Kenyan Pharmacy and Poisons Board for approval to
distribute Lodonal in Kenya. The Company is currently completing the submission of the trial data in Kenya, and expects to receive
approvals to distribute the product by the end of the second quarter of 2018.
While
working on regulatory approval throughout Africa, The Company has begun discussions with a number of international organizations
including the World Health Organization, the Joint United Nations Programme on HIV/AIDS (UNAIDS), and PATH, an international nonprofit
organization dedicated to saving lives and improving health, especially among women and children. The Company expects to reach
agreements with them in the coming year.
Establish
Partnerships in Africa:
Receipt of the recent approvals in Nigeria will allow the Company to establish partnerships in Africa
with large employers that maintain onsite clinics; there is increasing recognition that health creates wealth and advances GDP.
HIV and AIDS have had a significant negative impact on labor and productivity. The vast majority of people living with HIV in
Africa are of working age 15-49 years old. The Company believes that Lodonal™ can be used as a prophylactic to avoid many
of the standard opportunistic infections accompanied with HIV and cancer. The Company will now move forward on this program if
it receives approval for Lodonal™ sales in Nigeria.
Funding
Cytocom Inc. Clinical Trials:
As of the date of filing of this Form 10-K, there is no formal agreement in place between the
Company and Cytocom for the Company to fund research and development to be undertaken by Cytocom. Cytocom is currently pursuing
its own initiatives to raise funds to support its R&D initiatives in the U.S. If the Company generates significant revenue
from sales to Africa, and if Cytocom is not successful in raising its own funding, we believe that in 2018 we will be able to
enter into a formal arrangement to commit financial resources to help fund Cytocom’s clinical trials in the United States
and Europe to validate the use of Lodonal LDN in a number of indications.
Clinical
Studies:
In
2017, the Company focused on receipt of approvals in Nigeria to conduct clinical development programs for Lodonal™. We completed
a trial in Nigeria in December 2017, and in December 2017 we received final NAFDAC approval to commence sales in Nigeria. The
first shipments took place in February 2018.
The
Company also expects to complete a bridging trial for cancer in 2018 in the Republic of Malawi for Lodonal™ as a stand-along
therapy. The recruitment of study participants, VIA testing and follow up of patients is still on-going. The first evaluation
report from the doctors involved is expected by the end of June 2018 as per the study protocol. Since we have a cancer trial with
Lodonal as an adjunct, we decided to hold off requesting final approval for the second trial until we complete our first trial,
which is expected to occur in the third quarter of 2018.
On
the regulatory front, Cytocom has held constructive dialogue with the FDA with respect to appropriate trial designs and study
protocols for Lodonal™ for Crohn’s Disease. According to minutes from a Type C meeting held on January 16, 2018, the
Company, on behalf of Cytocom, and the US Food and Drug Administration (“FDA”) met to discuss next steps in the development
of Lodonal™ as an adjunct therapy to the standard of care for moderate to severe Crohn’s disease in patients age
12 and over and mild to severe Crohn’s in pediatric patients aged 2 to 11. Cytocom will move forward with its
IND 067442 submission for the Phase 3 pivotal clinical program for moderate to severe Crohn’s disease in patients 12 and
over and will file for a New Drug Application for its pediatric trial. Subject to the availability of funding, the Company
expects to start recruitment for this Phase 3 trial before the end of 2018.
In
addition to the trial design as described immediately above, the Company intends to undertake a Toxicologist and PK study in China
with its partner, Hubei Qianjiang Pharmaceutical Co., Ltd, for IRT-101 for the purpose of furthering its understanding of the
effect of the pharmacokinetics of IRT-101. The trial has been delayed until 2018 because the State Food and Drug Administration
of the People’s Republic of China on the Safety of Drugs and Medical Devices (SFDA) has required chemistry, manufacturing
and controls to be completed before the start of the toxicology study. Quinjiang expects to have the PK and Toxicology studies
completed before the end of the year. This will allow the Company to better understand the potential for drug interactions to
further optimize treatment for Phase 3 development of IRT-101 for cancer in both the United States and China. These trials are
required before Hubei can file for a phase III trial for liver cancer with the SFDA
The
Company recently received the pharmacology and toxicology reports for MENK completed at GLP Lab by Hubei Qianjiang on. In addition
to the pharmacology and toxicology, China Peptide Company has completed the Chemistry, Manufacturing, and Controls (
CMC
)
required to file with both the SFDA and the FDA, as no pivotal trial can be started without CMC.
Strategy
for Growth:
Since
2015, the Company has worked aggressively to build the business both upward and outward. It has worked to create a multi-faceted
leader in immunotherapies by exploring opportunities beyond HIV/AIDS and cancer in emerging nations.
The
goal and strategic vision is to build a diverse pipeline and to develop and commercialize novel drug treatments to improve the
lives of patients suffering from chronic often life-threating disease.
To
fulfill these goals, the Company has received funding from the sale of stock, the exercise of stock warrants and issuance of notes
payable totaling approximately $2 million in 2017. The Company anticipates generating revenues in 2018 from a number of sources,
including revenues from the use of its formulation and patents and the sale of Lodonal™ in Nigeria and Kenya.
Company
Growth
:
To
build visibility and positive awareness of the Company, management has made presentations at key investor and industry conferences
internationally.
The
Company believes it will be able to use approvals for the sale of LDN in Nigeria to “fast track” the approval process
in a number of African nations that will accept NAFDAC Nigeria’s approval of Lodonal™ for the treatment of HIV/AIDS.
Focus
on HIV/AIDS
HIV/AIDS
remains one of the three global public health threats. This disease results in substantial morbidity, mortality, negative socioeconomic
consequences, and human suffering. Despite the significant increase in financial support and recent progress in addressing HIV/AIDS,
many obstacles and unmet priorities remain.
Disease-specific
interventions must be developed to ensure successful treatments of this disease. Apart from human suffering, the associated high
adult mortality caused by HIV/AIDS, negatively impacts the socioeconomic development in some countries, especially in Nigeria
and South Africa.
Adopting
a treatment regimen for life that involves taking daily medication with potential side effects, presents many challenges that
must be overcome if patients are to successfully remain on treatment. If drug resistance occurs through failure to adhere to antiretroviral
treatments (“ARVs”), far more expensive second line therapy may be necessary. In some cases drug-resistant strains
of HIV are transmitted, which can impact national treatment programs. Drug resistance has been found to be more prevalent the
longer a country has provided antiretroviral therapies.
The
Company believes Lodonal™ can provide an alternative in areas where patients have stopped taking their therapies due to
side effects, or cost; Lodonal™ has been shown in trials to lessen the toxic side effects of ARVs. In those countries where
people must travel monthly for a medical check-up (and lose a day’s pay), Lodonal™ can cost-effectively provide the
ability to slow the progression of the disease without any toxic side effects.
Nigeria:
In Nigeria, it is estimated that more than 3.6 million people are living with HIV/AIDS, with the annual number of new infections
for adults at 323,000 and 57,000 for children. Currently, only 600,000 people receive HIV treatment (see http://www.unaids.org/en/regionscountries/).
South
Africa:
Based on a wide range of data including the household and antenatal studies, UNAIDS (see http://www.unaids.org/en/regionscountries)
estimated that HIV prevalence was 17.3% among 15-49 year olds at the end of 2011. The high and low estimates were 16.6% and 18.1%,
respectively. This implies that approximately 5.6 million South Africans were living with HIV at the end of 2011, including 460,000
children under 15 years old. By October 2012, only two million people were receiving ARVs. The biggest problem is compliance with
prescribed treatment, as people are required to take pills 2 to 3 times a day at specific times and many times with food with
considerable toxic side effects. In contrast, Lodonal™ is taken only once per day, does not have to be taken with food,
and has no toxic side effects.
Agreements
to Promote Development and Sale of Company Products
The
Company is focused on its lead therapies designed for the treatment of cancer, HIV/AIDS, Crohn’s disease, fibromyalgia and
MS. Management believes the pharmaceutical industry is eager to acquire advanced clinical-phase and approved products. However,
despite the strong demand for advanced clinical-phase products, nearly 4,000 known compounds have had their development suspended
in Phase II or earlier. Many of these are promising therapeutic drug candidates, but their development was discontinued because
of strategic or financial constraints rather than for clinical reasons. Therefore, management believes there are clear market
opportunities with a significant amount of unmet needs and a robust potential for partnering activities.
To
further the business strategy, the Company has entered into relationships with a number of groups to promote the sale of its products
outside the U.S., focusing initially on countries in Africa. They include: The Brewer Group, Inc.; GB Oncology & Imaging Group,
LLC; American Hospitals and Resorts Limited (“AHAR”), an advanced surgical and medical facility, as well as a number
of U.S. doctors that own and operate clinics in the U.S. and Nigeria.
The
Brewer Group, Inc. is an international business advisory firm engaged in the business of identifying and capitalizing on opportunities
with international governments, non-government organizations and professional athletes. The CEO of The Brewer Group is also the
founder and Executive Director of The Jack Brewer Foundation. The Jack Brewer Foundation seeks to provide the Company with medical
equipment where it is needed. Under the Engagement Agreement for Corporate Advisory Services dated February 5, 2013, the Brewer
Group agreed to evaluate the Company’s options for expansion and growth into certain international markets, including Africa
and, upon request, markets in Haiti, the Dominican Republic and/or Panama. Pursuant to the Engagement Agreement, the Brewer Group
agreed to endorse the Company publicly and assist the Company in securing strategic partnership deals to enhance brand and market
awareness. The initial term of the Engagement Agreement was 12 months, with an option for either party to terminate upon 30 calendar
days with written notice to the other party. The agreement has been extended through 2017.
Since
the receipt of NAFDAC approval to sell Lodonal
TM
in Nigeria, AHAR and the Company have held discussions to commence
distribution of Lodonal under their agreement. The Company has received an initial order for 400,000 capsules over a 12-month
period in equal quarterly instalments. The first order was shipped in February 2018. AHAR has opened discussions with a small
number of wholesalers in Nigeria for the purchase of Lodonal
TM
.
On
August 22, 2017, the Company entered into a Distribution Agreement with TNI BioTech International Ltd. (“TNI”), a
wholly-owned subsidiary, and Omaera Pharmaceuticals Ltd. (“Omaera”). Pursuant to the Agreement, Omaera will be the
sole distributor of the Company’s Products, as listed in Section 2 of the Agreement, for sale in Kenya. The Products to
be distributed by Omaera will be manufactured by Acromax Dominicana, SA. The term of the Agreement began on August 22, 2017 and
is to continue for a period of three (3) years, unless earlier terminated.
On
October 18, 2012, the Company and Hubei Qianjiang Pharmaceutical Co., Ltd. (“Qianjiang Pharmaceutical”), signed a
Venture Cooperation Agreement on New Drug Methionine Enkephalin (the “Venture Agreement”) pursuant to which Qianjiang
Pharmaceutical acquired an exclusive license for the production of MENK in China. The Venture Agreement requires that Qianjiang
Pharmaceutical conduct drug research and pilot testing for MENK, organize pre-clinical studies, and apply for clinical trials
for MENK with the Chinese State Food and Drug Administration. Under the Venture Agreement, Qianjiang Pharmaceutical must open
a co-administration account for the development of MENK in China. Qianjiang Pharmaceutical must pay the Company, upon the marketing
of MENK products, a half-year amount equaling 6% of its gross sales from MENK of the preceding half year. The Company may cancel
the Venture Agreement if Qianjiang Pharmaceutical does not pay expenses for a period exceeding nine months or does not commence
clinical trials within 12-months after receiving certain approvals. Qianjiang Pharmaceutical may cancel the Venture Agreement
if the Company fails to perform its obligations for a period of nine months or the failure to receive approval of clinical trials
is due to the Company’s MENK technologies. The Venture Agreement was amended on February 24, 2013 to expand the clinical
trials from pancreatic to both pancreatic and liver cancer and amended on March 6, 2014 to require Qianjiang Pharmaceutical to
commence studies and clinical trials in China and place funds in the co-administration account.
On
August 6, 2014, the Company entered into a Supplementary Agreement on New Drug Methionine – Enkephalin Cooperation (the
“Amendment”) with Qianjiang Pharmaceutical, amending the Venture Agreement, as amended. The Company and Qianjiang
Pharmaceutical executed the Amendment to accelerate clinical trials in both the United States and China, and agreed to immediately
initiate three month Good Laboratory Practice (“GLP”) Toxicology Studies (rat and dog) within 30 days of signing the
Amendment. The Amendment requires that the GLP Toxicology Studies Trials are conducted in China in accordance with international
standards and standards acceptable to the FDA.
In
February 2013, the Company signed a Strategic Framework Agreement for Cooperation with Qianjiang Pharmaceutical. Under the agreement,
the parties will work together to further the development of new products and conduct research and development on the Company’s
licensed patented technology. Specifically, the parties aim to co-invest to develop and market products focusing on HIV, cancer
and related autoimmune system therapies, develop co-ventured manufacturing facilities in China, and develop co-ventured distribution
of the developed products in China and Africa. The agreement does not have a definitive term, as each new agreement resulting
from the cooperation will set forth the material terms, including, but not limited to, fees, duration and termination therein.
In
accordance with these agreements, Qianjiang Pharmaceutical has acquired MENK material for the preclinical and clinical trial.
MENK toxicology studies are in process under the trial, including a six-month toxicology study in animals. Other studies, including
stability and general pharmacology (on normal animals to determine the effect to heart, blood pressure, etc.) have commenced.
All FDA-required tests, including formulation and quality control tests, are in process in China.
The
Company recently received the pharmacology and toxicology reports for MENK at GLP lab completed by Hubei Qianjiang. In addition
to the pharmacology and toxicology, China Peptide has completed the Chemistry, Manufacturing, and Controls (CMC) required to file
with both the SFDA and the FDA, as no pivotal trial can be started without CMC.
Production
On
October 25, 2016, the Company and Acromax Dominicana, SA (“Acromax”) entered into a contract for manufacturing of
LDN tablets, capsules and/or creams (“Agreement”). In accordance with the terms and conditions of the Agreement, Acromax
will obtain all necessary licenses and permits to carry out the manufacturing and packaging of LDN in exchange for a fixed fee
per tablet plus an additional fee for packaging, shipping and customs clearance. The Agreement has an initial term of five years
unless terminated by either party in accordance with its terms.
In
January 2017, Acromax obtained from the Ministry of Public Health and Social Assistance a Medications and Specialized Pharmaceuticals
Registration Certification for Lodonal
TM
, which allows for the manufacture and sale of Lodonal
TM
in the
Dominican Republic and for export. The Ministry also issued a Certificate of Pharmaceutical Product for Nigeria, Kenya, Senegal
and Malawi, which will allow for the export of Lodonal
TM
to those countries where the Company has drug and marketing
approval.
In
February 2018, the Company shipped the first Lodonal products made by Acromax to Nigeria.
The
Company has contracted with QS Pharma, located in Boothwyn, PA, to formulate Low Dose Immediate Release in 1mg, 1.5mg, 3mg and
4.5mg and liquid for pediatric purposes in the USA. QS Pharma’s facility consists of over 43,000 sq. ft. of Analytical Laboratories
and Drug Product Manufacturing space available which include cGMP suites and non-GMP development laboratories. There are 14 manufacturing
suites with dedicated Air and HVAC systems and the suites and equipment can accommodate batch sizes ranging from <1kg to over
500kg. Cytocom will assume all rights and obligations under the contract.
Immune
has also contracted with Complete Pharmacy & Medical Solutions, LLC (“Complete Pharmacy”), located in Miami Lakes,
FL., to manufacture Lodonal for all clinical trials initiated by Cytocom. Complete Pharmacy is registered with the FDA as a 503B
outsourcing facility under the Drug Quality and Security Act. A 503B outsourcing facility must report specific information about
the products that it compounds, including a list of all of the products it has compounded during the previous six months, and
information about the compounded products, such as the source of the ingredients used to compound (section 503B(3)). In addition,
the outsourcing facility must meet other conditions described in the law, including reporting adverse events and labeling its
compounded products with certain information (section 503B(b)(5) and section 503B(a)(10)). The facility specializes in the manufacture
of sterile and non-sterile prescription drugs. Complete Pharmacy offers high quality, custom or statutory formulations for hospital
and clinical operations.
Raw
Materials and Principal Suppliers
The
Company has decided to enter into third-party manufacturing agreements; accordingly, we rely on third parties for clinical production
of our products and product candidates.
The
active pharmaceutical ingredient (“API”) for initiating clinical trials in the United States has been and will continue
to be sourced from a cGMP-established vendor that has filed or will file a Type II Drug Master File in the United States. Prior
to sourcing, a quality due diligence/vendor qualification will be completed that will include, but is not limited to, a review
of the vendor’s inspection and compliance history with the FDA and, as relevant, the vendor’s inspection and compliance
history with other regulatory bodies (i.e. the European Medicines Agency, or EMA).
The
Company expects that the Finished Pharmaceutical Product (“FPP”) for initiating the proposed clinical trials will
be prepared by a U.S. vendor with extensive cGMP experience, a strong record of compliance with FDA regulations as evidenced by
a site Quality Audit, and an extensive history of manufacturing products administered to humans in the U.S.
American
Peptide Company is the Company’s supplier of the API in MENK. S.A.L.A.R.S SpA supplies the API in LDN.
Competition
Our
industry is highly competitive and subject to rapid and significant technological change. While we believe that our technology,
knowledge, experience and scientific resources provide us with competitive advantages, we face potential competition from many
different sources including large pharmaceutical and biotechnology companies, specialty pharmaceutical and generic drug companies,
academic institutions, government agencies and research institutions. We believe that key competitive factors that will affect
the development and commercial success of our product candidates are efficacy, safety, tolerability, reliability, and price and
reimbursement level.
Many
of our potential competitors, including many of the organizations named below, have substantially greater financial, technical
and human resources than we do and significantly greater experience in the discovery and development of product candidates, obtaining
FDA and other regulatory approvals of products and the commercialization of those products. Accordingly, our competitors may be
more successful than we may be in obtaining FDA approval for drugs and achieving widespread market acceptance. Our competitors’
drugs may be more effective, or more effectively marketed and sold, than any drug we may commercialize and may render our product
candidates obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product
candidates. We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies
become available. Further, the development of new treatment methods for the conditions we are targeting could render our drugs
non-competitive or obsolete.
Lodonal™/LDN
The
key competitive factors affecting the success of Lodonal™, if approved, are likely to be efficacy, safety, tolerability,
frequency and route administration, convenience and price, the level of branded and generic competition and the availability of
coverage and reimbursement from government and other third-party payors.
The
markets for medicines to treat Crohn’s disease, fibromyalgia, MS, HIV and other autoimmune diseases are well developed and
populated with established drugs marketed by large and small pharmaceutical, biotechnology and generic drug companies. Pfizer
(Lyrica), Eli Lilly (Cymbalta) and Forest Laboratories/Cyprus Biosciences (Savella) market FDA approved drugs for fibromyalgia.
We are aware of several companies pursuing treatments for fibromyalgia, including Chelsea Therapeutics, Johnson and Johnson, Meda,
Pfizer, Synthetic Biologics, Teva Pharmaceutical Industries Ltd., and Theravance. Clinical trials in the U.S. are registered with
the FDA and reported on the FDA’s website at www.clinicaltrials.gov.
Large
pharmaceutical companies have extensive experience in clinical testing and obtaining regulatory approval for drugs. In addition,
many universities and private and public research institutes are active in cancer research, some in direct competition with us.
We also may compete with these organizations to recruit scientists and clinical development personnel. Smaller or early-stage
companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established
companies.
We
expect Lodonal™, if approved for the treatment of Crohn’s disease, to compete directly with Centocor Ortho Biotech
Inc.’s Remicade (infliximab), UCB S.A.’s Cimzia (certolizumab pegol) and Abbott Laboratories’ Humira (adalimumab),
each of which is currently approved for the treatment of various diseases, including inflammatory bowel disease, ulcerative colitis
and Crohn’s disease, and several other products. Lodonal, if developed and approved for the treatment of MS, would compete
with Biogen Idec’s Avonex (interferon beta-1a), Bayer Healthcare Pharmaceuticals’ Betaseron (interferon beta-1b) and
Teva Pharmaceuticals Industries Ltd.’s Copaxone (Glatiramer Acetate) and several other products. New developments, including
the development of other pharmaceutical technologies and methods of treating disease, occur in the pharmaceutical and life sciences
industries at a rapid pace.
IRT-101/MENK
The
key competitive factors affecting the success of IRT-101, if approved, are likely to be efficacy, safety, tolerability, frequency
and route administration, convenience and price, the level of branded and generic competition and the availability of coverage
and reimbursement from government and other third-party payors.
Each
cancer indication for which we are developing products has a number of established therapies with which our candidates will compete.
Most major pharmaceutical companies and many biotechnology companies are aggressively pursuing new cancer development programs,
including both therapies with traditional, as well as novel, mechanisms of action. Some of the anticipated competitor treatments
for acute myelogenous leukemia include Genzyme Corporation’s Clolar (clofarabine), currently approved as a treatment for
acute lymphoblastic leukemia, Eisai Corporation’s Dacogen (decitabine), currently approved as a treatment for myelodysplastic
syndrome, Celgene Corporation’s Vidaza (azacitidine), currently approved as a treatment for myelodysplastic syndrome, and
Vion Pharmaceuticals, Inc.’s Onrigin (laromustine) currently being developed as a treatment for acute myelogenous leukemia,
any or all of which could change the treatment paradigm of acute leukemia. Each of these compounds is further along in clinical
development than is IRT-101 activated NK cell product.
Customers
In
2017, there were no product sales to customers. In 2016, the Company recorded Lodonal™ sales totaling $3,463 to individuals
in the USA.
In
2018, the Company commenced shipment of Lodonal
TM
tablets to Nigeria under its agreement with AHAR.
The
Company expects to commence deliveries to Kenya under its agreement with Omaera in 2018.
Available
Information
Our
Current Reports on Form 8-K, and Quarterly Reports are electronically filed with or furnished to the Securities and Exchange Commission
(SEC), and all such reports and amendments to such reports have been and will be made available, free of charge, through our website
(http://www.immunetherapeutics.com) as soon as reasonably practicable after such submission to the SEC. Such reports will remain
available on our website for at least 12 months. The contents of our website are not incorporated by reference into this Annual
Report on Form 10-K. The public may read and copy any materials filed by us with the SEC at the SEC’s Public Reference Room
at 100 F Street, NW, Washington, D.C. 20549.
Item
1A. Risk Factors
You
should carefully consider the following factors and other information in this Annual Report and our other SEC filings before making
a decision to invest in our common stock. Additional risks and uncertainties that we are unaware of may become important factors
that affect us. If any of the following events occur, our business, financial conditions and operating results may be materially
and adversely affected. In that event, the trading price of our common stock may decline, and you could lose all or part of your
investment.
Risks
Related to our Business
We
have a limited operating history and are expected to incur significant operating losses during the early stage of our corporate
development.
We
have a limited operating history. Our historical financial information consists only of an audit of our financial results at and
for the years ended December 31, 2017, 2016, 2015, 2014, 2013 and 2012. There is limited historical financial information upon
which to base an evaluation of our performance. We are an emerging company, and thus our prospects must be considered in light
of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operation,
particularly in the pharmaceutical industry.
Since
inception, we have invested a substantial portion of our time and financial resources in the acquisition and development of our
most advanced drug candidate, LDN. We have generated cumulative losses of approximately $373 million and $11 million stockholders’
deficit since inception, and we expect to continue to incur losses until IRT-103 (LDN) is approved by the FDA and foreign regulatory
authorities. Even if regulatory approval is obtained, there is a risk that we will not be able to generate material sales of IRT-103
(LDN), which would cause us to continue to incur losses.
We
may never generate revenue, are not profitable and may never become profitable.
We
expect to incur substantial losses and negative operating cash flow for the foreseeable future, and we may never achieve or maintain
profitability. Even if we are able to launch IRT-103 (LDN) we expect to incur substantial losses for the foreseeable future and
may never become profitable.
We
may not generate significant revenue from the sale of our products for the foreseeable future. In addition, if approved, we expect
to incur significant costs to commercialize our drug candidates and our drugs may never gain market acceptance. If our drug candidates
fail to demonstrate safety and efficacy in clinical trials, do not gain regulatory approval, or do not achieve market acceptance,
we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in
subsequent periods. If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline.
Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the
extent of any future losses or whether we will become profitable.
We
will see losses from our clinical trials conducted either directly or through our subsidiaries for the foreseeable future, and
if we fail at one or more of our clinical trials, it could affect the value of the Company’s stock.
We
rely on financings to fund and conduct clinical trials directly or through our subsidiaries needed for NDA submission with respect
to IRT-103 (LDN). Any of the following events or factors could have a material adverse effect on our ability to generate revenue
from the commercialization of IRT-103 (LDN):
|
●
|
The
Company may be unable to successfully complete the clinical development of IRT-103 (LDN);
|
|
●
|
The
Company must comply with any possible additional requests and recommendations from the FDA, including additional clinical
trials;
|
|
●
|
The
Company may not obtain all necessary approvals from the FDA and similar foreign regulatory agencies;
|
|
●
|
The
Company may not commit sufficient resources to the development, regulatory approval, marketing and distribution of IRT-103
(LDN);
|
|
●
|
IRT-103
(LDN) must be manufactured in compliance with requirements of the FDA and similar foreign regulatory agencies and in commercial
quantities sufficient to meet market demand;
|
|
●
|
IRT-103
(LDN) may not achieve market acceptance by physicians, patients and third party payers;
|
|
●
|
IRT-103
(LDN) may not successfully compete against alternative products and therapies; and
|
|
●
|
The
Company or any other pharmaceutical organization may independently develop products that compete with IRT-103 (LDN).
|
To
obtain approval from the FDA of an NDA, for IRT-103 (LDN), The Company will need to demonstrate through evidence of adequate and
well-controlled clinical trials that IRT-103 (LDN) is safe and effective for each proposed indication. However, IRT-103 (LDN)
may not be approved even though it achieved its specified endpoints in future Phase III clinical trials intended to support an
NDA, which may be conducted by the Company. The FDA may disagree with the trial design and the interpretation of data from clinical
trials, may ask the Company to conduct additional costly and time consuming clinical trials in order to obtain marketing approval
or approval to enter into an advanced phase of development, or may change the requirements for approval even after it has reviewed
and commented on the design for our future clinical trials. The FDA may also approve IRT-103 (LDN) for fewer or more limited indications
than the Company may request, or may grant approval contingent on the performance of costly post-approval clinical trials. In
addition, the FDA may not approve the labeling claims that we believe are necessary or desirable for the successful commercialization
of IRT-103 (LDN).
The
Company anticipates that if Cytocom initiates a clinical trial in the next 12 months, Cytocom would need approximately $7-$15
million to fully develop products and for Phase III clinical trials for Crohn’s disease. We expect that two-thirds of this
amount will be spent by Cytocom in the USA, the balance by Immune Therapeutics, Inc. and/or its subsidiaries for international
trials. Cytocom trials are expected to be split evenly between LDN and MENK. The international trials will focus the use of MENK
for treatment of cancer in Africa.
The
development of new drugs is a highly risky undertaking which involves a lengthy process, and therefore our drug discovery and
development activities may not result in products that are approved by the applicable regulatory authorities on the time schedule
we have planned, or at all.
Our
drug candidates are in early stages of drug discovery or clinical trials and are prone to the risks of failure inherent in drug
development. As of the date of this Form 10-K, both of our current drug candidates, IRT-101 (MENK) and IRT-103 (LDN) have been
tested on human beings. We will need to conduct additional clinical trials before we can demonstrate that our drug candidates
are safe and effective to the satisfaction of the FDA and other regulatory authorities. Clinical trials are expensive and uncertain
processes that can take multiple years to complete. We cannot assure you that our ongoing clinical trials or any future clinical
trial of any of our other drug candidates, will be completed on schedule, or at all, or whether our planned clinical trials will
start in a timely manner. The commencement of our planned clinical trials could be substantially delayed or prevented by a number
of factors, including:
|
●
|
delays
or failures in obtaining sufficient quantities of the API and/or drug product;
|
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|
delays
or failures in reaching an agreement on acceptable clinical trial agreement terms or clinical trial protocols with prospective
sites and with the FDA or other foreign regulatory bodies;
|
|
●
|
delays
or failures in obtaining Institutional Review Board (“IRB”) or Ethics Committee (“EC”) approvals to
conduct a clinical trial at a prospective site;
|
|
●
|
the
need to successfully complete, on a timely basis, preclinical safety pharmacology studies (for IRT-101 (MENK));
|
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●
|
the
limited number of, and competition for, suitable sites to conduct the clinical trials;
|
|
●
|
the
limited number of, and competition for, suitable patients for enrollment in the clinical trials; and
|
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●
|
delays
or failures in obtaining regulatory approval to commence a clinical trial.
|
The
completion of our clinical trials could also be substantially delayed or prevented by a number of factors, including:
|
●
|
slower
than expected rates of patient recruitment and enrollment;
|
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|
failure
of patients to complete the clinical trials;
|
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●
|
failure
of our third party vendors to timely or adequately perform their contractual obligations relating to the clinical trials;
|
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inability
or unwillingness of patients or medical investigators to follow our clinical trial protocols;
|
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inability
to monitor patients adequately during or after treatment;
|
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termination
of the clinical trials by one or more clinical trial sites;
|
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unforeseen
safety issues;
|
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|
lack
of efficacy demonstrated during clinical trial results;
|
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|
lack
of adequate funding to continue the clinical trials;
|
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●
|
the
need for unexpected discussions with the FDA or other foreign regulatory agencies regarding the scope or design of our clinical
trials or the need to conduct additional trials;
|
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unforeseen
delays by the FDA or other foreign regulatory agencies after submission of our results;
|
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●
|
an
unfavorable FDA inspection of our contract manufacturers of APIs or drug products; and/or
|
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●
|
inspection
of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of
a clinical hold.
|
Any
failure or significant delay in completing clinical trials for our drug candidates will harm the commercial prospects for our
drug candidates and adversely affect our financial results.
Additionally,
changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflect these changes.
Amendments may require us to resubmit our clinical trial protocols to IRBs or ECs for reexamination, which may impact the costs,
timing or successful completion of a clinical trial. If we experience delays in completion of a clinical trial, or if we terminate
any of our clinical trials, the commercial prospects for our drug candidates may be harmed and our ability to generate product
revenues will be delayed. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of
clinical trials may also ultimately lead to the denial of regulatory approval of a drug candidate.
If
we are required to suspend or discontinue clinical trials due to side effects or other safety risks, or if we are required to
conduct studies on the long-term effects associated with the use of our drug candidates, our efforts to commercialize our products
could be delayed or halted.
Our
clinical trials may be suspended or terminated at any time for a number of safety-related reasons. For example, administering
any drug candidate to humans may produce undesirable side effects. We may voluntarily suspend or terminate our clinical trials
if at any time we believe that our drug candidates present an unacceptable safety risk to the clinical trial patients. In addition,
IRBs, ECs or regulatory agencies may order the temporary discontinuation or termination of our clinical trials at any time if
they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements, including
if they present an unacceptable safety risk to patients. The existence of undesirable side effects resulting from our drug candidates
could cause us or regulatory authorities, such as the FDA, to interrupt, delay or halt clinical trials of our drug candidates
and could result in the FDA or other regulatory agencies denying further development or approval of our drug candidates for any
or all targeted indications.
Further,
cytokine receptors and opiate growth factor receptors are a novel class of targets. As a result, we may experience unforeseen
adverse side effects with our existing and future drug candidates, including IRT-101 (MENK) and IRT-103 (LDN). As of the date
of this registration statement, although we have not observed harmful side effects in prior studies of LDN or MENK, later trials
could reveal such side effects. The pharmacokinetic profile and results of preclinical studies may not be indicative of results
in any clinical trial.
We
have not conducted studies on the long-term effects associated with the use of our drug candidates. Studies of long-term effects
and chronic dosing (approximately 1 year of dosing); will be required for regulatory approval and may delay introduction of our
therapies or our other drug candidates into the market. Additional studies could also be required at any time after regulatory
approval of any of our drug candidates. Some or all of our drug candidates may prove to be unsafe for human use.
Even
if our drug candidates do obtain regulatory approval they may never achieve market acceptance or commercial success.
Even
if we obtain FDA or other regulatory approval, our drug candidates may not achieve market acceptance among physicians, patients
and/or third party payers or they may be used only in applications more restricted than we anticipate, and ultimately, may not
be commercially successful. Our treatments, if successfully developed, will compete with a number of traditional products manufactured
and marketed by major pharmaceutical and biotechnology companies. Our treatments may also compete with new products currently
under development by such companies and others. Physicians will prescribe a product only if they determine, based on experience,
clinical data, side effect profiles and other factors, that it is beneficial as compared to other products currently available
and in use. Physicians also will prescribe a product based on their traditional preferences. Market acceptance of our drug candidates
for which we receive approval depend on a number of factors, including:
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the
efficacy and safety of our drug candidates as demonstrated in clinical trials;
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the
clinical indications for which the drug is approved;
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acceptance
by physicians, major operators of clinics and patients of the drug as a safe and effective treatment;
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the
potential and perceived advantages of our drug candidates over alternative treatments;
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the
safety of drug candidates seen in a broader patient group, including its use outside the approved indications;
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the
cost of treatment in relation to alternative treatments;
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the
availability of adequate reimbursement and pricing by third parties and government authorities;
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relative
convenience and ease of administration;
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the
prevalence and severity of adverse side effects; and
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the
effectiveness of our sales and marketing efforts.
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If
our drug candidates that obtain regulatory approval fail to achieve market acceptance or commercial success, the Company’s
financial results will be adversely affected.
The
commercial success of IRT-103 depends, in part, on Cytocom’s ability to develop and market the drug in North America, and
if we fail in these initiatives, our ability to generate future revenue in the United States could be reduced.
If
Cytocom successfully completes the clinical development program in the U.S. for our lead independent drug candidate, IRT-103 (LDN),
we plan to retain commercial rights to IRT-103 as we have exclusive licensing rights. Any of the following events or factors could
have a material adverse effect on both the ability to generate revenue in the U.S. from the commercialization of IRT-103:
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we
may be unable to successfully complete the clinical development of IRT-103;
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our
lack of experience in commercializing and marketing drug products;
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we
may not have or be able to obtain sufficient financial resources to develop and commercialize IRT-103;
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we
may not be able to identify a suitable co-development partner;
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we,
or any of our future partners, may fail to fulfill our responsibilities in a timely manner or fail to commit sufficient resources
to the development, regulatory approval, and commercialization efforts related to IRT-103;
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we,
or any of our future partners, must comply with additional requests and recommendations from the FDA, including additional
clinical trials;
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we,
or any of our future partners, may not obtain all necessary approvals from the FDA and similar foreign regulatory agencies;
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IRT-103
must be manufactured in compliance with requirements of the FDA and similar foreign regulatory agencies and in commercial
quantities sufficient to meet market demand;
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IRT-103
may not achieve market acceptance by physicians, patients and third party payers;
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IRT-103
may not compete successfully against alternative products and therapies; and
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we,
or any pharmaceutical company, may independently develop products that compete with IRT-103.
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Changes
in pharmaceutical and biotechnology industry trends could adversely affect the Company’s operating results.
Industry
trends, economic and political factors that affect pharmaceutical, biotechnology, medical device companies and academic/government
entities sponsoring clinical research directly affect the Company’s business. For example, many companies in such industries
and government organizations have been hiring companies (like the Company) to conduct large development projects. The Company’s
operations, financial condition and growth rate could be materially and adversely affected if these industries reduce outsourcing
of such projects. In the past, mergers, product withdrawals, liability lawsuits and other factors in the pharmaceutical industry
have slowed decision making by pharmaceutical companies and correlating government bodies significantly delaying and/or halting
drug development projects. Continuation or increases in such trends could have an adverse effect on the Company’s business.
Additionally, numerous government agencies have undertaken efforts to control growing healthcare costs through legislation, regulation
and voluntary agreements with medical care providers and pharmaceutical companies. If future regulatory cost-containment efforts
limit potential profits derived from new drugs, the Company’s clients may reduce their drug discovery and development spending.
A reduction in drug discovery and development spending could have a material adverse effect on the Company’s results and
operations creating a significant reduction of the Company’s revenue.
We
currently rely on third parties to conduct all our clinical trials. If these third parties do not successfully carry out their
contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for or commercialize any of our
drug candidates.
We
currently do not have the ability to independently conduct clinical trials. We rely on medical institutions, clinical investigators,
contract laboratories, collaborative partners and other third parties, such as contract research organizations, to conduct clinical
trials on our drug candidates. The third parties with whom we contract for execution of our clinical trials play a significant
role in the conduct of these trials and the subsequent collection and analysis of data. These third parties are not our employees,
and except for contractual duties and obligations, we have limited ability to control the amount or timing of resources that they
devote to our programs. Our IND is being conducted per 21 Code of Federal Regulations Title 21, Part 312. In addition, we follow
ICH guidelines, including good clinical practices (ICH E6) and current good manufacturing practice (ICH Q7) throughout the development
process. After completion of Phase III clinical trials, the Company will file our NDA for LDN (IRT-103) as a 505(b)(2) application.
Although we rely on these third parties to conduct our clinical trials, we remain responsible for ensuring that each of our preclinical
studies and clinical trials is conducted in accordance with its investigational plan and protocol. Moreover, the FDA and foreign
regulatory authorities require us to comply with regulations and standards, commonly referred to as current Good Clinical Practices
(“cGCPs”) for conducting, monitoring, recording and reporting the results of clinical trials to ensure that the data
and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks
of participating in clinical trials.
In
addition, the execution of preclinical studies and clinical trials, and the subsequent compilation and analysis of the data produced,
requires coordination among various parties. In order for these functions to be carried out effectively and efficiently, it is
imperative that these parties communicate and coordinate with one another. Moreover, these third parties may also have relationships
with other commercial entities, some of which may compete with us. In most cases, these third parties may terminate their agreements
upon a material breach by us that is not cured within 30 days by providing us with 30 days’ prior written notice. Many of
these agreements may also be terminated by such third parties under certain other circumstances, including our insolvency or our
failure to comply with applicable laws. In general, these agreements require such third parties to reasonably cooperate with us
at our expense for an orderly winding down of services of such third parties under the agreements. If the third parties conducting
our clinical trials do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines,
terminate their agreements with us or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised
due to their failure to adhere to our clinical trial protocols or cGCPs, or for any other reason, we may need to enter into new
arrangements with alternative third parties, which could be costly, and our clinical trials may be extended, delayed or terminated
or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the drug candidate being
tested in such trials.
If
any of our drug candidates receive marketing approval, and the Company or others later identify undesirable side effects caused
by the drug candidate, our ability to market and derive revenue from the drugs could be compromised.
If
the Company or others identify undesirable side effects caused by one of our drug candidates, any of the following adverse events
could occur:
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regulatory
authorities may withdraw approval of the drug or seize the drug;
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we
may be required to recall the drug or change the way the drug is administered;
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additional
restrictions may be imposed on the marketing or the manufacturing processes of the particular drug;
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we
may be subject to fines, injunctions or the imposition of civil or criminal penalties;
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regulatory
authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;
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we
may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
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we
could be sued and held liable for harm caused to patients;
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the
drug may become less competitive; and
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our
reputation may suffer.
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Any
of these could result in the loss of significant revenues, which would materially and adversely affect our results of operations
and business.
We
may need additional financing and may be unable to raise capital on acceptable terms, or at all, when needed, which could force
us to delay, reduce or eliminate our research and development programs and other operations or commercialization efforts.
We
are advancing multiple drug candidates through discovery and development and will require substantial funds to conduct development,
including preclinical studies and clinical trials, of our drug candidates. Commercialization of any drug candidate will also require
substantial expenditures. To further the development and commercialization efforts of our drug candidates, we may need additional
financing to hire additional employees to co-promote drug candidates or to commercialize drug candidates that may not be covered
by our current collaboration agreements.
At
December 31, 2017, we had $14,718 in cash and cash equivalents. We do not believe that our available cash and cash equivalents
will be sufficient to fund our anticipated level of operations for the next 12 months and we will likely need to seek outside
sources of funding. Assuming that anticipated investment and revenue does not materialize business operations would not be able
to continue more than 30 days. We believe we require at least $2,000,000 for our operations over the next 12 months. Our future
financing requirements will depend on many factors, some of which are beyond our control, including:
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the
rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities;
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the
timing of, and costs involved in, seeking and obtaining FDA and other regulatory approvals;
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the
continuation and success of our strategic alliances and future collaboration partners;
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the
exercise of remaining options under current collaborative agreements;
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the
costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights,
including litigation costs and the results of such litigation;
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our
ability to enter into additional collaboration, licensing, government or other arrangements and the terms and timing of such
arrangements;
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potential
acquisition or in-licensing of other products or technologies; and
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the
technologies or other adverse market developments.
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Future
capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products
and technologies. We currently have no understandings, commitments or agreements relating to any of these types of transactions.
Until
we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance
future cash needs primarily through public or private equity offerings, debt financings, government grants and contracts and/or
strategic collaborations. Additional financing may not be available to us when we need it or it may not be available on favorable
terms, if at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or eliminate
one or more of our clinical trials or research and development programs or our commercialization efforts. We may be required to
enter into collaborative partnerships for one or more of our drug candidate programs at an earlier stage of development or on
less favorable terms, which may require us to relinquish rights to some of our drug candidates that we would otherwise have pursued
on our own. We may also be required to pursue strategic alternatives that may affect our business or corporate structure in order
to make ourselves more attractive to investors.
In
addition, If the Company or any of its future collaboration partners does not perform in the manner we expect or fulfill its responsibilities
in a timely manner, or at all, the clinical development, regulatory approval, and commercialization efforts related to IRT-103
(LDN) could be delayed or terminated. It may be necessary for us to assume the responsibility at our own expense for the development
of IRT-103 (LDN). In that event, we would likely be required to seek additional funding.
We
may form additional strategic alliances in the future with respect to our independent programs, and we may not realize any benefits
of such alliances.
We
may form strategic alliances, create joint ventures or collaborations or enter into licensing arrangements with third parties
with respect to our independent programs that we believe will complement or augment our existing business. For example, we plan
to find a partner to co-develop and commercialize IRT-101 (MENK) and IRT-103 (LDN) outside North America upon completion of clinical
development of IRT-103 (LDN) for the treatment of pediatric and adult patients with Crohn’s disease. We face significant
competition in seeking appropriate strategic partners. The negotiation process is time-consuming and complex. Moreover, we may
not be successful in our efforts to establish a strategic partnership or other alternative arrangements for any future product
candidates and programs because our research and development pipeline may be insufficient, our product candidates and programs
may be deemed to be at too early a stage of development for collaborative effort and/or third parties may not view our product
candidates and programs as having the requisite potential to demonstrate safety and efficacy. We cannot be certain that, following
a strategic transaction or license, we will achieve the revenues or specific net income that justifies such transactions. Any
delays in entering into new strategic partnership agreements related to our product candidates could also delay the development
and commercialization of our product candidates and reduce their competitiveness even if they reach the market.
We
do not currently manufacture IRT-103 Low Dose Naltrexone (LDN) and therefore must rely on third-party manufacturing to supply
the drug for clinical trials. If one of our suppliers or manufacturers fails to perform adequately or fulfill our needs, we may
be required to incur significant costs and devote significant efforts to find new suppliers or manufacturers, which would cause
delays in the development and commercialization of our drug candidates.
The
manufacture of pharmaceutical products in compliance with cGMPs requires significant expertise and capital investment, including
the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter
difficulties in production, including difficulties with production costs and yields, quality control, including stability of the
drug candidate and quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced FDA
cGMP requirements, other federal and state regulatory requirements, and foreign regulations. If our manufacturers were to encounter
any of these difficulties or otherwise fail to comply with their obligations to us or under applicable regulations, our ability
to provide study drugs in our preclinical studies and clinical trials would be jeopardized. Any delay or interruption in the supply
of preclinical study or clinical trial materials could delay the completion of our preclinical studies and clinical trials, increase
the costs associated with maintaining our preclinical study and clinical trial programs and, depending upon the period of delay,
require us to commence new trials at significant additional expense or terminate the studies and trials completely.
All
manufacturers of our drug candidates must comply with cGMP requirements enforced by the FDA through its facilities inspection
program. These requirements include, among other things, quality control, quality assurance and the maintenance of records and
documentation. Manufacturers of our component materials may be unable to comply with these cGMP requirements and with other FDA,
state and foreign, regulatory requirements. The FDA or similar foreign regulatory agencies at any time may also implement new
standards, or change their interpretation and enforcement of existing standards for manufacture, packaging or testing of products.
We have little control over our manufacturers’ compliance with these regulations and standards. A failure to comply with
these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval,
product seizure or recall, or withdrawal of product approval. If the safety of any product supplied is compromised due to our
manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval
for or successfully commercialize our products, and we may be held liable for any injuries sustained as a result. Any of these
factors could cause a delay of clinical trials, regulatory submissions, approvals or commercialization of our drug candidates
or entail higher costs or impair our reputation.
We
source the API for IRT-103 (LDN) from a third-party manufacturing vendor. Another pharmaceutical company manufactures the API
for IRT-101. Our current agreements with our suppliers provide for the entire supply of the API necessary for additional clinical
trials or for full-scale commercialization. In the event that we and our suppliers cannot agree to the terms and conditions for
them to continue to provide some or all of our API clinical and commercial supply needs, or if any single source supplier terminates
the agreement in response to a breach by us, we would not be able to manufacture the API on a commercial scale until a qualified
alternative supplier is identified, which could also delay the development of, and impair our ability to commercialize, our drug
candidates.
Although
alternative sources of supplies exist, the number of third party suppliers with the necessary manufacturing and regulatory expertise
and facilities are limited, and it could be expensive and take a significant amount of time to arrange for alternative suppliers,
which could have a material adverse effect on our business. New suppliers of any API would be required to qualify under applicable
regulatory requirements and would need to have sufficient rights to the method of manufacturing such ingredients under applicable
intellectual property laws. Obtaining the necessary FDA approvals or other qualifications under applicable regulatory requirements
and ensuring non-infringement of third party intellectual property rights could result in a significant interruption of supply
and could require the new manufacturer to bear significant additional costs which may be passed on to us.
We
currently have only a limited distribution organization with no sales and marketing staff. If we are unable to develop sales and
marketing and expand distribution capability on our own or through collaborations with marketing partners, we will not be successful
in commercializing our future products.
We
currently have only a limited distribution organization with no sales or marketing staff. If our products are approved for sale
in the United States we will need to execute a number of sales and marketing agreements, but there can be no assurance that the
Company will be able to sign an agreement to market and distribute our products. To the extent we rely on third parties for marketing
and distributing our approved products, any revenue we receive will depend upon the efforts of third parties, which may not be
successful, and are only partially within our control. Our reliance on third parties makes it likely that our product revenue
is likely to be lower than if we directly marketed or sold our products. If we are unable to enter into arrangements with third
parties to commercialize the approved products on acceptable terms or at all, we may not be able to successfully commercialize
our future products or we will have to market these products ourselves, which will be expensive and require us to build our own
sales force, which we do not have experience doing. We cannot assure you we will be successful in any of these initiatives. If
we are not successful in commercializing our future products, either on our own or through collaborations with one or more third
parties, our future product revenue will be materially adversely affected.
We
are dependent on market acceptance of compounding pharmacies and compounded formulations, and physicians may be unwilling to prescribe,
and patients may be unwilling to use, our proprietary LDN compounded formulation.
We
are currently distributing our proprietary LDN formulation through Complete Pharmacy and Medical Solutions, LLC and expect to
distribute such formulation through other compounding pharmacies outside of the U.S. Formulations prepared and dispensed by compounding
pharmacies contain FDA-approved ingredients, but are not themselves approved by the FDA. As a result, our formulation has not
undergone the FDA approval process and only limited data, if any, may be available with respect to the safety and efficiency of
our formulation for any particular indication. Some physicians may be hesitant to prescribe, and some patients may be hesitant
to purchase and use, this non-FDA approved compounded formulation. In addition, certain compounding pharmacies have been the subject
of widespread negative media coverage in recent years, and the actions of these pharmacies have resulted in increased scrutiny
of compounding pharmacy activities from the FDA and state governmental agencies. As a result, physicians may be unwilling to prescribe
a compounded formulation when an FDA-approved alternative is available, even if they believe the compounded formulation to be
superior and less expensive. Other reasons physicians may be unwilling to prescribe or patients may be unwilling to use our proprietary
LDN compounded formulation could include the following, among others: our proprietary formulation is not required to be, and has
not been, approved for marketing and sale by the FDA; there may be limited or no data available with respect to the clinical efficacy
or safety of our compounded formulation the physician is prescribing; and to the extent there is such data available, we are limited
in our ability to discuss the efficacy or safety of our formulation with potential purchasers of our formulation.
Additionally,
some third-party payors, including the government Medicare and Medicaid programs, may not provide reimbursement for compounded
formulations. Physicians who may otherwise be interested in prescribing our formulation or utilizing our compounding pharmacy
services may be unwilling to do so if third party payor reimbursement, including Medicare and Medicaid reimbursement, is not available
for our compounded formulation. Any failure by physicians, patients and/or third-party payors to accept and embrace compounded
formulations could substantially limit our market and cause our operations to suffer.
We
aim to generate revenue from our proprietary LDN formulation through our licensing arrangement with Complete Pharmacy and Medical
Solutions, LLC and potentially other compounding pharmacies outside of the United States, but we may not be successful in our
efforts to generate revenue from such formulation.
One
aspect of our business strategy is to continue to develop our licensing arrangement with Complete Pharmacy and Medical Solutions,
LLC and potentially enter into other licensing arrangements with other compounding pharmacies outside of the U.S., through which
we can generate revenue from the sale of our proprietary LDN formulation. On December 8, 2014, we entered into a Contract for
the Compounding of Pharmaceutical Products with Complete Pharmacy and Medical Solutions, LLC pursuant to which Complete Pharmacy
and Medical Solutions, LLC will carry out the services of compounding, packaging and distributing tablets of our LDN formulation
in the U.S. We have limited experience commercializing our formulation through licensing arrangements with compounding pharmacies.
Even if we are successful, we may be unable to generate sufficient revenue to recover our costs.
We
have minimal experience licensing products to pharmacies and outsourcing facilities and we may not be successful in our efforts
to develop our licensing arrangements. If we elect to license our proprietary LDN formulation to one or more pharmacies or outsourcing
facilities outside of the U.S., we may not be able to enter into licensing agreements when desired, on acceptable terms, or at
all. Establishing licensing or other relationships with pharmacies and outsourcing facilities could be expensive and time consuming,
disrupt our other operations, require significant capital expenditures and distract management and our other employees from other
aspects of our business.
Failure
to achieve and maintain effective internal controls could have a material adverse effect on our business.
Effective
internal controls are necessary for us to safeguard our assets and provide reliable financial reports. If we cannot provide reliable
financial reports, our operating results could be harmed. All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.
While
we continue to evaluate and improve our internal controls, we are a small company with limited staff, and we cannot be certain
that the measures we implement will ensure that we design, undertake and maintain adequate controls over our financial processes
and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their
implementation, could harm our operating results or cause us to fail to meet our reporting obligations.
Failure
to achieve and maintain an effective internal control environment could cause investors to lose confidence in our reported financial
information, which could have a material adverse effect on our stock price. In addition, if our efforts to comply with new or
changed laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities
related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
Our
independent registered public accounting firm has identified material weaknesses in our financial reporting process.
Our
independent registered public accounting firm has identified two material weaknesses in our financial reporting process. Specifically,
our independent registered public accounting firm identified material weaknesses with respect to:
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currently
inadequate segregation of duties by management in the financial reporting area; and
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the
lack of an audit committee to oversee the financial reporting process.
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We
intend to remediate this weakness by increasing the size of our accounting staff in 2018 and by appointing an audit committee
with membership that is qualified to oversee the Company’s financial reporting. However, there can be no assurance that
we will be able to successfully implement our plans to remediate the material weaknesses in our financial reporting process. Our
failure to successfully implement our plans to remediate these material weaknesses could cause us to fail to meet our reporting
obligations, to produce timely and reliable financial information, and to effectively prevent fraud. Additionally, such failure,
or other weaknesses that we may experience in our financial reporting process or other internal controls, could cause investors
to lose confidence in our reported financial information, which could have a negative impact on our financial condition and stock
price.
We
will need to increase the size of our organization, but we may experience difficulties in managing growth.
We
will need to continue to expand our managerial, operational, financial and other resources in order to manage our operations and
clinical trials, continue our development activities and commercialize our drug candidates. Our current management, personnel
systems and facilities may not be adequate to support this future growth. Our need to effectively execute our growth strategy
requires that we:
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manage
our clinical trials effectively, including our clinical trials for IRT-103 (LDN) which will be conducted at numerous trial
sites throughout the world;
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manage
our internal development efforts effectively while carrying out our contractual obligations to licensors, contractors, collaborators,
government agencies and other third parties;
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manage
operations in both regulated and unregulated businesses;
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continue
to improve our operational, financial and management controls and reporting systems and procedures; and
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identify,
recruit, maintain, motivate and integrate additional employees.
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If
we are unable to expand our managerial, operational, financial and other resources to the extent required to manage our development
and commercialization activities, our business will be materially adversely affected.
We
face substantial competition. Our competitors may discover, develop or commercialize products faster or more successfully than
us.
The
biotechnology and pharmaceutical industries are highly competitive. We face significant competition from companies in the pharmaceutical,
biotechnology and other related markets that are researching and marketing products designed to address Crohn’s Disease,
multiple sclerosis, other autoimmune diseases or immune disorders, inflammatory disorders, HIV/AIDS and cancer. Established pharmaceutical
companies that currently sell or are developing drugs in our markets of interest include, for example; Abbott Laboratories, Amgen,
AstraZeneca, Biogen Idec, Bayer, Elan, Johnson & Johnson, Merck, Merck Serono, Takeda, Novartis, Pfizer, Reata, Sanofi-Aventis
and Teva. Many or all of these established competitors are also involved in research and drug development regarding various OGF
receptors. Pharmaceutical and biotechnology companies which are known to be involved in immunotherapy research and related drug
development include Pfizer, Bristol-Myers Squibb, Merck, Takeda, Sanofi-Aventis, Incyte, and UCB Pharma among others.
We
are developing small molecule therapeutics that will compete with other drugs and alternative therapies that are currently marketed
or are being developed to treat Crohn’s Disease, HIV/AIDS, other autoimmune diseases and inflammatory disorders, HIV/AIDS
and cancer. If approved for marketing by the FDA, IRT-103 (LDN), our lead Inflammatory Bowel Disease (“IBD”) drug
candidate, would compete against existing IBD treatments such as Sulfasalazine (
Azulfidine
); Mesalamine (
Asacol, Rowasa
)
Corticosteroids; Azathioprine (
Imuran
) and mercaptopurine (
Purinethol
); Infliximab (
Remicade
); Adalimumab
(
Humira
); Certolizumab pegol (
Cimzia
); Methotrexate (
Rheumatrex
); Cyclosporine (
Gengraf, Neoral, Sandimmune
)
and Natalizumab (
Tysabri
). Similarly, other future drug candidates we are pursuing would compete against numerous existing
and established drugs and potentially against other novel drugs and therapies that are currently in development. We also anticipate
that we will face increased competition in the future as new companies enter our target markets and scientific developments surrounding
the chemokine system continue to develop.
Many
of our competitors have greater name recognition and financial, manufacturing, marketing, research and drug development resources
than we do. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources
being concentrated in our competitors. Large pharmaceutical companies in particular have extensive expertise in preclinical and
clinical testing and in obtaining regulatory approvals for drugs. In addition, academic institutions, government agencies, and
other public and private organizations conducting research may seek patent protection with respect to potentially competitive
products or technologies. These organizations may also establish exclusive collaborative or licensing relationships with our competitors,
thus giving our competitors a significant advantage. We may be unable to respond to competitive forces presently in the marketplace,
which would severely impact our business.
In
addition, in terms of the licensing of our LDN formulation to Complete Pharmacy and Medical Solutions, LLC, we compete against
branded drug companies, generic drug companies, outsourcing facilities and other compounding pharmacies. We are currently and
expect to continue our efforts on making available our proprietary compounded formulation through Complete Pharmacy and Medical
Solutions, LLC and other compounding pharmacies outside of the U.S. The drug products available through branded and generic drug
companies with which our formulation competes have been approved for marketing and sale by the FDA and are required to be manufactured
in facilities compliant with cGMP standards. As a result, some physicians may be unwilling to prescribe them. Because our proprietary
LDN formulation is compounded in accordance with The U.S. Federal Food, Drug, and Cosmetic Act Section 503B and is not required
to be, and has not been, approved for marketing and sale by the FDA, our business may be subject to limitations our competitors
with FDA-approved drugs may not face.
Under
state and federal laws applicable to compounding pharmacies, Complete Pharmacy and Medical Solutions, LLC is not permitted to
prepare significant amounts of a specific formulation in advance of a prescription, compound quantities for office use or utilize
a wholesaler for distribution for our formulation; instead, our compounded formulation must be prepared and dispensed in connection
with a physician prescription for an individually identified patient. Pharmaceutical companies typically sell most of their FDA-approved
products to large pharmaceutical wholesalers, who in turn sell to and supply hospitals and retail pharmacies. As a result, the
sale of our formulation by Complete Pharmacy and Medical Solutions, LLC is not scalable on the scope available to our competitors
with FDA-approved drugs, which may limit our potential for revenue.
We
may be subject to costly product liability claims related to our clinical trials and drug candidates and, if we are unable to
obtain adequate insurance or are required to pay for liabilities resulting from a claim excluded from, or beyond the limits of,
our insurance coverage, a material liability claim could adversely affect our financial condition.
Because
we conduct clinical trials with human patients, we face the risk that the use of our drug candidates may result in adverse side
effects to patients and to otherwise healthy volunteers in our clinical trials. We face even greater risks upon any commercialization
of our drug candidates. Although we will maintain product liability insurance for clinical trials, our insurance may be insufficient
to reimburse us for any expenses or losses we may suffer, and we will be required to increase our product liability insurance
coverage for the advanced clinical trials that we plan to initiate. We do not know whether we will be able to continue to obtain
product liability coverage and obtain expanded coverage on acceptable terms, or at all. We may not have sufficient resources to
pay for any liabilities resulting from a claim excluded from, or beyond the limits of, our insurance coverage. There is also a
risk that third parties that we have agreed to indemnify could incur liability. An individual may bring a product liability claim
against us if one of our drug candidates, products or compounded formulations cause, or is claimed to have caused, an injury or
is found to be unsuitable for consumer use. Any product liability claim brought against us, with or without merit, could result
in:
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withdrawal
of clinical trial volunteers, investigators, patients or trial sites;
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the
inability to commercialize our drug candidates;
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decreased
demand for our drug candidates;
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regulatory
investigations that could require costly recalls or product modifications;
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loss
of revenues;
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substantial
costs of litigation;
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liabilities
that substantially exceed our product liability insurance, which we would then be required to pay ourselves;
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an
increase in our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable
terms, if at all;
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the
diversion of management’s attention from our business; and
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damage
to our reputation and the reputation of our products.
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Our
business involves the use of hazardous materials. As a result, we, including our third party manufacturers, must comply with environmental
laws and regulations, which may be expensive and restrict how we do business.
Our
third party manufacturers’ activities and our own activities involve the controlled storage, use and disposal of hazardous
materials, including the components of our pharmaceutical products, test samples and reagents, biological materials and other
hazardous compounds. We and our manufacturers are subject to federal, state and local, and foreign laws and regulations governing
the use, generation, manufacture, storage, handling and disposal of these hazardous materials. We currently carry no insurance
specifically covering environmental claims relating to the use of hazardous materials. Although we believe that our safety procedures
for handling and disposing of these materials and waste products comply with the standards prescribed by these laws and regulations,
we cannot eliminate the risk of accidental injury or contamination from the use, storage, handling or disposal of hazardous materials.
In the event of an accident, state or federal or other applicable authorities may curtail our use of these materials and/or interrupt
our business operations. In addition, if an accident or environmental discharge occurs, or if we discover contamination caused
by prior operations, including by prior owners and operators of properties we acquire, we could be liable for cleanup obligations,
damages and fines. The substantial unexpected costs we may incur could significantly harm our financial condition and results
of operations.
Future
financings may adversely affect our stockholders or impose restrictions on our assets or operations, which may harm our business.
If
we raise additional capital by issuing equity securities or convertible debt securities, our existing stockholders’ ownership
will be diluted and the terms of any new equity securities may have preferences over our common stock. If we raise additional
capital through the issuance of debt securities, the debt will have rights senior to the holders of our common stock and may contain
covenants that restrict our operational flexibility or impose liens or other restrictions on our assets. In addition, the terms
of future financings may restrict our ability to raise additional capital, which would delay or prevent the further development
or commercialization of our drug candidates.
If
we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish potentially
valuable rights to our current drug candidates, potential products or proprietary technologies, or grant licenses on terms that
are not favorable to us. Additionally, we may consider pursuing strategic opportunity for our business and corporate structure
that may make us a more attractive investment candidate. If adequate funds are not available, our ability to achieve profitability
or to respond to competitive pressures would be significantly limited and we may be required to delay, significantly curtail or
eliminate the development of one or more of our drug candidates.
We
may be adversely affected by the current economic environment.
Our
ability to attract and retain collaboration partners or customers, invest in and grow our business and meet our financial obligations
depends on our operating and financial performance, which, in turn, is subject to numerous factors, including the prevailing economic
conditions and financial, business and other factors beyond our control, such as the rate of unemployment, the number of uninsured
persons in the United States and inflationary pressures. We cannot anticipate all the ways in which the current economic climate
and financial market conditions could adversely impact our business.
We
are exposed to risks associated with reduced profitability and potential financial instability of our collaboration partners or
customers, many of which may be adversely affected by volatile conditions in the financial markets. For example, unemployment
and underemployment, and the resultant loss of insurance, may decrease the demand for healthcare services and pharmaceuticals.
If fewer patients are seeking medical care because they do not have insurance coverage, our collaboration partners or customers
may experience reductions in revenues, profitability and/or cash flow that could lead them to reduce their support of our programs
or financing activities. If collaboration partners or customers are not successful in generating sufficient revenue or are precluded
from securing financing, they may not be able to pay, or may delay payment of, accounts receivable that are owed to us. This,
in turn, could adversely affect our financial condition and liquidity. To the extent economic challenges result in fewer individuals
pursuing or being able to afford our products once commercialized, our business, results of operations, financial condition and
cash flows could be adversely affected.
Our
internal computer systems, or the computer systems of our contractors or consultants, may fail or suffer security breaches, which
could result in a material disruption of our drug development programs.
Despite
the implementation of security measures, our internal computer systems and the computer systems of our contractors and consultants
are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and
electrical failures. While we have not experienced any such system failure, accident or security breach to date, if such an event
were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs.
For example, the loss of clinical trial data from completed or ongoing clinical trials for any of our drug candidates could result
in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent
that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure
of confidential or proprietary information, we could incur liability and the further development of our drug candidates could
be delayed.
Our
current and future operations substantially depend on our management team and our ability to have other key personnel, the loss
of any of whom could disrupt our business operations.
The
Company’s future success depends on the efforts and abilities of principal members of its senior management and scientific
staff to provide strategic direction, business development, operations management and maintenance of a cohesive and stable work
environment. The Company relies on the services of Dr. Nicholas P. Plotnikoff and Professor Fengping Shan. If we lost their services
or the services of any other key member of management, it could be impossible to replace them.
Additionally,
the Company’s ability to maintain, expand and renew existing business with its clients and maximize potential business opportunities
from new clients (in both the drug development and the drug discovery areas) depends on its ability to hire and retain scientists
with necessary skills. The scientists working for the Company must have the ability to lead ahead of continuing changes and trends
in drug discovery and development technologies to create the most innovative products on the market in order to remain competitive
within the drug development industry. The Company faces risks, challenges and competition attracting and retaining experienced
scientists and healthcare providers.
The
Company’s inability to hire qualified personnel may increase the workload for both existing and new personnel. The Company
may not be successful in attracting new healthcare providers, scientists and management or in retaining/motivating existing personnel.
The shortage of experienced healthcare providers and scientists or other factors may lead to increased recruiting, relocation
and compensation costs for the Company. Such increased costs may reduce profit margins or make hiring necessary experts (i.e.
healthcare providers or scientists) impracticable. If the Company is unable to attract or retain any of its key personnel its
ability to execute a competitive and profitable business plan will be adversely affected. Services and products will be less competitive
if not obsolete. If competing companies introduce superior technologies that compete with the Company’s services and products,
the Company may not be able to make the necessary enhancements to its services and products that will maintain a competitive position
in the marketplace. The Company’s competitive position, business, revenues and financial condition will be materially and
adversely affected.
Any
failure by the Company to comply with existing health care and drug regulations could harm its reputation, operating results,
the quality of the Company’s business strategy and the quality of the Company’s products.
The
Company has not experienced any failure to comply and has not received any notice or violation of either good clinical practices,
laboratory practices or good manufacturing practices. Any future failure by the Company to comply with existing health care and
drug regulations could result in the termination of ongoing research and/or the disqualification of data for submission to regulatory
authorities. Failure to comply with existing regulations will harm the Company’s reputation, brand name, its prospects for
immediate and future work and its operating results. For example, if the Company fails to verify that informed consent is obtained
from patient participants in connection with a particular clinical trial or grant deviations from the inclusion/exclusion criteria
in a study protocol, the data collected from that trial could be disqualified at which point the Company may be required to conduct
the trial again at no further cost to its client. Furthermore, the issuance of a FDA notice based on a finding of a material violation
of good clinical practice, good laboratory practice or good manufacturing practice requirements could materially and adversely
affect the Company.
Proposed
and future legislation or regulation may increase the cost of the Company’s business or limit its service and product offerings.
Federal,
state, and/or international authorities might adopt healthcare legislation or regulations that are more burdensome than existing
regulations. For example, recent product safety concerns and the creation of the Drug Safety Oversight Board could change the
regulatory environment for drug products including the process for FDA product approval and post-approval safety surveillance.
Such changes and other possible changes in regulation could increase the Company’s expenses or limit its ability to offer
some of its services or products. For example, the confidentiality of patient-specific information and the circumstances under
which it may be released for inclusion in the Company’s databases or used in other aspects of business are subject to substantial
government regulation. Additional legislation or regulation governing the possession, use and dissemination of medical record
information or other personal health information may require the Company to implement new security measures requiring substantial
expenditures or limiting the ability to offer services and products. These regulations might also increase costs by creating new
privacy requirements for the Company’s business mandating additional privacy procedures for its clinical research business.
Requirements
associated with being a public company will increase our costs significantly, as well as divert significant company resources
and management attention.
Prior
to June 2013, we were not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). We are working with our legal, independent accounting and financial advisors to identify those areas in which changes
should be made to our financial and management control systems to manage our growth and our obligations as a public company. These
areas include corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting
and accounting systems. We have made, and will continue to make, changes in these and other areas. However, the expenses that
will be required in order to adequately prepare for being a public company could be material.
Compliance
with the various reporting and other requirements applicable to public companies will also require considerable time and attention
of management. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private
company. The Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and NASDAQ, has imposed various requirements
on public companies. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives.
In addition, the changes we make may not be sufficient to allow us to satisfy our obligations as a public company on a timely
basis.
Moreover,
we anticipate that compliance with these rules and regulations will increase our legal, accounting and financial compliance costs
substantially. In addition, these rules and regulations may make our activities related to legal, accounting and financial compliance
more difficult, time-consuming and costly and may also place undue strain on our personnel, systems and resources. If these requirements
divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on
our business, financial condition and results of operations.
In
addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including
directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or
incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult
for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
We
estimate the additional costs we may incur to respond to these requirements to range from $100 to $500 thousand annually, although
unforeseen circumstances could increase actual costs.
As
an “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements, which could
leave our stockholders without information or rights available to stockholders of more mature companies.
For
as long as we remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (which
we refer to herein as the JOBS Act), we have elected to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not “emerging growth companies” including, but not limited
to:
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not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
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taking
advantage of an extension of time to comply with new or revised financial accounting standards;
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reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and
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exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved.
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We
expect to take advantage of these reporting exemptions until we are no longer an “emerging growth company.” Because
of these lessened regulatory requirements, our stockholders would be left without information or rights available to stockholders
of more mature companies.
If
we are unable to attract suitable and willing investigators and volunteers for clinical trials and product development, business
may suffer.
Our
clinical research studies rely on the accessibility and participation of physician investigators and volunteer subjects. Investigators
are typically located at hospitals, clinics or other sites and supervise administration of the study drug to patients during the
course of a clinical trial. Volunteer subjects generally include individuals from the locale where the studies are conducted.
Our clinical research development business could be adversely affected if it is unable to attract suitable and willing investigators
or volunteers on a consistent basis.
We
may not obtain government approval for our products and/or uses.
The
development and commercialization of pharmaceutical products are subject to extensive governmental regulation in the United States
and foreign countries. Government approvals are required to develop, market and sell potential drug candidates. Obtaining government
approval to develop, market and sell drug candidates is time-consuming and expensive. The clinical trial results for a particular
drug candidate might not satisfy necessary requirements to obtain government approvals. Even if we are successful in obtaining
all required approvals to market and sell a drug candidate, post-approval requirements and the failure to comply with other regulations
could result in suspension or limitation of government approvals.
In
connection with drug discovery activities outside of the United States, we and our strategic partners will be subject to foreign
regulatory requirements governing testing, approval, manufacturing, labeling, marketing and sale of pharmaceutical products. These
requirements vary with location. Even if approval has been obtained for a product in the United States, approval in a foreign
country must be obtained prior to marketing the product. The approval process in foreign countries may be more or less rigorous
than the United States and the time required for approval may be longer or shorter. Clinical studies conducted outside of a specific
country may not be acceptable. The approval of a pharmaceutical product in one country does not guarantee approval in another.
Even
if approved, the products that we may develop and market may be later withdrawn from the market or subject to promotional limitations.
We
may not be able to obtain the labeling claims necessary or desirable for the promotion of our treatments if approved. We may also
be required to undertake post-marketing clinical trials. If the results of such post-marketing studies are not satisfactory or
if adverse events or other safety issues arise after approval, the FDA or a comparable regulatory agency in another country may
withdraw marketing authorization or may condition continued marketing on commitments from us that may be expensive and/or time
consuming to complete. In addition, if we or others identify adverse side effects after any of our products are on the market,
or if manufacturing problems occur, regulatory approval may be withdrawn and reformulation of our products, additional clinical
trials, changes in labeling of our products and additional marketing applications may be required. Any reformulation or labeling
changes may limit the marketability of our products if approved.
Florida
Law and our Articles of Incorporation may protect our Directors and Officers from certain types of lawsuits.
Florida
law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain
types of conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages
incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have
the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor
judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers
and directors against claims, including claims arising out of their negligence, poor judgment or other circumstances.
We
may seek to grow our business through acquisitions of or investments in new or complementary businesses, products or technologies,
and the failure to manage acquisitions or investments, or the failure to integrate them with our existing business, could have
a material adverse effect on us.
From
time to time we expect to consider opportunities to acquire or make investments in other technologies, products and businesses
that may enhance our capabilities, complement our current products or expand the breadth of our markets or customer base. Potential
and completed acquisitions and strategic investments involve numerous risks, including:
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problems
assimilating the purchased technologies, products or business operations;
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issues
maintaining uniform standards, procedures, controls and policies;
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unanticipated
costs associated with acquisitions;
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diversion
of management’s attention from our core business;
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adverse
effects on existing business relationships with suppliers and customers;
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risks
associated with entering new markets in which we have limited or no experience;
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potential
loss of key employees of acquired businesses; and
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increased
legal and accounting compliance costs.
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We
have no current commitments with respect to any acquisition or investment. We do not know if we will be able to identify acquisitions
we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether
we will be able to successfully integrate any acquired business, product or technology into our business or retain any key personnel,
suppliers or distributors. Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate,
complete and integrate suitable target businesses and to obtain any necessary financing. These efforts could be expensive and
time-consuming, and may disrupt our ongoing business and prevent management from focusing on our operations. If we are unable
to integrate any acquired businesses, products or technologies effectively, our business, results of operations and financial
condition will be materially adversely affected.
We
may expend our limited resources to pursue a particular opportunity and fail to capitalize on current research and products that
may be more profitable or for which there is a greater likelihood of success.
Because
we have limited financial and managerial resources, we have focused on specific research programs, treatments, and products. As
a result, we may forego or delay pursuit of opportunities with other products or research that later may prove to have greater
commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial treatments or
profitable market opportunities. Our spending on current and future research and development programs may not yield any commercially
viable treatments.
We
are subject to risks associated with our non-U.S. operations.
The
Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally
prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or
retaining business. The FCPA also imposes accounting standards and requirements on publicly traded U.S. corporations and their
foreign affiliates which are intended to prevent the diversion of corporate funds to the payment of bribes and other improper
payments, and to prevent the establishment of “off books” slush funds from which such improper payments can be made.
Because of the predominance of government-sponsored healthcare systems around the world, many of our customer relationships outside
of the United States are with governmental entities and are therefore subject to such anti-bribery laws. Our internal control
policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents. Violations
of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction and
result in a material adverse effect on our business, results of operations and financial condition. We also could suffer severe
penalties, including criminal and civil penalties, disgorgement and other remedial measures, including further changes or enhancements
to our procedures, policies and controls, as well as potential personnel changes and disciplinary actions.
Furthermore,
we are subject to the export controls and economic embargo rules and regulations of the United States, including, but not limited
to, the Export Administration Regulations and trade sanctions against embargoed countries, which are administered by the Office
of Foreign Assets Control within the Department of the Treasury, as well as the laws and regulations administered by the Department
of Commerce. These regulations limit our ability to market, sell, distribute or otherwise transfer our products or technology
to prohibited countries or persons. A determination that we have failed to comply, whether knowingly or inadvertently, may result
in substantial penalties, including fines and enforcement actions and civil and/or criminal sanctions, the disgorgement of profits,
the imposition of a court-appointed monitor, the denial of export privileges and/or an adverse effect on our reputation.
These
and other factors may have a material adverse effect on our international operations or on our business, results of operations
and financial condition generally.
Because
our some of our manufacturing activities occur in Nicaragua, which is subject to political, economic and other uncertainties,
situations may arise that could have a material adverse effect on our business.
The
status of Nicaragua as a developing country may make it difficult for us to obtain additional financing for our projects. Notwithstanding
the progress achieved in recent years in political institutions and revitalizing the Nicaraguan economy, the present administration,
or any successor government, may not be able to sustain the progress achieved. While the Nicaraguan economy has experienced growth
in recent years, such growth may not continue in the future at similar rates or at all. If the economy of Nicaragua fails to continue
its growth or suffers a recession, our manufacturing efforts may be affected.
Further,
Nicaragua has in the past experienced a difficult security environment as well as political instability. In particular, various
illegal groups that may be active in and around regions in which we are present may pose a credible threat of terrorism, extortion
and kidnapping, which could have an adverse effect on our operations in such regions. In the event that continued operations in
these regions compromise our security or business principles, we may withdraw from these regions on a temporary or permanent basis,
which in turn, could have an adverse impact on our results of operations and financial condition. Any changes in regulations or
shifts in political attitudes are beyond our control and may adversely affect our business.
Our
independent auditors have expressed substantial doubt about our ability to continue as a going concern.
Due
to our net losses, negative cash flow and negative working capital, in their report on our audited financial statements for the
years ended December 31, 2017 and 2016, our independent auditors included an explanatory paragraph regarding substantial doubt
about our ability to continue as a going concern.
We
have incurred substantial losses since inception. Because of these losses, we will require additional working capital to develop
our business operations. We intend to raise additional working capital through private placements, public offerings, bank financing
and/or advances from related parties or shareholder loans.
There
are no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations.
To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient,
we will have to raise additional working capital. No assurance can be given that additional financing will be available, or, if
available, will be on terms acceptable to us. If adequate working capital is not available we may not increase our operations.
These
conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities
that might be necessary should we be unable to continue as a going concern.
Risks
Related to Intellectual Property
Our
inability to adequately protect our intellectual property rights could hurt business.
Our
commercial success will depend in part on obtaining and maintaining intellectual property protection for our products, formulations,
processes, methods and other technologies. We will only be able to protect these technologies and products from unauthorized use
by third parties to the extent that valid and enforceable intellectual property rights, including patents or other market exclusionary
rights apply.
The
patent positions of pharmaceutical companies, like ours, can be highly uncertain and involve complex legal and factual questions
for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies’
patents has emerged to date in the United States. The general environment for pharmaceutical patents outside the United States
also involves significant uncertainty. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced, or
that the scope of these patent rights could provide a sufficient degree of future protection that could permit us to gain or keep
our competitive advantage with respect to these products and technologies. For example, we cannot predict:
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the
degree and range of protection any patents will afford us against competitors, including whether third parties will find ways
to make, use, sell, offer to sell or import competitive products without infringing our patents;
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if
and when patents will issue;
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whether
or not others will obtain patents claiming inventions similar to those covered by our patents and patent applications; or
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whether
we will need to initiate litigation or administrative proceedings in connection with patent rights, which may be costly whether
we win or lose.
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Some
of our patents we have licensed may be subject to challenge and possibly invalidated or rendered unenforceable by third parties.
Changes in either the patent laws or in the interpretations of patent laws in the United States or other countries may diminish
the value of our intellectual property.
In
addition, others may independently develop similar or alternative products and technologies that may be outside the scope of our
intellectual property. Furthermore, others may have invented technology claimed by our patents before our licensors or we did
so, and they may have filed patents claiming such technology before we did so, weakening our ability to obtain and maintain patent
protection for such technology. Should third parties obtain patent rights to similar products or technology, this may have an
adverse effect on our business.
We
may also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate
or obtainable. Trade secrets, however, are difficult to protect. While we believe that we will use reasonable efforts to protect
our trade secrets, our own or our strategic partners’ employees, consultants, contractors or advisors may unintentionally
or willfully disclose our information to competitors. We seek to protect this information, in part, through the use of non-disclosure
and confidentiality agreements with employees, consultants, advisors and others. These agreements may be breached, and we may
not have adequate remedies for a breach. In addition, we cannot ensure that those agreements will provide adequate protection
for our trade secrets, know-how or other proprietary information or prevent their unauthorized use or disclosure.
If
competitors that have greater experience and financial resources learn our trade secrets, the competitors may copy or use our
trade secrets and other proprietary information in the advancement of their products, methods or technologies. If we were to prosecute
a claim that a third party had illegally obtained and was using our trade secrets, it could be expensive and time consuming and
the outcome could be unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade
secrets than courts in the United States. Moreover, if our competitors independently develop equivalent knowledge, we would lack
any legal or contractual claim to prevent them from using such information, and our business could be harmed.
The
Company’s most important intellectual property includes:
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For
IRT - 103 for Crohn’s disease, Patent Number 7879870, filed April 16, 2007, issued February 1, 2011, Methods for the
treatment of inflammatory and ulcerative diseases of the bowel (e.g., Crohn’s disease and ulcerative colitis) with low
dose opioid antagonists (e.g., naltrexone, nalmefene or naloxone), pharmaceutical compositions for use in such methods, and
methods for the manufacture of such pharmaceutical compositions.
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We
depend extensively on our license agreement with Pennsylvania State University for the development of IRT-101 for pancreatic
cancer covered by patents US Patent Numbers 6,737,397, CA 2,557,504, US 20010046968, US 6737397, US 6136780, US 20080015211,
US 20070053838, US 8003630, US 20110123437, US 7807368, US 7576180, US 7517649, US 20080146512, US 7122651, US 20060073565,
US 20050191241, Patent No 8,003,630 issued between 2001 and 2011. Our license agreement with Pennsylvania State University
may be terminated if we materially breach the agreement and fail to cure our breach during an applicable cure period. Our
failure to use commercially reasonable efforts to develop and commercialize OGF sometimes referred to as MENK (intravenous)
and IRT-101 in the United States and certain other specified countries or to perform our other diligence obligations under
the license agreement would constitute a material breach of the license agreement. In the event our license agreement with
Pennsylvania State University is terminated, we will lose all of our rights to develop and commercialize the drug candidates
covered by such license, which would harm our business and future prospects. We own a number of other patents having to do
with the development of MENK which would allow us to continue our development of those indications.
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We
may become subject to intellectual property suits that could cause us to incur significant costs or pay significant damages or
that could prohibit us from selling its products.
The
Company’s competitors also seek to obtain patents or other protection of their proprietary rights. Third parties may claim
in the future that the Company’s products infringe upon their proprietary rights. To date, there have been no claims of
infringement. However, in the future, intellectual property claims could force the Company to alter its existing products or withdraw
them from the market or could delay the introduction of new products.
Various
patents have been issued to the Company’s competitors and these competitors may assert that the Company’s products
infringe their patent or other proprietary rights. If the Company’s products are found to infringe third-party intellectual
property rights, the Company may be unable to obtain a license to use such technology, and it could incur substantial costs to
redesign its products or to defend legal actions.
The
drug discovery and development industry has a history of patent and other intellectual property litigation; thus, we may be involved
in costly intellectual property lawsuits.
There
has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical
and biotechnology industries. We or one of our collaborators may be subject to third party claims in the future that would cause
us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages, including treble damages
and attorney’s fees if we are found to be willfully infringing a third party’s patents. Further, if a patent infringement
suit were brought against us or our collaborators, we or they could be forced to stop or delay research, development, manufacturing
or sales of the product or drug candidate that is the subject of the suit. As a result of patent infringement claims, or in order
to avoid potential claims, we or our collaborators may choose to seek, or be required to seek, a license from the third party
and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable
terms, or at all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which would give
our competitors access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or
forced to redesign it, or to cease some aspect of our business operations if, as a result of actual or threatened patent infringement
claims, we or our collaborators are unable to enter into licenses on acceptable terms. This could harm our business significantly.
In
addition to infringement claims against us, if third parties prepare and file patent applications in the United States that also
claim technology to which we have rights, we may have to participate in interference proceedings with the United States Patent
and Trademark Office (“USPTO”) to determine the priority of invention. We may also become involved in similar opposition
proceedings in the European Patent Office regarding our intellectual property rights with respect to our products and technology.
The
failure to obtain or maintain patents, licensing agreements and other intellectual property could impact our ability to compete
effectively.
Our
success will depend, in part, on our ability to obtain and maintain patent protection for our drug candidates, preserve our trade
secrets, prevent third parties from infringing upon our proprietary rights and operate without infringing upon the proprietary
rights of others. While the patents we own have been issued, pending patent applications we have filed may not result in issued
patents or may take longer than we expect to result in issued patents. We cannot be certain that patents will be issued as a result
of any of our pending applications, and we cannot be certain that any of our issued patents, whether issued pursuant to our pending
applications or licensed from third parties, will give us adequate protection from competing products.
Composition
of Matter patents on APIs are generally considered to be the strongest form of intellectual property protection for pharmaceutical
products, as they apply without regard to any method of use. Entirely new individual chemical compounds, often referred to as
new chemical entities, are typically entitled to Composition of Matter coverage. However, we cannot be certain that the current
law will remain the same, or that our drug candidates will be considered novel and non-obvious by the USPTO and courts.
In
addition to Composition of Matter patents and patent applications, we also have filed Method of Use patent applications. This
type of patent protects the use of the product only for the specified method. However, this type of patent does not prevent a
competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of
the patented method. Moreover, even if these competitors do not actively promote their product for our targeted indication, physicians
may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement
of Method of Use patents, the practice is common and such infringement is difficult to prevent or prosecute.
Patent
applications in the United States and most other countries are confidential for a period of time until they are published. The
publication of discoveries in scientific or patent literature typically lags actual discoveries by several months or more. As
a result, we cannot be certain whether the Company or another inventor were the inventors of the issued patents and applications
or that the Company or another inventor were the first to conceive of the inventions covered by such patents and pending patent
applications or that the Company or another inventor were the first to file patent applications covering such inventions.
Others
may obtain issued patents that could prevent us from commercializing our product candidates or require us to obtain licenses requiring
the payment of considerable fees or royalties in order to enable us to conduct our business. As to those patents that we have
licensed, our rights depend on maintaining our obligations to the licensor under the applicable license agreement, and we may
be unable to do so.
We
have numerous issued patents and some patent applications pending before the USPTO. The protection may lapse before we manage
to obtain commercial value from the patents, which might result in increased competition and materially affect our position in
the market.
We
may be subject to claims that we or our employees or consultants have wrongfully used or disclosed alleged trade secrets of our
employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if we do not
successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel.
Many
of our employees were previously employed at universities, 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 these employees
or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers.
Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary
damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product
could hamper our ability to commercialize, or prevent us from commercializing our drug candidates, which could severely harm our
business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction
to management.
Some
of our intellectual property that was discovered through government funded programs may be subject to federal regulation such
as “march-in” rights, certain reporting requirements, and a preference for United States industry. Compliance with
such regulations may limit our exclusive rights, subject us to expenditure of resources with respect to reporting requirements,
and limit our ability to contract with foreign manufacturers.
Some
of our existing drug candidates, including LDN and MENK, and some of the research and development work conducted before we had
licensing rights may have been funded, at least in part, by the U.S. government and therefore would be subject to certain federal
regulations. Under the “march-in” provisions of the Bayh-Dole Act, the government may have the right under limited
circumstances to require the patent owners to grant exclusive, partially exclusive or non-exclusive rights to third parties for
intellectual property discovered through the government-funded program. The government can exercise its march-in rights if it
determines that action is necessary because the patent owner fails to achieve practical application of the new invention or because
action is necessary to alleviate health concerns or address the safety needs of the public. Intellectual property discovered under
the government-funded program is also subject to certain reporting requirements, compliance with which may require us to expend
substantial resources. Such intellectual property is also subject to a preference for U.S. industry, which may limit our ability
to contract with foreign product manufacturers for products covered by such intellectual property. We may apply for additional
U.S. government funding, and it is possible that we may discover compounds or drug candidates as a result of such funding. Intellectual
property under such discoveries would be subject to the applicable provisions of the Bayh-Dole Act.
Risks
Related to Government Regulation
The
regulatory approval process is expensive, time consuming and uncertain and may prevent us or our collaboration partners from obtaining
approvals for the commercialization of some or all of our drug candidates.
The
research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug products are
subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries which regulations
differ from country to country. Neither we nor our collaboration partners are permitted to market our drug candidates in the United
States until we receive approval of a NDA from the FDA. Neither we nor our collaboration partners have submitted an application
for or received marketing approval for any of our drug candidates. Obtaining approval of an NDA can be a lengthy, expensive and
uncertain process. In addition, failure to comply with FDA and other applicable U.S. and foreign regulatory requirements may subject
us to administrative or judicially imposed sanctions, including:
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warning
letters;
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civil
and criminal penalties;
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injunctions;
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withdrawal
of approved products;
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product
seizure or detention;
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product
recalls;
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total
or partial suspension of production; and
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refusal
to approve pending NDAs or supplements to approved NDAs.
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Regulatory
approval of an NDA or NDA supplement is not guaranteed, and the approval process is expensive and may take several years. The
FDA also has substantial discretion in the approval process. Despite the time and expense exerted, failure can occur at any stage,
and we could encounter problems that cause us to abandon or repeat clinical trials, or perform additional preclinical studies
and clinical trials. The number of preclinical studies and clinical trials that will be required for FDA approval varies depending
on the drug candidate, the disease or condition that the drug candidate is designed to address, and the regulations applicable
to any particular drug candidate. The FDA can delay, limit or deny approval of a drug candidate for many reasons, including, but
not limited to, the following:
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a
drug candidate may not be deemed safe or effective;
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FDA
officials may not find the data from preclinical studies and clinical trials sufficient;
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the
FDA might not approve our or our third party manufacturer’s processes or facilities; or
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the
FDA may change its approval policies or adopt new regulations.
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If
any of our drug candidates fail to demonstrate safety and efficacy in clinical trials or do not gain regulatory approval, our
business and results of operations will be materially and adversely harmed.
Even
if we receive regulatory approval for a drug candidate, we will be subject to ongoing regulatory obligations and continued regulatory
review which may result in considerable additional expense and subject us to penalties if we fail to comply with applicable regulatory
requirements.
Once
regulatory approval has been granted, the approved product and its manufacturer are subject to continual review by the FDA and/or
non-U.S. regulatory authorities. Any regulatory approval that we or our collaboration partners receive for our drug candidates
may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially
costly post-marketing follow-up studies to monitor the safety and efficacy of the product. In addition, if the FDA and/or non-U.S.
regulatory authorities approve any of our drug candidates, we will be subject to extensive and ongoing regulatory requirements
by the FDA and other regulatory authorities with regard to the labeling, packaging, adverse event reporting, storage, advertising,
promotion and recordkeeping for our products. In addition, manufacturers of our drug products are required to comply with current
cGMP regulations which include requirements related to quality control and quality assurance as well as the corresponding maintenance
of records and documentation. Further, regulatory authorities must approve these manufacturing facilities before they can be used
to manufacture our drug products, and these facilities are subject to continual review and periodic inspections by the FDA and
other regulatory authorities for compliance with cGMP regulations. If we or a regulatory authority discover previously unknown
problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the
product is manufactured, a regulatory authority may impose restrictions on that product, the manufacturer or us, including requiring
withdrawal of the product from the market or suspension of manufacturing. If we, our drug candidates or the manufacturing facilities
for our drug candidates fail to comply with regulatory requirements of the FDA and/or other non-U.S. regulatory authorities, we
could be subject to administrative or judicially imposed sanctions, including:
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warning
letters;
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civil
or criminal penalties;
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injunctions;
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suspension
of or withdrawal of regulatory approval;
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suspension
of any ongoing clinical trials;
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voluntary
or mandatory product recalls and publicity requirements;
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refusal
to approve pending applications for marketing approval of new drugs or supplements to approved applications filed by us;
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restrictions
on operations, including costly new manufacturing requirements; or
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seizure
or detention of our products or import bans.
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The
regulatory requirements and policies may change and additional government regulations may be enacted for which we may also be
required to comply. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation
or administrative action, either in the United States or in other countries. If we are not able to maintain regulatory compliance,
we will not be permitted to market our future products and our business will suffer.
The
availability of adequate third-party coverage and reimbursement for newly approved drugs is uncertain, and failure to obtain adequate
coverage and reimbursement from third-party payers could impede our ability to market any future products we may develop and could
limit our ability to generate revenue.
There
is significant uncertainty related to the third-party payor coverage and reimbursement of newly approved drugs. The commercial
success of our future products in both domestic and international markets depends on whether such third-party coverage and reimbursement
is available for our future products. Governmental payers, including Medicare and Medicaid, health maintenance organizations and
other third-party payers are increasingly attempting to manage their healthcare expenditures by limiting both coverage and the
level of reimbursement of new drugs and, as a result, they may not cover or provide adequate reimbursement for our future products.
These payers may not view our future products as cost-effective, and coverage and reimbursement may not be available to our customers
or may not be sufficient to allow our future products to be marketed on a competitive basis. Third-party payers are exerting increasing
influence on decisions regarding the use of, and coverage and reimbursement levels for, particular treatments. Such third-party
payers, including Medicare, are challenging the prices charged for medical products and services, and many third-party payers
limit or delay coverage and reimbursement for newly approved healthcare products. In particular, third-party payers may limit
the covered indications. Cost-control initiatives could cause us to decrease the price we might establish for products, which
could result in lower than anticipated product revenues. If the prices for our drug candidates decrease or if governmental and
other third-party payers do not provide adequate coverage or reimbursement, our prospects for revenue and profitability will suffer.
Even
if we obtain FDA approval of any product candidate we may develop or acquire in the future, we may never obtain approval or commercialize
our products outside of the U.S., which would limit our ability to realize their full market potential. If foreign approval is
obtained, there are risks in conducting business in international markets.
We
have and continue to seek other distribution and marketing partners for IRT-101 and IRT-103 (LDN) outside North America that will
and may market future products in international markets. In order to market any of our products we may develop or acquire outside
of the U.S., we must establish and comply with numerous and varying regulatory requirements of other countries regarding safety
and efficacy. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory
approval in one country does not mean that regulatory approval will be obtained in any other country. Approval procedures vary
among countries and can involve additional product testing and validation and additional administrative review periods. Seeking
foreign regulatory approvals could result in significant delays, difficulties and costs for us and require additional preclinical
studies or clinical trials which would be costly and time consuming. Regulatory requirements can vary widely from country to country
and could delay or prevent the introduction of our products in those countries. Satisfying these and other regulatory requirements
is costly, time consuming, uncertain and subject to unanticipated delays. In addition, our failure to obtain regulatory approval
in the U.S. or any foreign country may delay or have negative effects on the process for regulatory approval in other countries.
If we fail to comply with regulatory requirements in a foreign country or to obtain and maintain required approvals, our potential
market for our products will be reduced and our ability to realize the full market potential of our products will be harmed.
The
Company, either directly or through its collaborating partners, is working with drug regulatory authorities in Nicaragua, China
and in those African Nations where an FDA equivalent exists. The Company is working with the agencies to obtain local approval
for the therapies for each modality that we intend to market for. We believe this will reduce our risk due to The Agreement on
Trade Related Aspects of Intellectual Property Rights (“TRIPS”) which is an international agreement administered by
the World Trade Organization (“WTO”). TRIPS allows emerging nations to manufacture drugs around existing patents.
If
approved for commercialization in a foreign country, we intend to enter into agreements with third parties to market our products
whenever they may be approved and wherever we have the right to market them. Consequently, we expect that we will be subject to
additional risks relating to entering into international business relationships, including:
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lack
of adequate protection from intellectual property rights in foreign countries, which could occur if we do not have issued
patents in force in such foreign countries covering our products, their methods of use and methods of manufacture;
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the
potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices
(for instance, because the goods have patent protection in such country), opts to import goods from a foreign market (with
low or lower prices) rather than buy them locally;
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unexpected
changes in tariffs, trade barriers and regulatory requirements
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economic
weakness, including inflation, or political instability in particular foreign economies and markets;
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compliance
with laws for employees traveling abroad;
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foreign
taxes, including withholding of payroll taxes;
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foreign
currency fluctuations, which could result in increased operating expenses and reduced revenues;
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workforce
uncertainty in countries where labor unrest is more common than in the U.S.;
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production
shortages resulting from any events affecting the API and/or finished drug product supply or manufacturing capabilities abroad;
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business
interruptions resulting from geo-political actions, including war and terrorism, or natural disasters including earthquakes,
typhoons, floods and fires; and
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failure
to comply with Office of Foreign Asset Control rules and regulations and the Foreign Corrupt Practices Act
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These
and other risks may materially adversely affect our ability to attain or sustain revenue from international markets.
Healthcare
policy changes may have a material adverse effect on us.
Our
business may be affected by the efforts of government and third-party payers to contain or reduce the cost of healthcare through
various means. For example, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation
Act of 2010 (collectively, the Affordable Care Act or ACA), enacted in March 2010, substantially changed the way healthcare is
financed by both governmental and private insurers, and significantly impacted the pharmaceutical industry. With regard to pharmaceutical
products, among other things, ACA is expected to expand and increase industry rebates for drugs covered under Medicaid programs
and make changes to the coverage requirements under the Medicare D program. ACA has been held constitutional. This adds to the
uncertainty of the legislative changes enacted as part of ACA, and we cannot predict the impact that ACA or any other legislative
or regulatory proposals will have on our business. We expect both government and private health plans to continue to require healthcare
providers, including healthcare providers that may one day purchase our products, to contain costs and demonstrate the value of
the therapies they provide.
If
we fail to comply with healthcare regulations, we could face substantial penalties and our business, operations and financial
condition could be adversely affected.
Even
though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party
payers, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are
and will be applicable to our business. We could be subject to healthcare fraud and abuse and patient privacy regulation by both
the federal government and the states in which we conduct our business. The regulations that may affect our ability to operate
include, without limitation:
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the
federal healthcare program Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully
offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual
for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare
programs such as the Medicare and Medicaid programs;
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the
federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing
to be presented, false claims, or knowingly using false statements to obtain payment from the federal government, and which
may apply to entities like us which may provide coding and billing advice to customers;
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federal
criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating
to healthcare matters; and
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the
federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic
and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security
and privacy of protected health information; and state law equivalents of each of the above federal laws, such as anti-kickback
and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
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If
our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply
to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring
of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability
to operate our business and our financial results. Any action against us for violation of these laws, even if we successfully
defend against it, could cause us to incur significant legal expenses and divert Management’s attention from the operation
of our business. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws
may prove costly.
The
FDA may not accept the results of clinical trials conducted outside of the United States.
It
is possible that the FDA may not accept the results of our clinical trials; and this risk can increase when a clinical trial is
conducted outside of the United States. All clinical trials and clinical trial sites that are outside of the United States but
will be used to support a FDA application will be run in accordance with all US guidelines and regulations; however, this does
not guarantee the FDA’s acceptance of the clinical trial results. Clinical studies to support US licensure will only be
conducted in countries that are typically used to support a US licensure such as Canada, Australia, and countries within the EU.
We would need to obtain approval from the FDA to conduct the trial outside of the United States and/or to allow clinical sites
outside of the US, prior to initiation of such study. We would also need to ensure that the study is conducted in accordance with
local legal and regulatory requirements and all applicable United States federal regulations, European Union regulations, International
Conference on Harmonisation of Good Clinical Practice guidelines and any other applicable regulatory requirements for the overall
conduct of the clinical investigation.
Risks
Related to our Common Stock
Because
of their significant stock ownership, our chief executive officer, our other executive officers, and our directors and principal
stockholders may be able to exert control over us and our significant corporate decisions. Our other stockholders will have limited
ability to influence corporate actions or decisions.
This
concentration of ownership may harm the value of our common stock by, among other things:
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delaying,
deferring or preventing a change in control of our company;
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impeding
a merger, consolidation, takeover or other business combination involving our company; or
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causing
us to enter into transactions or agreements that are not in the best interests of all stockholders
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As
a group, our officers and directors own 14.0% of the outstanding common stock of the Company. Our other stockholders will have
limited ability to influence corporate actions or decisions.
The
price of our common stock may be volatile, and you may not be able to resell your shares.
An
active and liquid trading market for our common stock may not develop or be sustainable. Shareholders may be unable to sell shares
of common stock at or above their purchase price due to fluctuations in the market price of our common stock. The market price
of our common stock may fluctuate significantly in response to factors, some of which are beyond our control. Factors that could
cause volatility in the market price of our common stock include, but are not limited to:
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results
from, and delays in, clinical trial programs relating to our drug candidates, including the ongoing and planned clinical trials
for IRT-103 (LDN), IRT-101 (MENK) and other drug candidates;
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announcements
of regulatory approvals or disapprovals of our drug candidates including IRT-103 (LDN) and IRT-101 (MENK) or delays in any
regulatory agency review or approval processes;
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failure
or discontinuation of any of our research programs;
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loss
of significant clients or customers;
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loss
of significant strategic relationships;
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announcements
relating to future collaborations or our existing collaborations;
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our
failure to achieve and maintain profitability;
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changes
in earnings estimates and recommendations by financial analysts;
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changes
in market valuations of similar companies;
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wholesalers’
buying patterns;
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addition
or termination of clinical trials or funding support;
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regulatory
developments affecting our drug candidates or those of our competitors;
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the
Company’s sales decrease internationally;
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variations
in the level of expenses related to our drug candidates or future development programs;
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ability
to secure new government contracts and allocation of our resources to or away from performing work under government contracts;
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general
economic conditions in the United States and abroad;
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acquisitions
and sales of new products, technologies or business;
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market
conditions in the pharmaceutical, biopharmaceutical and biotechnology sectors;
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the
issuance of new or changed securities analysts’ reports or recommendations regarding us, our competitors or our industry
in general;
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actual
and anticipated fluctuations in our quarterly operating results;
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disputes
concerning our intellectual property or other proprietary rights;
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introduction
of technological innovations or new products by us or our competitors;
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manufacturing
issues related to our drug candidates for clinical trials or future products for commercialization;
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market
acceptance of our future products;
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deviations
in our operating results from the estimates of analysts;
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third
party payor coverage and reimbursement policies;
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new
legislation in the United States relating to the sale or pricing of pharmaceuticals;
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FDA
or other U.S. or foreign regulatory actions affecting us or our industry;
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product
liability claims or other litigation or public concern about the safety of our drug candidates or future drugs;
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our
ability to obtain necessary intellectual property licenses including, if necessary, those relating to IRT-103 (LDN) and other
drug candidates;
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the
outcome of any future legal actions to which we are a party;
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sales
of our common stock by our officers, directors or significant stockholders;
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frequent,
irregular, under market, or large sales of shares of our common stock by any shareholder;
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additions
or departures of key personnel; and
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external
factors, including natural disasters and other crises.
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In
addition, the stock markets in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular,
have experienced extreme volatility that has often been unrelated to the operating performance of the issuer. These broad market
fluctuations may adversely affect the trading price or liquidity of our common stock. In the past, when the market price of a
stock has been volatile, holders of that stock have sometimes instituted securities class action litigation suits against the
issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit
and the attention of our management would be diverted from the operation of our business.
Future
sales of our common stock or securities convertible or exchangeable for our common stock may depress our stock price.
If
our existing stockholders or holders of our convertible notes, options or warrants sell, or indicate an intention to sell substantial
amounts of our common stock in the public market, the trading price of our common stock could decline. The perception in the market
place that these sales may occur could also cause the trading price of our common stock to decline.
Certain
holders of shares of our common stock, warrants to purchase our common stock, and shares of common stock issuable upon exercise
of warrants will be entitled to rights with respect to the registration of their shares under the Securities Act. Registration
of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities
Act, except for shares purchased by affiliates. In addition, our directors may, and we expect that our executive officers will
establish programmed selling plans under Rule 10b5-1 of the Exchange Act, for the purpose of effecting sales of our common stock.
Any sales of securities by these stockholders, or the perception that those sales may occur, including the entry into such programmed
selling plans, could have a material adverse effect on the trading price of our common stock.
If
we sell shares of our common stock in future financings, common stockholders may experience immediate dilution and, as a result,
our stock price may decline.
We
may from time to time issue additional shares of common stock at a discount from the current trading price of our common stock.
As a result, our common stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold
at such a discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the
future, including the issuance of debt securities, preferred stock or common stock.
Provisions
of our charter documents or Florida law could delay or prevent an acquisition of the Company, even if the acquisition would be
beneficial to our stockholders, and could make it more difficult for stockholders to change management.
Provisions
of our amended and restated articles of incorporation, as amended, and amended and restated bylaws may discourage, delay or prevent
a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders
might otherwise receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempt by our
stockholders to replace or remove our current management by making it more difficult to replace or remove our board of directors.
We
do not anticipate paying any cash dividends on our capital stock in the foreseeable future, therefore capital appreciation, if
any, of our common stock will be our shareholders sole source of gain for the foreseeable future.
We
have never declared or paid cash dividends on our capital stock. We do not anticipate paying any cash dividends on our capital
stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development
and growth of our business. As a result, capital appreciation, if any, of the common stock will be our shareholders sole source
of gain for the foreseeable future.
If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our
stock price and trading volume could decline.
The
trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish
about us or our business. Securities and industry analysts do not currently, and may never, publish research on our Company. If
no securities or industry analysts commence coverage of our Company, the trading price for our stock would likely be negatively
impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade
our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. In addition,
if our operating results fail to meet the forecast of analysts, our stock price would likely decline. If one or more of these
analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our stock could decrease, which
might cause our stock price and trading volume to decline.
Our
board of directors is authorized to issue and designate shares of our preferred stock in additional series without stockholder
approval.
Our
amended and restated articles of incorporation, as amended, authorize our board of directors, without the approval of our stockholders,
to issue shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions
of our amended and restated articles of incorporation, as amended, as shares of preferred stock in series, and to establish from
time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights
of the shares of each such series and the qualifications, limitations or restrictions thereof. The powers, preferences and rights
of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value.
We do not currently have any class of preferred stock authorized.
Our
shares may be subject to the “penny stock” rules, which may subject you to restrictions on marketability and limit
your ability to sell your shares.
Broker-dealer
practices in connection with transactions in “Penny Stocks” are regulated by certain penny stock rules adopted by
the SEC. Penny stocks generally are equity securities with a price of less than $5.00 per share (other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system). The penny stock rules require a broker-dealer, prior
to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the risk associated with the penny stock market. The broker-dealer must also provide
the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson
in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.
In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer must make
a written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the
secondary market for a stock that becomes subject to the penny stock rules. The Company’s securities may be subject to the
penny stock rules, and investors may find it more difficult to sell their securities.
An
active and visible trading market for our common stock may not develop.
We
cannot predict whether an active market for our common stock will develop in the future. In the absence of an active trading market:
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Investors
may have difficulty buying and selling or obtaining market quotations;
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Market
visibility for our common stock may be limited; and
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A
lack of visibility for our common stock may have a depressive effect on the market price for our common stock
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Our
common stock is currently quoted on the OTC Market under the trading symbol “IMUN”. The OTC Market is unorganized,
inter-dealers, over-the-counter markets that provides significantly less liquidity than the New York Stock Exchange or NASDAQ.
No assurances can be given that we will ever obtain a listing for our securities on a senior exchange. The trading price of our
common stock is therefore expected to be subject to significant fluctuations in response to variations in quarterly operating
results, changes in analysts’ earnings estimates, announcements of innovations by us or our competitors, general conditions
in the industry in which we operate and other factors. These fluctuations, as well as general economic and market conditions,
may have a material or adverse effect on the market price of our common stock.
Because
we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging
growth company” our financial statements may not be comparable to companies that comply with public company effective dates.
We
have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1)
of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective
dates for public and private companies until those standards apply to private companies. As a result of this election, our financial
statements may not be comparable to companies that comply with public company effective dates, and thus investors may have difficulty
evaluating or comparing our business, performance or prospects in comparison to other public companies, which may have a negative
impact on the value and liquidity of our common stock.
We
may not register or qualify our securities with any state agency pursuant to blue sky regulations.
The
holders of our shares of common stock and persons who desire to purchase them in the future should be aware that there may be
significant state law restrictions upon the ability of investors to resell our shares. We currently do not intend to and may not
be able to qualify securities for resale in other states which require shares to be qualified before they can be resold by our
shareholders.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain
statements contained or incorporated by reference in this Form S-1 are considered forward-looking statements (within the meaning
of the Private Securities Litigation Reform Act of 1995) concerning our business, results of operations, economic performance
and/or financial condition, based on management’s current expectations, plans, estimates, assumptions and projections. Forward-looking
statements are included, for example, in the discussions about:
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strategy;
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new
product discovery and development;
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current
or pending clinical trials;
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our
products’ ability to demonstrate efficacy or an acceptable safety profile;
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actions
by the FDA and other regulatory authorities;
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product
manufacturing, including our arrangements with third-party suppliers;
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product
introduction and sales;
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royalties
and contract revenues;
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expenses
and net income;
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credit
and foreign exchange risk management;
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liquidity;
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asset
and liability risk management;
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the
outcome of litigation and other proceedings;
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intellectual
property rights and protection;
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economic
factors;
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competition;
and
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legal
risks.
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Any
statements contained in this report that are not statements of historical fact may be deemed forward-looking statements. Forward-looking
statements generally are identified by the words “expects,” “anticipates,” “believes,” “intends,”
“estimates,” “aims,” “plans,” “may,” “could,” “will,”
“will continue,” “seeks,” “should,” “predict,” “potential,” “outlook,”
“guidance,” “target,” “forecast,” “probable,” “possible” or the negative
of such terms and similar expressions. Forward-looking statements are subject to change and may be affected by risks and uncertainties,
most of which are difficult to predict and are generally beyond our control. Forward-looking statements speak only as of the date
they are made, and we undertake no obligation to update any forward-looking statement in light of new information or future events,
except as required by law, although we intend to continue to meet our ongoing disclosure obligations under the U.S. securities
laws and other applicable laws.
We
caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed
in, or implied by, the forward-looking statements, and therefore you should not place too much reliance on them. These factors
include, among others, those described herein, under “Risk Factors” and elsewhere in this Annual Report and in our
other public reports filed with the Securities and Exchange Commission. It is not possible to predict or identify all such factors,
and therefore the factors that are noted are not intended to be a complete discussion of all potential risks or uncertainties
that may affect forward-looking statements. If these or other risks and uncertainties materialize, or if the assumptions underlying
any of the forward-looking statements prove incorrect, our actual performance and future actions may be materially different from
those expressed in, or implied by, such forward-looking statements. We can offer no assurance that our estimates or expectations
will prove accurate or that we will be able to achieve our strategic and operational goals.
Forward-looking
statements are based on information we have when those statements are made or management’s good faith belief as of that
time with respect to future events, and are subject to significant risks and uncertainties that could cause actual performance
or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that
could cause such differences include, but are not limited to:
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our
lack of operating history;
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our
current and future capital requirements and our ability to satisfy our capital needs;
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our
inability to keep up with industry competition;
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interpretations
of current laws and the passages of future laws;
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acceptance
of our business model by investors and our ability to raise capital;
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our
drug discovery and development activities may not result in products that are approved by the applicable regulatory authorities.
Even if our drug candidates do obtain regulatory approval they may never achieve market acceptance or commercial success;
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our
reliance on key personnel, including our ability to attract and retain scientists;
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our
reliance on third party manufacturing to supply drugs for clinical trials and sales;
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our
limited distribution organization with no sales and marketing staff;
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our
being subject to product liability claims;
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our
reliance on key personnel, including our ability to attract and retain scientists;
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legislation
or regulation that may increase the cost of our business or limit our service and product offerings;
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risks
related to our intellectual property, including our ability to adequately protect intellectual property rights;
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risks
related to government regulation, including our ability to obtain approvals for the commercialization of some or all of our
drug candidates, and ongoing regulatory obligations and continued regulatory review which may result in significant additional
expense and subject us to penalties if we fail to comply with applicable regulatory requirements; and
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our
ability to obtain regulatory approvals in foreign jurisdictions to allow us to market our products internationally.
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Moreover,
new risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess
the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to
differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are
based on information available to us on the date of this registration statement. Except to the extent required by applicable laws
or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this registration
statement.