ITEM
1. BUSINESS
Overview
We
are a late-stage immuno-oncology company focused on designing, developing and commercializing innovative, proprietary, intra-tumoral
DNA-based therapeutics to stimulate and to augment anti-tumor immune responses for the treatment of cancers.
Our core technology platform ImmunoPulse® is a drug-device therapeutic modality platform comprised of proprietary intratumoral electroporation
(“EP”) delivery devices (the “OncoSec Medical System (“OMS”) Electroporation Device” or “OMS
EP Device”) and a proprietary DNA plasmid that triggers transient expression of target protein in cells. The OMS EP Device is designed
to deliver plasmid DNA-encoded drugs directly into a solid tumor and promote an immunological response against cancer. The OMS EP Device
can be adapted to treat different tumor types, and consists of an electrical pulse generator, a reusable handle and disposable applicators.
Our lead product candidate is a DNA-encoded interleukin-12 (“IL-12”) called tavokinogene telseplasmid (“TAVO”).
The OMS EP Device is used to deliver TAVO intratumorally, with the aim of reversing the immunosuppressive microenvironment in the treated
tumor. The activation of the appropriate inflammatory response can drive a systemic anti-tumor response against untreated tumors in other
parts of the body. In 2017, we received Fast Track Designation and Orphan Drug Designation from the U.S. Food and Drug Administration
for TAVO in metastatic melanoma, which could qualify TAVO for expedited FDA review, a rolling Biologics License Application review and
certain other benefits.
Our
current focus is to pursue our study of TAVO in combination with KEYTRUDA® (pembrolizumab)
in melanoma and triple negative breast cancer (“TNBC”).
Our KEYNOTE-695 study targets
advanced melanoma patients who are definitive anti-PD-1 therapy non-responders. In May 2017, we entered into a clinical trial collaboration
and supply agreement with a subsidiary of Merck in connection with the KEYNOTE-695 study. Pursuant to the terms of the agreement, both
companies will bear their own costs related to manufacturing and supply of their product, as well as be responsible for their own internal
costs. We are the study sponsor and are responsible for external costs. The KEYNOTE-695 study is a registration-directed, Phase 2b open-label,
single-arm, multicenter study in approximately 100 patients treated with TAVO in combination with KEYTRUDA® (pembrolizumab) in anti-PD-1
checkpoint (nivolumab or pembrolizumab) relapsed or refractory metastatic melanoma, being conducted in the United States, Canada, Australia
and Europe. The study completed enrollment in December 2020. In December 2020, the protocol was amended to include an additional cohort,
consisting of patients who progressed on prior treatment of both ipilimumab and nivolumab. Enrollment in this cohort was stopped in September
2021 because of sufficient data collected in this patient subpopulation. The amendment also enabled enrollment of approximately 25 additional
patients to be treated with an updated version of the OMS EP Device (using the GenPulse generator and Series 3 Applicator), in preparation
for FDA clearance. Based on and subject to the outcome of the study and feedback from FDA, we plan to file for accelerated approval with
the FDA for this patient population in the second half of 2022.
In May 2018, we entered into
a second clinical trial collaboration and supply agreement with Merck with respect to a Phase 2 study of TAVO in combination with KEYTRUDA®
to evaluate the safety and efficacy of the combination in patients with inoperable locally advanced or metastatic TNBC, who have previously
failed at least one systemic chemotherapy or immunotherapy. This study is referred to as KEYNOTE-890, Cohort 1. Pursuant to the terms
of the agreement, both companies will bear their own costs related to manufacturing and supply of their product, as well as be responsible
for their own internal costs. We are the study sponsor and are responsible for external costs. The KEYNOTE-890 study, Cohort 1 final
patient treatment was completed in December 2020. Interim data for Cohort 1 was initially presented at the San Antonio
Breast Cancer Symposium (“SABCS”) in December 2019, and an update on this cohort is planned for SABCS in December
2021. The study is a Phase 2 open-label, single-arm, multicenter study in the United States and Australia.
In
May 2019, the Company commenced an investigator-initiated Phase 1 clinical trial conducted by the University of California San Francisco
(“UCSF”) Helen Diller Family Comprehensive Cancer Center (“OMS-131”). This study targets patients with
Squamous Cell Carcinoma Head & Neck Cancer and is a single-arm open-label clinical trial in which 68 evaluable patients will receive
TAVO, KEYTRUDA® and epacadostat. Recruitment on this study has been halted after the last patient was treated in June 2021
while OncoSec and UCSF consider alterations in the design of the study.
In
June 2020, we amended our second clinical trial collaboration and supply agreement with Merck to include another Phase 2 study of TAVO
in combination with KEYTRUDA® plus chemotherapy to evaluate the safety and efficacy of the combination in patients with inoperable
locally advanced or metastatic triple negative breast cancer. This study is referred to as KEYNOTE-890, Cohort 2. Pursuant to
the terms of the amended agreement, both companies will bear their own costs related to the manufacture and supply of their product,
as well as be responsible for their own internal costs. We are the study sponsor and are responsible for external costs. The KEYNOTE-890,
Cohort 2 study began enrolling patients in January of 2021. We expect to complete enrollment in this cohort in 2022. The study is a Phase 2 open-label, single arm, multicenter study in
the United States and Australia.
In
August 2020, we commenced an Investigator-Initiated Phase 2 study conducted by the H. Lee Moffitt Cancer Center and Research Institute
and the University of South Florida Morsani College of Medicine to evaluate TAVO™ as neoadjuvant treatment (administered before
surgery) in combination with intravenous OPDIVO® (nivolumab) in up to 33 patients with operable locally/regionally advanced melanoma.
This Investigator-Initiated Phase 2 study has been designed to evaluate whether the addition of TAVO can increase the published anti-tumor
response observed with monotherapy OPDIVO®, an anti-PD-1 checkpoint inhibitor, in patients with locally/regionally advanced melanoma
prior to surgical resection of tumors. This study began enrolling patients in December of 2020 and is expected to complete enrollment
within eighteen months of the start of enrollment.
In
November 2020, we obtained exclusively licensed rights to the Cliniporator® electroporation gene electrotransfer platform
from IGEA Clinical Biophysics. The license encompasses a broad field of use for gene delivery in oncology, including use as part of our
visceral lesion applicator (“VLA”) program. This platform has been used for electrochemotherapy in and outside of Europe
in over 200 major oncological centers to treat cutaneous metastatic cancer nodules, including melanoma.
In
April 2020, we announced that Providence Cancer Institute, a part of Providence St. Joseph Health (“Providence”),
is pursuing a first-in-human Phase 1 clinical trial of OncoSec’s novel DNA-encodable, investigational vaccine, CORVax12, which
is designed to act as a prophylactic vaccine to prevent COVID-19. CORVax12 consists of our existing product candidate, TAVO™,
in combination with an immunogenic component of the SARS-CoV-2 virus developed by researchers at the National Institutes of Health
National Institute of Allergy and Infectious Diseases (“NIAID”). Providence investigators filed and received
an Investigator-Initiated Investigational New Drug (“IND”) Application; however, at this time, Providence does not intend
to continue further enrollment in this study and has transferred the Investigator Initiated IND to the Company.
In
April 2021, OncoSec Medical announced that it has received authorization to CE mark, GenPulse™, OMS EP Device for use in solid
tumors. The CE mark certification augments the Notified Body certification to the International Organization for Standardization’s
(“ISO”) 13485 standard for the design, development, manufacture and distribution of electroporation devices, which
is renewed annually, subject to a successful audit. The CE mark certification involved a comprehensive audit of our quality system,
as well as thorough evaluation and testing of the OMS EP Device to assure it performs safely and as designed. A CE mark indicates
the OMS EP Device complies with Directives of the European Commission and therefore can be marketed within the 31-nation European
Economic Area and Switzerland. The GenPulse is being used in certain clinical trial sites in Australia and the EU. We are currently
seeking FDA agreement to use GenPulse in U.S. clinical sites.
In
July 2021, we entered into a clinical trial collaboration and supply agreement with Merck with respect to a Phase 3 study of TAVOTM
in combination with KEYTRUDA® to evaluate the safety and efficacy of the combination in patients with Stage III
or IV unresectable, metastatic melanoma, and who are refractory to prior checkpoint therapy. This study is referred to as KEYNOTE-C87.
Pursuant to the terms of the agreement, both companies will bear their own costs related to manufacturing and supply of their product,
as well as be responsible for their own internal costs. We are the study sponsor and are responsible for external costs.
The trial is designed to be a global Phase 3 randomized clinical trial and is intended to support accelerated approval by the U.S. FDA
and/or serve as a pivotal study to support a full licensure.
We
intend to continue to pursue potential new trials and studies related to TAVO, in various tumor types. In addition, we are also developing
our next-generation EP device and applicator, including advancements toward prototypes, pursuing discovery research to identify other
product candidates that, in addition to IL-12, can be encoded into propriety plasmid-DNA and delivered intratumorally using EP. Specifically,
we are developing a new, propriety technology to potentially treat liver, lung, bladder, pancreatic and other difficult to treat visceral
lesions through the direct delivery of plasmid-based IL-12 with a new Visceral Lesions Applicator (“VLA”).
The new VLA has been designed
to work with low voltage EP generators, including but not limited to our proprietary APOLLOTM EP generator and Cliniporator®
to leverage plasmid-optimized EP and enhance the depth of transfection of immunologically relevant genes into cells located in
visceral organs. In early 2020, we had two poster presentations, one at the Society for Interventional Oncology (“SIO”)
and one at the Society for Interventional Radiology, where it presented preclinical data on both the new VLA and APOLLO generator. Additionally,
we successfully completed several large animal studies and aim to bring the new VLA into the clinic in 2023. By using our
next-generation technology with the new VLA (and in cutaneous/subcutaneous settings as well), our goal is to reverse the immunosuppressive
mechanisms of a tumor, as well as to expand our pipeline. We believe that the flexibility of our proprietary plasmid-DNA
technology will allow us to deliver other immunologically relevant molecules into the tumor microenvironment in addition to the
delivery of plasmid-DNA encoding for IL-12.
We
have established a collaboration with Emerge Health Pty (“Emerge”), the leading Australian company providing full registration,
reimbursement, sales, marketing and distribution services of therapeutic products in Australia and New Zealand, to commercialize TAVO
and have made it available under Australia’s Special Access Scheme (“SAS”). Emerge was acquired in late 2019 and in
June 2021 informed the Company that oncology will not be a core therapeutic focus for Emerge into the future. The collaboration was terminated
effective October 1, 2021, and the Company will not continue to participate in the SAS program.
Cancer
Immunotherapy Treatments: Background
Many
traditional modalities for treating cancer, such as chemotherapy, have limited survival benefit and are frequently
associated with significant negative side effects. Immunotherapy, which has received significant attention in recent years, focuses
on modulating the immune system to identify and eradicate cancer cells. Systemic delivery of immune-modulating cytokine proteins
such as interleukin-2 (IL-2), interleukin-10 (IL-10), or interleukin-12 (IL-12) had shown early indications of efficacy but was
associated with mechanism-based toxicity.
The development of
monoclonal antibody drugs which target and block critical “immune checkpoint” proteins such as anti-CTLA-4 (cytotoxic
T-lymphocyte-associated protein-4), anti-PD-1 (program cell-death-1) or anti-PD-L1 (programmed death-ligand-1), has been successful
at augmenting anti-tumor immunity with more easily controlled toxicity than systemic cytokines, and several agents have been
approved for the treatment of multiple sold tumor cancers. Although these new immuno-oncology agents have shown clinical benefit for
patients with solid tumors across multiple tumor types, a majority of patients will not respond (primary refractory) or will
relapse. One hypothesis for the primary refractory patients is that the tumor lacks infiltrating immune cells (immune desert) or the
pre-exisiting immune cells are unproductive (exhausted) or productive and limited to the periphery of the tumor (immune excluded).
Thus, novel agents that can alter the tumor immune environment directly, is an area of intense research.
The TAVO EP platform was developed
to address two unmet needs – the ability to safely deliver a powerful, well characterized, immune cytokine, Interleukin-12 to the
tumor where it is needed. Second, to leverage electroporation as a mechanism to deliver DNA medicines that are otherwise too toxic to
administer systemically and/or more effective in the tumor microenvironment.
CLINICAL
PROGRAMS
Our
Lead Product Candidate: TAVO
Our lead product candidate, TAVO,
is a drug-device combination. The drug consists of a plasmid construct called tavokinogene telseplasmid with plasmid DNA-encoded, IL-12,
and is delivered into a tumor using our proprietary EP Device. Our clinical data indicates that the in vivo gene transfer of plasmid
DNA-encoded IL-12 using EP is well-tolerated and anti-tumor activity has been observed after a single cycle of treatment. Importantly,
regression in distant, non-injected/non-electroporated lesions has also been observed (“abscopal effect”) in different solid
cancers.
Our
Clinical Pipeline
MELANOMA
Melanoma
is a deadly form of skin cancer with rapidly rising incidences both in the U.S. and internationally. The National Cancer Institute (“NCI”)
Surveillance, Epidemiology and End Results (“SEER”) Program estimates that 96,480 new melanoma cases were diagnosed in 2019,
representing 5.5% of all new cancer cases in the U.S. Overall, the five-year survival rate for melanoma, regardless of disease stage,
is high (92.2%); however, according to SEER 2019, for patients who present with metastatic disease and receive systemic treatment, the
five-year survival rate is considerably lower at less than 25%. Despite recent advances in therapy, advanced metastatic melanoma continues
to present a major and increasing burden with significant morbidity and mortality.
KEYNOTE-695
Study (ongoing)
The KEYNOTE-695 study is a
Phase 2b, open-label, single-arm, multi-center study of TAVO-EP in combination with an intravenous anti-PD-1 antibody, Merck’s
KEYTRUDA®, in patients with unresectable locally advanced or metastatic melanoma and confirmed progression on immediate prior anti-PD1
therapy. The KEYNOTE-695 study completed enrollment of the original patient cohort (105 patients) in December of 2020 during the Covid
pandemic, approximately half of the cohort was enrolled. The study is currently enrolling approximately 25 additional patients in an expansion
cohort in Australia, Canada and Europe to gain patient experience with the OMS EP Device (using the GenPulse generator and
Series 3 Applicator). The data from this study will support filing for accelerated approval with the FDA in 2022.
KEYNOTE-695
enrollment criteria with respect to anti-PD-1 checkpoint failure is highly restrictive. In order to be considered an anti-PD-1 checkpoint
failure, all patients must have histological or cytological confirmed diagnosis of unresectable melanoma (Stage III or IV) with progressive
locally advanced or metastatic diseases, be refractory/relapse to anti-PD-1 monoclonal antibodies, namely KEYTRUDA® (pembrolizumab)
or OPDIVO® (nivolumab), as either monotherapy or in combination with other approved checkpoint inhibitors or targeted therapies according
to their approved label, and must have relapsed as documented disease progression within 12 weeks of the last dose of anti-PD-1 monoclonal
antibodies according to RECIST v1.1, measured by radiologic assessment. Patients can have no intervening therapies between failure of
anti-PD-1 therapy and the TAVO / KEYTRUDA® combination treatment with the exception of approved BRAF/MEK inhibitor combinations.
Patients that are BRAF eligible may have received BRAF treatment. The primary endpoint of the study, by
blinded independent central review, is to assess the objective response rate (“ORR”) based on RECIST v1.1.
KEYNOTE-695
is a registration directed clinical trial. In order to be eligible for accelerated approval, the TAVO / KEYTRUDA® combination must
treat a serious condition and provide a meaningful advantage over available therapies. Prior to the commencement of the study, we
reviewed the patient inclusion and progression criteria, and other study requirements with FDA. In light of this review, we strictly
defined the patient population to be enrolled in KEYNOTE-695 to include only those patients who have definitively progressed on
prior anti-PD-1 checkpoint therapy.
OMS-102
(completed)
OMS-102
was an open-label, multi-center, Phase 2 trial of TAVO and KEYTRUDA® (pembrolizumab) in patients with advanced, metastatic melanoma.
In August 2015, we enrolled the first patient in our Phase 2 investigator-sponsored clinical trial led by the clinicians at the University
of California, San Francisco (“UCSF”). Huntsman Cancer Institute in Utah was the second clinical site. The primary
endpoint of this study was to assess the anti-tumor efficacy of the combination of TAVO and KEYTRUDA® in patients with stage III/IV
metastatic melanoma whose tumors are characterized by low frequency of CD8+/PD-1+/CTLA-4+ TILs (tumor
infiltrating lymphocytes). The primary endpoint of the study was best overall response rate by RECIST of the combination regimen. Recent
data suggests that patients whose tumors are lacking TILs or CD8+ T-cells at the tumor margin or generally have a low frequency
of CD8+/PD-L1+/CTLA-4+ TILs are unlikely to respond to anti-PD-1 therapies such as KEYTRUDA®, while
tumors with a frequency of CTLA-4+/PD-L1+/CD8+ >20% in the tumor are likely to have a clinical benefit.
Therapies, such as TAVO, that promote TIL generation and PD-L1 positivity play an important role in augmenting the clinical efficacy
of the anti-PD1/PD-L1 agents.
Initial
data were presented in February 2017 at ASCO-SITC and the trial stopped enrolling patients in September 2017, allowing us to progress
on KEYNOTE-695. The final data was selected for prominence at SITC 2017 and was presented during the oral poster session. The overall
response rate in the 22-patient population was 43% by RECIST v1.1. at week 24 (best overall response rate was 50% by clinical assessment),
with one Grade-3 adverse event of cellulitis that resolved with antibiotics. Based on these results, we believe the combination of TAVO
and KEYTRUDA® demonstrated efficacy in this low TIL metastatic melanoma patient population and was well-tolerated. Further, long-term
follow up has shown responses with significant durability, with all patients who experienced a response remaining in responding status.
To date only one patient has required additional surgery to maintain remission. Data from this study was published in the Clinical Cancer
Research journal in May 2020.
OMS-100
(completed)
OMS-100
was an open-label Phase 2 trial of TAVO monotherapy in patients with metastatic melanoma. On December 5, 2014, we released top-line six-month
data from a Phase 2 repeat dose trial of TAVO in patients with stage III/IV metastatic melanoma. We presented final data at the Melanoma
Bridge Conference in 2018. This study is now locked with the data collected at 6 clinical centers. Thirty (30) patients with stage III/IV
melanoma received up to four cycles of TAVO delivered by EP on days one, five and eight of each 12-week cycle. Of the 28 patients in
the study who were evaluable, an objective response rate of 35.7% (10/28 patients) was observed. Five patients (17.9%) had a CR, 5 patients
(17.9%) had a PR, 12 patients (42.9%) had SD. Of the distant untreated and assessed lesions that decreased in longest dimension by ≥
30%, 17.4% (20/115) were assessed. Of the 26 patients with ≥ 1 assessed lesion, 12 patients (46.2%) had ≥ 1 assessed distant lesion
with major regression (≥ 30%). Two patients were not evaluated due to not having evaluable distant untreated lesions. Other clinical
endpoints included objective response rate, local and distant lesion regression, duration of response, overall survival and safety. The
results of this study demonstrated that multiple treatment cycles of TAVO were well-tolerated, with no treatment-limiting toxicities.
The majority of adverse events were localized to the treatment site and were Grade-1 or -2 in severity.
In
order to continue to acquire clinical and immune correlational data on melanoma patients treated with TAVO, the protocol of the OMS-I100
study was amended in February 2014 to enroll up to an additional 30 patients. Enrollment in OMS-I100 Addendum was completed in March
2016. The study is complete and the Company presented final data at the Melanoma Bridge Conference held on November 29 –
December 1, 2018. The data was selected for an oral presentation and included new data demonstrating that local treatment with TAVO alone
led to whole-body immune responses associated with regression of untreated lesions in almost half of the 50 patients treated on the study.
Final data from this study was published in the Annals of Oncology in March 2020.
Following
this trial, a retrospective analysis of the patients who went on to receive an anti-PD-1/PD-L1 therapy was conducted. Results from this
retrospective analysis suggested that TAVO primes and enhances response rates to PD-1/PD-L1 blockade. Specifically, of the 29 patients
who completed TAVO, 14 subsequently received an anti-PD-1/PD-L1 treatment. Overall, five of these 14 patients (36%) experienced a complete
response and four patients experienced a partial response (29%), for an overall response rate of 65% (75% without intervening therapies).
Two patients experienced stable disease (14%) and three patients experienced progressive disease (21%). We believe this retrospective
sequential data could suggest combinatorial potential of an immune-priming effect with TAVO prior to anti-PD-1/PD-L1 therapy. Data from
this retrospective analysis formed the clinical rationale for conducting OMS-I102.
PHASE
2 INVESTIGATOR-INITIATED NEOADJUVANT STUDY
In
August 2020, we commenced an investigator-initiated Phase 2 study conducted by the H. Lee Moffitt Cancer Center and Research
Institute and the University of South Florida Morsani College of Medicine to evaluate TAVO™ as neoadjuvant treatment
(administered before surgery) in combination with intravenous OPDIVO® (nivolumab) in up to 33 patients with operable
locally/regionally advanced melanoma. This investigator-initiated Phase 2 study has been designed to evaluate whether the addition
of TAVO can increase the published anti-tumor response observed with monotherapy OPDIVO®, an anti-PD-1 checkpoint inhibitor, in
patients with locally/regionally advanced melanoma prior to surgical resection of tumors. This study is currently
enrolling.
TRIPLE
NEGATIVE BREAST CANCER (TNBC)
Breast
cancer is the most common cancer diagnosed among U.S. women and is the second leading cause of cancer-related deaths. Worldwide, approximately
170,000 new cases of TNBC are diagnosed each year, with TNBC representing one of the four main molecular subtypes of invasive breast
cancer, accounting for approximately 10 -20% of all breast cancer, according to breastcancer.org. According to the American Cancer Society,
for patients who present with Stage 4 metastatic disease, the five-year survival rate is considerably lower at approximately 22%.
TNBC
frequently affects younger women (under 40 years old) and is characterized by higher relapse rates than estrogen receptor positive breast
cancers. TNBC is also associated with an increased risk of recurrence, both locally and in distant sites including the lungs and brain.
Advanced TNBC remains a significant area of unmet medical need and there is no established standard-of-care. Chemotherapy is the current
standard-of-care treatment in the adjuvant, neoadjuvant, and metastatic settings. Due to the loss of the tumor cell receptors, patients
with TNBC do not benefit from hormonal therapy or treatments targeting the oncogenic HER2 pathway. The standard of care for patients
with recurrent and/or metastatic disease is cytotoxic chemotherapy, leading to a median survival of approximately 13 months from the
time of recurrence or diagnosis of distant metastases. Importantly, for patients with metastatic TNBC, the traditional chemotherapeutic
treatment approach has undergone limited advance in the last decades, and no regimen is specifically indicated in this unique patient
population.
KEYNOTE-890
study (ongoing)
KEYNOTE-890
is a Phase 2, open-label, single-arm, multi-center study of TAVO in combination with an intravenous anti-PD-1 antibody, Merck’s
KEYTRUDA®, in patients with histologically confirmed diagnosis of inoperable locally advanced or metastatic TNBC who have received
at least one prior line of approved systemic chemotherapy or immunotherapy.
In
collaboration with Merck, KEYNOTE-890, Cohort 1 completed enrollment in early 2020. Enrollment in Cohort 2 began in the first quarter
of 2021. We previously provided interim data from Cohort 1 in December, 2019 on the first group of patients enrolled from this study
at the SABCS. The fully enrolled Cohort 1 efficacy, durability, and safety data will be presented at SABCS the week of December
6, 2021. Based on the outcome of the study and feedback from FDA, we amended the KEYNOTE-890 clinical protocol to include TAVO in combination
with KEYTRUDA® plus chemotherapy to evaluate the safety and efficacy of the combination in treatment-naïve patients with inoperable
locally advanced or metastatic triple negative breast cancer, Cohort 2. The study is a Phase 2 open-label, single-arm, multicenter study
in the United States and Australia.
OMS-140
(completed)
OMS-140
is a Phase 2, monotherapy biomarker study in patients with advanced or metastatic TNBC. The study is being conducted at Stanford University
and is designed to assess whether TAVO increases TNBC tumor immunogenicity by driving a pro-inflammatory cascade that leads to increases
in cytotoxic tumor infiltrating lymphocytes (“TILs”). The presence and number of TILs is thought to be a key requirement
for promoting the anti-tumor activity of anti-PD-1. By driving cytotoxic immune cells into the tumor, TAVO could be used in combination
with checkpoint blockade therapies, which have reported some, but limited, activity in TNBC.
The
primary objective of the study is to evaluate the potential of TAVO to promote a pro-inflammatory molecular and histological signature,
and the secondary objectives include the evaluation of safety and tolerability, evaluation of local ablation effect (% of necrosis),
and description of other evidence of anti-tumor activity. The study has been subsequently amended to capture the post-TAVO treatments
and outcomes.
Preliminary
data was presented at the SABCS annual meeting in 2018 and enrollment in this trial (n=10) is now complete. The clinical observations
from this study prompted us to conduct KEYNOTE-890, which is currently underway.
SQUAMOUS
CELL CARCINOMA HEAD & NECK CANCER (SCCHN)
Head
and neck cancer represent approximately 4% of all cancers in the U.S., and it is estimated over 65,000 patients will develop head and
neck cancer this year with over 14,000 deaths.
OMS-131
(ongoing)
OMS-131
is an investigator-initiated Phase 2 clinical trial conducted by the University of California San Francisco Helen Diller Family Comprehensive
Cancer Center. This study stopped enrolling and amendments to the protocol are under consideration.
OMS-131,
also referred to as the “TRIFECTA” study, was formed from the clinical observations from a 2017 pilot study of TAVO in head
and neck cancer patients, which demonstrated clinical and biological results including evidence of synergy between TAVO and PD-1 antibodies
in the disease.
ROSWELL
PARK COMPREHENSIVE CANCER CENTER
The
Company has an ongoing research collaboration with Roswell Park Comprehensive Cancer Center (“Roswell Park”) to evaluate
the use of Roswell Park’s intravital microscopy (“IVM”) and TAVOPLUS (enhanced IL-12 DNA-plasmid), in combination
with our APOLLO™ EP generator in preclinical studies. The collaboration is led by Joseph Skitzki, MD, FACS, Associate Professor
of Immunology, Associate Professor of Surgery and Chair of the Melanoma/Sarcoma Disease Site Research Group at Roswell Park.
DUKE
UNIVERSITY
The Company has an ongoing
research collaboration with Duke University’s Center for Applied Therapeutics (“Duke University”) to evaluate TAVOPLUS
in combination or sequenced with a HER2-plasmid vaccine administered our APOLLO™ EP generator in preclinical studies. The
research is led by Herbert Kim Lyerly, M.D., George Barth Geller Professor, Professor of Immunology, Surgery and Pathology at Duke University
School of Medicine and a director on our board of directors. This ongoing work was recently reported in a peer reviewed journal titled
“Intratumoral Plasmid IL12 Expands CD8+ T Cells and Induces a CXCR3 Gene Signature in Triple-negative Breast Tumors
that Sensitizes Patients to Anti-PD-1 Therapy”.
In this study,
Duke investigators used mouse models of TNBC, to evaluate immune activation and tumor targeting of intratumoral IL-12 plasmid followed
by electroporation (tavokinogene telseplasmid; TAVO). Collaborators at Stanford further presented a single-arm, prospective clinical
trial of TAVO monotherapy in patients with treatment refractory, advanced TNBC (OMS-I140). Single-cell RNA sequencing of murine
tumors identified a CXCR3 gene signature (CXCR3-GS) following TAVO treatment associated with enhanced antigen presentation, T-cell
infiltration and expansion, and PD-1/PD-L1 expression. Assessment of pretreatment and posttreatment tissue from patients confirmed the
enrichment of this CXCR3-GS in tumors from patients that exhibited an enhancement of CD8+ T-cell infiltration following treatment.
One patient, previously unresponsive to anti-PD-L1 therapy, but who exhibited an increased CXCR3-GS after TAVO treatment, went
on to receive additional anti-PD-1 therapy as their immediate next treatment after OMS-I140, and demonstrated a significant clinical
response. These data show a safe, effective intratumoral therapy that can enhance antigen presentation and recruit CD8 T cells, which
are required for the antitumor efficacy. They identify a TAVO treatment-related gene signature associated with improved outcomes
and conversion of nonresponsive tumors, potentially even beyond TNBC.
Visceral
Lesion Applicator
We
are developing our next-generation intratumoral delivery device and applicators, including advancements toward prototypes, pursuing discovery
research to identify other product candidates that, in addition to IL-12, can be encoded into propriety plasmid-DNA, delivered intratumorally.
Specifically, we are developing a new, propriety technology to potentially treat liver, lung, bladder, pancreatic and other difficult
to treat visceral lesions through the direct delivery of plasmid-based IL-12 with a new VLA.
The
VLA has been designed to work with low voltage EP generators. Moving forward, we see significant opportunity to leverage this innovative
technology to secure new partnerships that may allow us to expand our capabilities and drive shareholder value.
Throughout
2019 and 2020, we have successfully completed five large animal studies and aim to bring the VLA into the clinic during 2023. Preclinical
data was presented in posters at the 2020 Society for Interventional Oncology meeting, where it was awarded “Best
Technology Scientific Abstract”, and the 2020 Society for Interventional Radiology meeting.
Our
OMS Electroporation Device
The
effectiveness of many drugs and DNA-based therapeutics is dependent upon their crossing the cell membrane. In the 1970s, it was discovered
that the brief application of high-intensity, pulsed electric fields to the cell resulted in a temporary and reversible increase in the
permeability of the cell membrane, a mechanism known as “electroporation.”
The
transient, reversible nature of the electrical permeabilization of cell membranes and the resulting increase in intracellular delivery
of therapeutic agents is the underlying basis of our electroporation facilitated therapeutic approach. Our EP delivery system consists
of an electrical generator, a reusable applicator handle and disposable tips. While the extent of membrane permeabilization depends on
various electrical, physical, chemical, and biological parameters, research with EP delivery has demonstrated an improvement in cellular
uptake of chemical molecules such as chemotherapeutic agents (e.g., bleomycin and cisplatin), and nucleic acids (e.g., DNA and RNA).
Multiple
viral and non-viral delivery modalities have been developed to deliver nucleic acids into cells, however, many of these methods have
faced challenges related to the safe and efficient expression of the DNA-encoded biologic into the intended target cells. For example,
viral mediated delivery technologies appear to be efficient at transfecting cells, but they have suffered from significant safety issues
related to the immunogenicity of the viral vector, shedding of the virus, and potential integration of the viral DNA into the host genome.
Other non-viral delivery methods have employed the use of nanotechnology to coat the DNA with fat molecules, called lipids. Although
these lipid nanoparticle technologies have been used extensively in the clinic to deliver DNA-encoded biologic agents, few particles
have been developed with the ability to specifically target cancer cells; instead, many of these particles naturally target the liver,
which can lead to potential liver toxicities.
Like
viral vectors and lipid nanoparticle technologies, EP has been used extensively in the clinic to deliver multiple therapeutic agents,
including DNA. However, unlike these other technologies, EP has not seen the same safety concerns. In fact, the use of EP to deliver
bleomycin intratumorally has been approved for use in Europe for cancers, such as basal cell carcinoma, and has been accepted across
many European countries, including the United Kingdom.
Our
OMS EP Devices are designed to create favorable conditions to deliver plasmid DNA encoding immunotherapeutic cytokines directly
into cells of the tumor microenvironment. The cytokine-encoding plasmid is first injected into the tumor. A needle-electrode array then
delivers the electrical pulses produced in the pulse generator.
Our
lead product candidate, TAVO, consists of a plasmid construct encoding the proinflammatory cytokine IL-12 that is injected into the tumor
and delivered into the tumor cells through in vivo electroporation using our OMS EP Device. We are also researching other DNA-encoded,
immunologically-active molecules, with an aim of developing additional immunotherapeutic drugs that, when delivered using our OMS EP
Device, may be capable of breaking the immune system’s tolerance to cancer.
Commercialization
Strategy
Our
primary focus is to continue our clinical development strategy for TAVO, including our planned and ongoing clinical trials discussed
under “Clinical Programs” above and potentially other trials we may pursue in the future.
As
a part of our commercialization strategy, we also regularly investigate and evaluate potential collaboration opportunities to identify
rational combinations with existing and emerging monoclonal antibody therapies and other drugs. For instance, we may seek to collaborate
with pharmaceutical or biotechnology companies to provide us with access to complementary technologies and/or greater resources. In addition,
we may seek to expand the applications of our technologies through strategic collaborations or other opportunities, such as in-licensing
or strategic acquisitions, and we may seek to out-license our intellectual property to other companies to leverage our technologies for
applications that we may not choose to internally and independently develop.
Manufacturing
and Supply
Currently,
we assemble and store certain components of our OMS EP system, which is our proprietary delivery mechanism for our TAVO product
candidate, and we utilize the services of qualified contract manufacturers to make the remaining components of this system and for the
manufacturing, testing, packaging and storage of our plasmid product candidate for clinical trials or other studies. The manufacture
of our systems and product supplies requires significant expertise and capital investment, including the use of advanced manufacturing
techniques and process controls. We do not own and have no plans to build our own clinical or commercial Good Manufacturing Practice
(“GMP”) manufacturing capabilities for any device, drug substance or drug product. We expect to increase our reliance on
third-party manufacturers.
We
rely upon a small number of suppliers and manufacturers for our clinical activities. For manufacturing and distributing we use Cryosite,
PCI, Richter-Helm Biologics, VGXI, Baxter Oncology GmbH, SGS, Minnetronix and EG Medacys, which collectively account for approximately
90% of clinical materials and EP systems support and materials. We believe there are alternate sources of raw material supply and finished
goods manufacturing to satisfy our requirements, although transitioning to other vendors, if necessary, could result in significant delay
or material additional costs. In addition, for combination trials, we typically rely exclusively on one supplier of the non-company-owned
product used in the trial, such as our reliance upon Merck for the supply of KEYTRUDA® in the KEYNOTE-695 and KEYNOTE-890 studies.
We
are ISO 13485:2016 certified and comply with all appropriate standards and authorities for the assembly, manufacturing and activities
we conduct, and we have established an audited quality management system for these activities. In addition, all contract manufacturers
that we use must comply with various requirements enforced by the FDA through its facilities inspection programs. See “Regulation”
below for more information.
Competition
The
biotechnology industry is intensely competitive. This competitive environment stimulates an ongoing and extensive search for technological
innovation and necessitates effective and targeted marketing strategies to communicate the effectiveness, safety and value of products
to healthcare professionals in private practice and group practices and payors in managed care organizations, group purchasing organizations,
and Medicare and Medicaid services.
We
face competition from a number of sources, including large pharmaceutical companies, biotechnology companies, academic institutions,
government agencies and private and public research institutions. We compete against all other developers of cancer treatments, including
other immunotherapy treatments as well as other types of treatments for the cancer indications on which we are focused. In particular,
a number of companies, some of which are large, well-established pharmaceutical companies, have development strategies similar to our
current focus. These companies could include, among others, Bristol Myers-Squibb, Iovance Therapeutics, Syndax, Dynavax Technologies,
Checkmate, Immunomedics and Idera Pharmaceuticals. In addition, we also compete with other clinical-stage biotechnology companies for
funding and support from healthcare and other investors and potential collaboration relationships with larger pharmaceutical or other
companies, as well as for personnel with expertise in our industry. We are smaller and less well-funded than many of our competitors,
and we have a shorter and less proven operating history and a less recognizable and established brand name than many of our competitors.
In addition, some of our competitors have commercially available products, which provide them with operating revenue and other competitive
advantages.
Our
competitors may obtain regulatory approval of their product candidates more rapidly than we can or may obtain more robust patent protection
or other intellectual property rights to protect their product candidates and technologies, which could limit or prevent us from developing
or commercializing our product candidates. If we are able to obtain regulatory approval of one or more of our product candidates, we
will face competition from approved products or products under development by larger companies that may address our targeted indications.
If we directly compete with these very large entities for the same markets and/or customers, their greater resources, brand recognition,
sales and marketing experience and financial strength could prevent us from capturing a share of these markets or customers. Our competitors
may also develop products that are more effective, more useful, better tolerated, subject to fewer or less severe side effects, more
widely prescribed, less costly or more widely accepted for other reasons than any of our products that obtain regulatory approvals, and
our competitors may also be more successful than us in manufacturing, distributing and otherwise marketing their products.
We
expect our product candidates, if approved and commercialized, to compete on the basis of, among other things, product efficacy and safety,
time to market, price, coverage and reimbursement by third-party payors, extent of adverse side effects and convenience of treatment
procedures. We may not be able to effectively compete in any of these areas. Presently, we compete with other biotechnology companies
for funding and support on the basis of our technology platforms and the potential value of our product candidates based on the factors
described above.
Intellectual
Property
We
believe our success and ability to compete depends in large part on our ability to protect our proprietary rights and technologies, including
obtaining and maintaining patent, trademark and trade secret protection of our product candidates and their respective components and
underlying technologies, including devices, formulations, manufacturing methods and methods of treatment, and appropriately safeguarding
unpatented proprietary rights, including trade secrets and know-how. As of October 2021, we owned 66 issued patents (5 U.S. and
61 foreign) and 94 pending patent applications (13 U.S. and 81 foreign). We are currently prosecuting pending patent applications
in various jurisdictions. We have issued patents in the U.S., Europe and Japan with claims directed to cytokine-based intratumoral immunotherapies
in combination with a checkpoint inhibitor. The Japanese patent was issued May 7, 2021. U.S. Patent 11071860, with claims directed
to electroporation systems and devices having enhanced safety features including novel monitoring and crowbar trigger circuitries was
issued on July 27, 2021. Japanese patent 6860497 directed to various adaptive electroporation systems and delivery assemblies was issued
on March 30, 2021. In addition, we have licensed intellectual property rights that allow us to use certain EP technology to deliver DNA-based
cytokines as an immunotherapy, as well as catheter-based delivery devices. From these in-licensed portfolios, we have access to 79 issued
U.S. and foreign issued patents (6 from USF, 16 from Gaeta Therapeutics, and 57 from Inovio Pharmaceuticals, Inc. (Inovio)) and 13 U.S.
and foreign pending patent applications (2 from USF, 3 from Gaeta Therapeutics, and 8 from Inovio). We expect to continue to file additional
patent applications, if and when appropriate, as our research and development efforts continue. The majority of the patents in our portfolio,
including owned and in-licensed patents and fundamental patents directed toward our proprietary technology, expire between 2023 and 2041.
We have previously obtained patent protection through an asset purchase agreement with Inovio covering our original clinical electroporation
device. The primary patents providing protection of this original device have expired. However, the Company has recently filed applications,
in 2019-2021, on our next generation electroporation devices and applicator handles and our next generation DNA-based cancer immunotherapeutics
and will continue to file patent applications this year.
In
addition, we have entered into a cross-license agreement for certain electroporation technology with Inovio, including patent protection
for some of our clinical electroporation devices (some of which, as noted above, have recently expired or will soon expire). Under the
terms of the agreement, Inovio has granted us a non-exclusive, worldwide license under certain of its electroporation patents, and in
exchange, we have granted to Inovio an exclusive license to certain of our purchased technology in a limited field of use.
Regulation
Commercialization
Approval for our Product Candidates
Biotechnology
companies are subject to extensive, complex, costly and evolving government regulation relating to the ability to market and sell any
therapeutic or medical device. In the United States, these regulations are principally enforced by the FDA and state government agencies.
Outside the United States, these regulations are typically administered by various health authorities comparable to the FDA in countries
where products or product candidates are researched, tested, manufactured and/or marketed.
United
States
General
In
the United States, the federal Food, Drug and Cosmetic Act, or FDCA, other state statutes and regulations, many of which are administered
and enforced by the FDA, govern or influence, among other things, the research, development, verification, validation, clinical testing,
manufacturing, storage, record-keeping, approval, labeling, promotion, marketing, distribution, post-approval monitoring and reporting,
sampling, import and export of product candidates such as ours. Under these regulations, we and our contract manufacturers may be subject
to periodic inspection of our facilities, quality controls and other procedures, and operations and/or the testing of our product candidates
during and after the approval process for a product candidate, to confirm compliance with all applicable regulations, including current
good manufacturing practices (“cGMPs”) and other applicable requirements.
Possible
penalties or other consequences for failure to comply with these regulatory requirements include, among others, observations, notices,
citations and/or warning letters that could force us to modify our clinical programs or other activities; clinical holds on our ongoing
clinical programs; adverse publicity from the FDA or others; the FDA’s suspension of its review of pending applications; fines;
product recalls or seizures; total or partial suspension of production and/or distribution; labeling changes; withdrawal of previously
granted product approvals; enforcement actions; injunctions and civil or criminal prosecution. Any such sanctions, if imposed, could
have a material adverse effect on our business, operating results and financial condition.
Approval
Process
Before
any new drug, device or dosage form, including a new use of a previously approved drug or biologic, can be marketed in the United States,
FDA approval is required. The process required by the FDA before a product may be marketed in the United States generally involves, among
other things:
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completion
of non-clinical testing;
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completion
of chemistry, manufacturing, and control testing, commonly known as CMC;
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submission
to the FDA of an investigational new drug application (“IND”) for human clinical testing, which must be accepted and
effective before human clinical trials may begin in the United States;
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performance
of adequate human clinical trials in accordance with good clinical practices to establish the safety and efficacy of the proposed
product for each intended use;
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for
a stand-alone medical device, submission to the FDA of a premarket approval application (“PMA”) or 510(k) premarket notification,
which the FDA must review and approve; and
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for
a therapeutic, submission to the FDA of a NDA or BLA which the FDA must review and approve.
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The
pre-clinical and clinical testing and approval process can take many years and requires substantial company time, effort and financial
resources. The receipt and timing of approval, if any, is uncertain. The results of pre-clinical tests, together with certain manufacturing
information, analytical data and a proposed clinical trial protocol and other information, are submitted as part of an IND to the FDA.
Once an IND is in effect, the protocol for each clinical trial to be conducted under the IND must be submitted to the FDA, which may
or may not allow the trial to proceed. A separate submission to an existing IND must also be made for each successive clinical trial
conducted during product development.
Clinical
trials involve the administration of the investigational new drugs or biologics to human subjects under the supervision of qualified
investigators in accordance with good clinical practice requirements. For purposes of a NDA or BLA submission and approval, human clinical
trials are typically conducted in the following sequential phases, which may overlap or be combined:
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Phase
1: The product candidate is initially introduced to healthy human subjects or patients and tested for safety, dose tolerance,
absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its safety, tolerability and
effectiveness.
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Phase
2: The product candidate is administered to a limited patient population to identify possible adverse effects and safety risks,
to preliminarily evaluate the efficacy of the product for specific targeted indications, and to determine dose tolerance and optimal
dosage. Multiple Phase 2 clinical trials may be conducted.
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Phase
3: The product candidate is administered in an expanded patient population at multiple, geographically-dispersed clinical trial
sites, to obtain additional evidence of clinical efficacy and safety and to establish the overall risk-benefit relationship of the
product candidate.
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Phase
4: In some cases, the FDA may condition approval of a NDA or BLA for a product candidate on the sponsor’s agreement to
conduct additional post-approval clinical trials to further assess the safety and efficacy of the drug or biologic.
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The
results of product development, pre-clinical studies and clinical trials are submitted to the FDA as part of a NDA or BLA requesting
approval to market the product. NDAs or BLAs must also contain extensive information relating to the product’s pharmacology, chemistry,
manufacture, controls, and proposed labeling, among other things.
Once
the NDA or BLA submission has been accepted, the FDA begins an in-depth substantive review. Pursuant to the FDA’s performance goals,
NDA and BLA standard reviews are to be completed within 10 months, subject to extensions by the FDA. Before approving a NDA or BLA,
the FDA often inspects the facility or facilities where the product is manufactured and will not approve an application unless it determines
that the manufacturing processes and facilities are in compliance with good manufacturing practices. Additionally, the FDA will typically
inspect one or more clinical sites to assure compliance with good clinical practices before approving a NDA or BLA. If the FDA determines
that a NDA or BLA is not approvable, then the FDA may outline the deficiencies and often will request that additional information be
provided or additional clinical trials be completed. Notwithstanding the submission of any requested additional testing or information,
the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
Further,
even if regulatory approval of a product candidate is obtained, such approval would specify the indicated uses for which the product
may be marketed. Additionally, we would be subject to pervasive and continuing regulation by the FDA with respect to any approved product,
including requirements related to, among other things, drug or device listing, record-keeping, periodic reporting, product sampling and
distribution, manufacturing practices, labeling, advertising, promotion, and reporting of adverse events associated with any approved
products. Moreover, we could be required to conduct post-approval studies, such as Phase 4 clinical trials, or surveillance programs
to monitor the safety of any approved products. FDA has the authority to stop or limit further marketing of a product or impose more
stringent labeling restrictions based on the results of these post-approval programs or in the event of any unexpected or serious health
or safety concern regarding any approved product.
Non-U.S.
Regulation
If
we pursue research and/or commercialization activities for our product candidates outside the United States, we would need to obtain
necessary approvals from the regulatory authorities comparable to the FDA in applicable jurisdictions before we could commence clinical
trials or marketing of our product candidates in these jurisdictions. In addition, we would become subject to a variety of foreign regulations
regarding safety and efficacy of our product candidates and governing, among other things, clinical trials, commercial activities, manufacture
and distribution of our product candidates. The requirements to obtain product approvals vary widely from country to country, and the
FDA’s approval requirements, review procedures and timelines may not be the same as or even similar to the requirements or a comparable
foreign regulator. As a result, even if we obtain regulatory approval for a product candidate in one country, we may be required to undertake
additional clinical trials or studies, submit additional information, wait for longer review periods or make other efforts in order to
obtain regulatory approvals in other desirable geographic markets.
Healthcare
Laws and Regulations
The
healthcare industry is heavily regulated, constantly evolving and subject to significant change and fluctuation. The U.S. federal and
state healthcare laws and regulations that currently impact our business include, among others:
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the
laws and regulations administered and enforced by the FDA, including the FDCA, and other federal statutes and regulations, discussed
above;
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the
federal Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act, referred to collectively
as the Affordable Care Act, which, in general and among other things, expands the government’s investigative and enforcement
authority, including requiring pharmaceutical companies to record and disclose to government agencies any transfers of value to doctors
and teaching hospitals, and increases the penalties for fraud and abuse, including amendments to the federal False Claims Act and
the Anti-Kickback Statute to make it easier to bring suits under these statutes;
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the
federal Anti-Kickback Statute, which generally prohibits, among other things, soliciting, receiving or providing remuneration to
induce the referral of an individual for an item or service or the purchasing or ordering of an item 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 laws, which generally prohibit, among other things, knowingly presenting or causing to be presented claims for
payment from Medicare, Medicaid or other third-party payors that are false or fraudulent;
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the
federal Health Insurance Portability and Accountability Act of 1986, or HIPAA, as amended by the federal Health Information Technology
for Economic and Clinical Health Act, or HITECH, which, in general and among other things, establish comprehensive federal standards
with respect to the privacy, security and transmission of individually identifiable health information and impose requirements for
the use of standardized electronic transactions with respect to transmission of such information; and
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analogous
state and foreign laws and regulations, such as anti-kickback and false claims laws that may apply to items or services reimbursed
by any third-party payor, including commercial insurers, and state laws governing the privacy and security of health information
in certain circumstances, many of which differ from each other in significant ways and may not be preempted by applicable federal
laws, thus complicating compliance efforts.
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Additionally,
the healthcare compliance environment is continuously changing, with proposed revisions to or replacement of the Affordable Care Act
at the federal level and with some states mandating implementation of compliance programs, compliance with industry ethics codes, spending
limits and reporting to state governments of gifts, compensation and other remuneration to physicians. Further, to the extent we continue
to pursue operations in foreign countries, such as our clinical activities in Australia, or in Canada, or if we seek to sell any product
that obtains regulatory approval in a foreign country, we would be subject to different reporting and other compliance requirements in
multiple jurisdictions, including foreign laws and regulations comparable to the U.S. laws and regulations described above.
All
of these laws impose penalties for non-compliance, some of which may be severe. If we or our operations are found to be in violation
of any of these laws or any other governmental regulations that apply to us, we may be subject to civil or criminal penalties, fines
or other monetary damages or orders forcing us to curtail or restructure our operations.
Other
Regulatory Requirements and Environmental Matters
We
are or may become subject to various laws and regulations regarding laboratory practices and the experimental use of animals, as well
as environmental laws and regulations governing, among other things, any use and disposal by us of hazardous or potentially hazardous
substances in connection with our research. In each of these areas, the FDA and other government agencies have broad regulatory and enforcement
powers, including, among other things, the ability to levy fines and civil penalties, suspend or delay issuance of approvals, seize or
recall products and withdraw approvals.
In
addition, to the extent we continue to pursue operations in foreign jurisdictions, we will be subject to anti-bribery laws in the United
States and applicable foreign jurisdictions, including the U.S. Foreign Corrupt Practices Act, or FCPA, and comparable foreign laws.
Further, we are subject to a variety of laws and regulations relating to other matters, including workplace health and safety, labor
and employment, public reporting and taxation, among others, and our failure to comply with these laws and regulations may result in
a variety of administrative, civil and criminal enforcement measures, including monetary penalties or imposition of sanctions or other
corrective requirements.
Our
Team
Our
senior management team and board of directors have decades of experience, each demonstrating a strong track record of success in the
biotechnology and pharmaceutical industries, including in research and development, commercialization and financing activities. In addition,
we have assembled a clinical and regulatory team experienced in developing and advancing novel therapeutic approaches through clinical
testing and regulatory approvals, including extensive technical, manufacturing, analytical and quality experience to oversee our clinical,
manufacturing and testing activities. Our team consists of a relatively small number of employees, as well as consultants and advisors
regarding research and development, regulatory, compliance, healthcare and investor and public relations matters. We also expect to engage
experts in healthcare and in general business to advise us in various capacities. For instance, we have in the past consulted with various
oncology researchers and clinicians to provide counsel as part of our advisory panels for our clinical programs, and we expect to continue
to establish consulting and advisory relationships with scientific, clinical and medical experts in academia and industry to assist us
with FDA submissions, clinical testing and identification and development of new product candidates.
As
of July 31, 2021, we had a total of 58 employees, including 54 full-time employees and 4 part-time employees. None
of our employees are represented by a labor union or covered by a collective bargaining agreement, and we believe that our relations
with our employees are good.
Corporate
Information
We were incorporated under the
laws of the State of Nevada in February 2008 under the name Netventory Solutions Inc. to pursue the business of inventory management
solutions. In March 2011, we completed a merger with our subsidiary to change our name to “OncoSec Medical Incorporated,”
and we commenced operations as a biotechnology company upon our acquisition of assets from Inovio related to the use of drug-medical
device combination products for the treatment of various cancers. Our principal executive office is located at 24 North Main Street,
Pennington, NJ 08534 and the telephone number is (855) 662-6732. Our website address is www.oncosec.com. Information contained
on our website is not, and should not be considered, part of this report. We will make available free of charge through our website our
annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports, as
soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange
Commission, or SEC. We are not including the information on our website as a part of, nor incorporating it by reference into, this report.
Additionally, the SEC maintains a website that contains annual, quarterly, and current reports, proxy statements, and other information
that issuers (including us) file electronically with the SEC. The SEC’s website address is http://www.sec.gov/.
In
addition, we intend to use our media and investor relations website, SEC filings press releases, public conference calls and webcasts
as wells as social media to communicate with our subscribers and the public about the Company, its services and other issues. It is possible
that the information we post on social media could be deemed to be material information. Therefore, in light of the SEC’s guidance,
we encourage investors, the media and others interested in the Company to review the information we post on the U.S. social media channels
listed on our website.
ITEM
1A. RISK FACTORS
Investing
in our securities involves a high degree of risk. You should carefully consider each of the following risks, together with the other
information contained in this report and the other documents we file with the SEC before making any investment decision with respect
to our securities. If any of the risks described below materialize, our business, financial condition, prospects and/or operating results
could be materially and adversely affected. These factors could cause the trading price of our common stock to decline, and you could
lose all or a substantial part of your investment. The risks described below are not the only risks we face. Additional risks and uncertainties
not currently known to us may also materially and adversely affect our business operations and financial condition or the price of our
common stock.
Risks
Related to Our Business
Our
majority stockholder may have significant influence over the outcome of matters submitted to our stockholders for approval, which may
prevent us from engaging in certain transactions.
As
the date hereof, one shareholder owns approximately 43% of the Company’s common stock. As a result, this stockholder may exercise
significant influence over all matters requiring stockholder approval, including the appointment of our directors and the approval of
significant corporate transactions. This ownership and control may also have the effect of delaying or preventing a future change in
control, impeding a merger, consolidation, takeover or other business combination that may be in the best interest of the Company and
any other stockholders. This ownership and control may be used to prevent the Company from raising additional funds through the sale
of equity which may make it more difficult for the Company to finance its operations.
We
have never generated, and may never generate, revenue from our operations.
We
have not generated any revenue from our operations since our inception, and we do not anticipate generating meaningful revenue in the
near term. During our fiscal year ended July 31, 2021, we incurred a net loss of approximately $45.2 million, and from inception
through July 31, 2021, we have incurred an accumulated deficit of approximately $252 million. We will need significant
additional funding to continue our operations and pursue our strategic plans, including continued development of our ImmunoPulse®
IL-12. Although we have been and expect to continue to tightly manage our operating expenses, we expect our operating expenses will continue
to increase as we further our development activities and pursue FDA approval for one or more of our product candidates.
Because
of the numerous risks and uncertainties associated with our product development and planned commercialization efforts, many of which
are discussed in these risk factors, we are unable to predict the extent of our future losses or when, or if, we will generate meaningful
revenue or become profitable, and it is possible we will never achieve these goals. Our failure to develop our investments in our proprietary
technologies and product candidates into revenue-generating operations would have a material adverse effect on our business, results
of operations, financial condition, and prospects and could result in our inability to continue operations.
We
have limited working capital and a history of losses, which raises substantial doubt as to whether we will be able to continue as a going
concern.
Our
auditor’s report on our financial statements for the year ended July 31, 2021, includes an explanatory paragraph related to
the existence of substantial doubt about our ability to continue as a going concern. The Company has never generated any cash from
its operations and does not expect to generate such cash in the near term. As a result, the Company has suffered recurring losses and
requires significant cash resources to execute its business plans. These losses are expected to continue for an extended period of time.
The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from
the date of filing. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments
relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should
the Company be unable to continue as a going concern within one year after the date the financial statements are issued.
Our
ability to obtain additional financing will depend on a number of factors, including, among others, our ability to generate positive
data from our clinical and pre-clinical studies, the condition of the capital markets and the other risks described in these risk factors.
If any one of these factors is unfavorable, we may not be able to obtain additional funding, in which case, our business could be jeopardized
and we may not be able to continue our operations or pursue our strategic plans. If we are forced to scale down, limit or cease operations,
our stockholders could lose all of their investment in our Company.
We
will need to raise additional capital to continue operating our business, and additional funds may not be available when needed, on acceptable
terms or at all.
As
of July 31, 2021, we had cash and cash equivalents of approximately $46.0 million. We do not generate any cash from our operations.
Historically,
we have raised the majority of the funding for our business through offerings of our common stock and warrants to purchase our common
stock. We are exploring other ways of funding our operations that involve less dilution to our existing stockholders, including, among
others, technology licensing or other collaboration arrangements, debt financings or grants. We may need to continue to seek funding
for our operations through additional dilutive public or private equity financings.
If
we issue equity or convertible debt securities to raise additional funds, our existing stockholders would experience further dilution,
and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. If we
incur debt, our fixed payment obligations, liabilities and leverage relative to our equity capitalization would increase, which could
increase the cost of future capital. Further, the terms of any debt securities we issue or borrowings we incur, if available, could impose
significant restrictions on our operations, such as limitations on our ability to incur additional debt or issue additional equity or
other operating restrictions that could adversely affect our ability to conduct our business, and any such debt could be secured by any
or all of our assets pledged as collateral. Additionally, we may incur substantial costs in pursuing future capital, including investment
banking, legal and accounting fees, printing and distribution expenses and other costs.
Moreover,
equity or debt financings or any other source of capital may not be available to us when needed or at all, or, if available, may not
be available on commercially reasonable terms. Weak economic and capital market conditions generally or uncertain conditions in our industry
could increase the challenges we face in raising capital for our operations. In recent periods, the capital and financial markets for
early and development-stage biotechnology and life science company stocks have been volatile and uncertain. If we cannot raise the funds
that we need, we could be forced to delay or scale down some or all of our development activities or cease all operations, and our stockholders
could lose all of their investment in our Company.
We
are a clinical-stage company with a limited operating history and no approved products, which makes assessment of our future viability
difficult and which may hinder our ability to generate revenue and meet our other objectives.
We
are a clinical-stage, pre-commercial, company with only a limited operating history upon which to base an evaluation of our current business
and future prospects and how we will respond to competitive, financial or technological challenges. Additionally, although we are investigating
licensing and partnering opportunities, no such opportunities have been finalized and, even if completed, we do not expect that these
potential opportunities would generate any significant near-term revenue. Our operations to date have been limited to organizing, staffing
and financing, applying for patent rights, undertaking clinical trials of TAVO-EP and engaging in other research and development activities,
including pre-clinical and other clinical studies of our other product candidates. We have not demonstrated an ability to obtain regulatory
approval of a product candidate, or conduct the sales and marketing activities necessary for successful product commercialization. Consequently,
the revenue-generating potential of our business is unproven and uncertain.
In
addition, we have limited insight into trends that may emerge and affect our business or our industry. We will be subject to the risks,
uncertainties and difficulties frequently encountered by clinical-stage companies in evolving markets, and we may not be able to successfully
address any or all of these risks and uncertainties. Further, errors may be made in predicting and reacting to relevant business or industry
trends. The occurrence of any of these risks could cause our business, results of operations, and financial condition to suffer or fail.
We
are significantly dependent on the success of our ImmunoPulse® technology platform and our product candidates based on this platform,
including our lead product candidate TAVO-EP.
We
have invested, and we expect to continue to invest, significant efforts and financial resources in the development of product candidates
based on our electroporation technology, including primarily our lead product candidate TAVO-EP. Our ability to generate meaningful revenue,
which may not occur for the foreseeable future, if ever, will depend heavily on the successful development, regulatory approval and commercialization
of one or more of these product candidates, and such regulatory approval and commercialization may never occur. We are working on updated
versions of the OMS EP Device to ensure compliance with current regulatory standards as a prerequisite for FDA clearance.
We anticipate that we will need to have clinical experience with this device before we seek regulatory approval for our product candidate.
If we experience delays in completion of this work or FDA approval in using the updated OMS EP Device in our ongoing clinical
trials, it could delay our clinical programs, necessitate enrolling more patients in our ongoing clinical trials, delay the commercialization
our product candidate and have a material adverse effect on our business, results of operations, financial condition and prospects.
The
success of TAVO, our OMS EP Device, or any other product candidates based on our electroporation technology will
depend on a number of factors, including, among others:
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our
ability to conduct and complete pre-clinical and clinical studies and trials, including the time, costs and uncertainties associated
with all aspects of these trials;
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our
ability to retain key management and scientific personnel to oversee the approval and adoption of our product candidates;
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our
ability to continue as a going concern;
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the
data we obtain from pre-clinical and clinical testing of the product candidates, including data demonstrating the required level
of safety and efficacy of the product candidates (for example, a key factor in determining whether we are able to successfully develop
and commercialize TAVO in melanoma will be the data we obtain from our KEYNOTE-695 study, which is our ongoing study of TAVO in combination
with Merck’s approved therapy for melanoma in patients who have shown resistance to, or relapse from, certain other cancer
therapies);
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the
regulatory approval pathway we choose to pursue for our product candidates in the United States of America or any other jurisdiction;
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our
ability to obtain required regulatory approvals for one or more of our product candidates in the United States and in other jurisdictions,
and the time required to obtain these approvals, if they are ever obtained;
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the
manufacturing arrangements we are able to establish with third-party manufacturers, both for the manufacture of the product candidates
for clinical trial use and for the potential commercial manufacture of products, if and when approved;
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our
ability to build an infrastructure capable of supporting product sales, marketing and distribution of any approved products in territories
where we pursue commercialization directly;
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our
ability to establish commercial distribution agreements with third-party distributors for any approved products in territories where
we do not pursue commercialization directly;
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the
labeling requirements for any product candidates that are approved, including obtaining sufficiently broad labels that would not
unduly restrict our ability to market the product;
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acceptance
of our products, if and when approved, by patients and the medical community;
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the
ability of our products, if and when approved, to effectively compete with other cancer treatments;
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a
continued acceptable safety profile for any product candidates that are approved following such approval;
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our
level of success in obtaining and maintaining patent and trade secret protection and otherwise protecting our rights in our intellectual
property portfolio;
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the
levels of coverage and reimbursement we are able to secure for any product candidates that receive regulatory approval;
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our
ability to establish a commercially viable price for our products, if and when approved; and
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delays
or unanticipated costs, including those related to any of the foregoing.
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If
one or more of these factors is unfavorable, we could experience significant delays or we may not be able to successfully commercialize
TAVO or any of our other product candidates, which would materially harm our business.
We
may not be successful in our efforts to identify or discover additional product candidates and may fail to capitalize on programs or
product candidates that may present a greater commercial opportunity or for which there is a greater likelihood of success.
The
success of our business depends upon our ability to identify, develop and commercialize product candidates based on our programs. If
we do not successfully develop and eventually commercialize products, we will face difficulty in obtaining product revenue in future
periods, or may never obtain such revenue, resulting in significant harm to our financial position and adversely affecting our share
price. Research programs to identify new product candidates require substantial technical, financial and human resources.
Additionally,
because we have limited resources, we may forego or delay pursuit of opportunities with certain programs or product candidates or for
indications that later prove to have greater commercial potential. Our estimates regarding the potential market for a product candidate
could be inaccurate, and our spending on current and future research and development programs may not yield any commercially viable products.
If we do not accurately evaluate the commercial potential for a particular product candidate, we may relinquish valuable rights to that
product candidate through strategic collaboration, licensing, or other arrangements in cases in which it would have been more
advantageous for us to retain sole development and commercialization rights to such product candidate. Alternatively, we may allocate
internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering
arrangement.
If
any of these events occur, we may be forced to abandon or delay our development efforts with respect to a particular product candidate
or fail to develop a potentially successful product candidate, which could have a material adverse effect on our business, financial
condition, results of operations and prospects.
It
may be difficult to identify and enroll patients due to clinical trial inclusion-exclusion criteria or other factors, which has in the
past, and may in the future, lead to delays in enrollment and in generating clinical data for our trials.
Our
clinical trials have had, and may have in the future, strict inclusion criteria for patient enrollment. These criteria could present
significant obstacles to the timely recruitment and enrollment of a sufficient number of eligible patients into our trials. We may experience
slower than expected patient enrollment in our existing or future clinical trials. Any inability to successfully enroll the number of
patients meeting the criteria for any of our clinical trials could cause significant delays in the trial and increase the costs associated
with the trial, which could materially harm our business and prospects.
Patient
enrollment in a clinical trial may be affected by many factors, including:
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the
severity of the disease under investigation;
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the
design of the study protocol;
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the
eligibility criteria for the study;
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the
perceived risks, benefits and convenience of administration of the product candidate being studied;
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the
novel 2019 coronavirus (“COVID-19”);
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the
competitive disease space with many trials for patients to select from;
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the
availability of approved alternate treatments; and
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the
proximity and availability of clinical trial sites to prospective patients.
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Business
or economic disruptions or global health concerns could seriously harm our development efforts and increase our costs and expenses.
Broad-based
business or economic disruptions could adversely affect our ongoing or planned research and development or clinical activities. For example,
in December 2019 an outbreak of a novel strain of coronavirus originated in Wuhan, China, and has since spread globally. To date, this
outbreak has resulted in extended shutdowns of businesses and has had ripple effects to businesses around the world. The effects of the
COVID-19 pandemic are unpredictable. The outbreak may result in additional or more extensive travel restrictions, closures, disruptions
of businesses or facilities around the world or lead to social, economic, political or labor instability in the affected areas may impact
our suppliers’ or our customers’ operations. Additionally, variants of the disease present additional uncertainty that could
lead to further restrictions that may have a negative impact on our operations and the larger economy.
Global
epidemics, such as the coronavirus, could also negatively affect the hospitals and clinical sites in which we conduct any of our clinical
trials, which could have a material adverse effect on our business and our results of operations and financial condition. We cannot presently
predict the scope and severity of any potential business shutdowns or disruptions, but if we or any of the third parties with whom we
engage, including the suppliers, clinical trial sites, regulators and other third parties with whom we conduct business, were to experience
shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could
be materially and negatively impacted.
Certain
characteristics of our ImmunoPulse® platform may negatively impact market acceptance of the platform.
Physicians,
patients, and third-party payors may be less accepting of product candidates based on our ImmunoPulse® technology platform due to
certain characteristics of this platform. For example, these parties may have concerns about the complexity inherent in a combination
therapy approach or the clinical application of electroporation technology, which is less prevalent in the United States than in certain
foreign markets. Moreover, our efforts to educate the medical community and third-party payors about the benefits of any of our technologies
and product candidates may require significant resources and may never be successful. As a result, even if any of our product candidates
achieve regulatory approval, a lack of acceptance by physicians, third-party payors and patients of the products or underlying technologies
could prevent their successful commercialization and could materially limit our revenue potential.
Our
business and operations could be adversely affected by the effects of health epidemics, including the ongoing COVID-19 pandemic.
Our
operational and financial performance have already been affected by the impact of the COVID-19 pandemic. Our clinical trials have experienced
delays in patient enrollment, potentially due to prioritization of hospital resources toward the COVID-19 pandemic, or concerns among
patients about participating in clinical trials during a public health emergency. The COVID-19 pandemic is also affecting the operations
of government entities, such as the FDA, as well as contract research organizations, third-party manufacturers, and other third-parties
upon whom we rely. As a result of “shelter-in-place” orders, quarantines or similar orders or restrictions to control the
spread of COVID-19, many companies, including our own, have implemented work-from-home policies for their employees. The effects of these
stay at home orders and work-from-home policies may be negatively impacting productivity, resulting in delays in our clinical programs
and timelines. The extent of the impact on our operations depends in part on the time these restrictions remain in place, and whether
restrictions are reinstated. These and similar disruptions in our operations could negatively impact our business, operating results
and financial condition.
The
spread of COVID-19 has also led to disruption and volatility in the global capital markets, which increases the cost of, and adversely
impacts access to, capital and increases economic uncertainty. To the extent the COVID-19 pandemic adversely affects our business, financial
results and value of our common stock, it may also affect our ability to access capital and obtain financing, which could in the future
negatively affect our liquidity and ability to continue as a going concern.
The
global pandemic of COVID-19 continues to evolve rapidly, and the ultimate impact of the COVID-19 pandemic or a similar health epidemic
is highly uncertain and subject to change. We do not yet know the full impact of potential delays or effects on our business, our clinical
trials, our ability to access the capital markets, or supply chains or on the global economy as a whole. However, these effects could
have a material impact on our operations, and we will continue to monitor the COVID-19 situation closely.
If
the commencement or completion of clinical testing for our product candidates is delayed or prevented, we could experience significantly
increased costs and our ability to pursue regulatory approval or generate revenue could be delayed or limited.
Clinical
trials are very expensive, time-consuming, unpredictable and difficult to design and implement. Even if we are able to complete our ongoing
and currently proposed clinical trials and assuming the results are favorable, clinical trials for product candidates based on our technology
are planned to continue for several years and may take significantly longer than expected to complete. Even with the Fast Track designation
we received from the FDA for TAVO in metastatic melanoma in February 2017, additional clinical trials, which can take years to complete,
are still required.
Delays
in the commencement or completion of clinical testing could significantly affect our product development costs and business plan. We
do not know and cannot predict whether any of our ongoing or planned trials or studies will be completed on schedule or at all. We also
do not know and cannot predict whether any other pre-clinical or clinical trials, including Phase 3 clinical trials to follow completion
of our ongoing or any other Phase 2 clinical trials, will be planned or will begin, and in many cases such future trials would be dependent
on obtaining favorable results from preceding studies.
The
commencement and completion of clinical trials can be delayed or prevented for many reasons, including due to delays or issues related
to:
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obtaining
clearance or approval from the FDA or a comparable international regulatory body and other applicable agencies, including the U.S.
National Institutes of Health, to commence a clinical trial;
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reaching
agreement on acceptable terms with prospective clinical research organizations, or CROs, clinical investigators and trial sites;
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obtaining
institutional review board, or IRB, and institutional biological committee, or IBC, approval to initiate and conduct a clinical trial
at a prospective site;
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identifying,
recruiting and training suitable clinical investigators;
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identifying,
recruiting and enrolling subjects to participate in clinical trials, which can pose challenges for a variety of reasons, including
competition from other clinical trial programs or approved products for similar indications, requirements for larger than anticipated
patient populations, slower than expected enrollment, or higher than predicted rates of patient drop-out or withdrawal;
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natural
disaster, epidemics, pandemics, political crisis (such as terrorism, war, political instability or other conflict), or other events
outside of our control;
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retaining
patients who have initiated a clinical trial but who may be prone to withdraw due to side effects from the therapy, lack of efficacy,
personal issues, death or for any other reason, or who are lost to further follow-up; and
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identifying
and maintaining a sufficient supply of necessary products or product candidates, including those produced by third parties, on commercially
reasonable terms.
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With
respect to any clinical trial we plan, the FDA could determine it is not satisfied with our plan or the details of our clinical trial
protocols and designs and could put a clinical hold on the proposed trials, or issue a clinical holder after a trial has commenced. Any
such determination could delay the commencement or completion of the trials and would be a setback for the commercialization strategy
for the product candidate that is the subject of the trial. Additionally, changes in applicable regulatory requirements and guidance
may occur, in which case clinical trial protocols may need to be amended to reflect these changes. Any such amendments could require
us to resubmit our clinical trial protocols to IRBs or IBCs for re-examination, which could impact the costs, timing and successful completion
of a clinical trial. If we experience delays in completion of, or if we terminate, any of our ongoing, planned or future clinical trials,
the commercial prospects for our product candidates could be harmed, which could have a material adverse effect on our business, results
of operations, financial condition and prospects.
To
the extent we conduct clinical trials of our product candidates in combination with third parties’ products, we will face additional
risks relating to these products.
To
the extent our commercialization strategy includes the combination of our product candidates with third parties’ products or product
candidates, we will likely be required to conduct clinical studies to evaluate the combinations. We have several ongoing and planned
combination trials, and these combination studies involve additional risks due to their reliance on circumstances outside our control,
such as those relating to the availability and marketability of the third-party product involved in the study. If the marketability of
third-party products such as KEYTRUDA® is impacted, or if we are unable to secure and maintain a sufficient supply of such third-party
products when needed on commercially reasonable terms, our clinical studies could be delayed or we could be forced to terminate these
studies. Such a delay or termination could have a material negative impact on our development strategy, business, results of operations,
financial condition, and prospects.
If
serious adverse or unacceptable side effects are identified during the development of one or more of our product candidates or any future
product candidate, we may need to address any serious safety concerns as part of ongoing or post-marketing surveillance efforts; otherwise
we may need to modify, limit or discontinue development efforts related to some of our product candidates.
Establishing
the safety of a new product is one of the principal objectives of any clinical trial. Adverse events, including serious adverse events,
suspected adverse reactions, and unexpected adverse events, and their proper reporting, form the basis of the critical risk-benefit analysis
of investigational drug therapies. If adverse events are identified during the development of one or more of our product candidates or
any future product candidates, we may need to address any serious safety concerns as part of ongoing or post-market surveillance efforts.
Alternatively, we may need to modify, limit or discontinue the development of these product candidates to more narrow uses or subpopulations
in which the adverse events, undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from
a risk-benefit perspective. In the development of new and investigational drug therapies in this industry, many compounds that initially
showed promise in early stage testing have later been associated with adverse events, including serious adverse events that have subsequently
prevented further development of the compound. It is not uncommon for an adverse event to be encountered during a clinical trial. Upon
discovery of an adverse event, sponsors are generally required to investigate this event in order to determine whether there is enough
evidence to suggest that there was a reasonable possibility that the drug caused the adverse event.
In
the event that adverse events, including serious adverse events, suspected adverse reactions, and unexpected adverse events are identified
during any of our clinical trials, these trials could be modified, limited, suspended or terminated. Such adverse events may trigger
a notification requirement to the FDA or comparable foreign regulatory authorities, who in turn could order us to cease further clinical
investigation or deny approval of one or more of our product candidates or any future product candidates for any or all targeted indications.
The FDA could also issue a letter requesting additional data or information prior to making a final decision regarding whether or not
to approve a product candidate. The number of requests for additional data or information issued by the FDA in recent years has increased
and has resulted in substantial delays in the approval of several new drugs. Adverse events or undesirable side effects caused by one
or more of our product candidates or any future product candidates could also result in the inclusion of unfavorable information in our
product labeling, such as a Black Box warning, or denial of regulatory approval by the FDA or other regulatory authorities for any or
all targeted indications, and in turn prevent us from commercializing and generating market acceptance and revenues from the sale of
that product candidate. Adverse events or side effects could affect patient recruitment or the ability of enrolled patients to complete
the trial and could result in potential product liability claims.
No
matter how extensive clinical trials and premarket studies may be, the safety profile of a new therapeutic product can only be fully
characterized by continuing safety surveillance through a spontaneous adverse event monitoring system and a post-marketing surveillance
study. FDA may require post-marketing testing, known as Phase 4 testing, risk evaluation and mitigation strategies, and surveillance
to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the product.
Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards,
if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered. It is well
understood in the drug development process that drug safety can never be considered an absolute, since the safety profile of a new therapeutic
product will continue to evolve as more information is generated, gathered, and assessed over the course of general use.
Additionally,
if one or more of our product candidates or any future product candidates receive marketing approval and we or others later identify
undesirable side effects caused by this product, a number of potentially significant negative consequences could result, including:
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regulatory
authorities may require the addition of unfavorable labeling statements, including specific warnings, black box warnings, adverse
reactions, precautions, and/or contraindications;
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regulatory
authorities may suspend or withdraw their approval of the product, and/or require it to be removed from the market;
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we
may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product;
or
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our
reputation may suffer.
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Any
of these events could prevent us from achieving or maintaining market acceptance of any of our product candidates or any future product
candidates, or could substantially increase our commercialization costs and expenses, which in turn could delay or prevent us from generating
significant revenues, or any revenues, from its sale.
We
rely on third parties to conduct our clinical trials and other studies, and if these third parties do not successfully carry out their
duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our
business could be substantially harmed.
We
have entered into, and expect to continue to enter into, agreements with third-party Clinical Research Organizations (“CROs”)
to help us manage critical aspects of the clinical trials we sponsor. We rely on these third parties for the execution of certain
of our clinical and pre-clinical studies, and we only control certain aspects of their activities. We and our CROs are required to comply
with the FDA’s regulations for conducting clinical trials and good clinical practice, as well as the guidelines of the International
Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use. We are also required to harmonize
standard operating procedures between companies and conduct periodic internal and vendor audits to ensure compliance. Additionally, the
FDA and comparable foreign regulators enforce these good clinical practice regulations through periodic inspections of trial sponsors,
principal investigators, trial sites, laboratories and other entities involved in the completion of the study protocol and processing
of data.
If
we or our CROs fail to comply with applicable good clinical practice or other regulations, the data generated in our clinical trials
may be deemed unreliable and/or the FDA or comparable foreign regulators may refuse to accept the data, and these regulators may require
us to perform additional or repeat clinical trials, which could significantly increase costs and delay the regulatory approval process.
Additionally, repeated compliance failures could prompt the FDA or other regulatory authority to suspend or terminate a clinical trial,
which could cause significant approval delays and increased costs. Further, if CROs do not otherwise successfully carry out their contractual
duties or obligations or meet expected deadlines or if the quality or accuracy of the clinical data they obtain is compromised for any
reason, our clinical trials may need to be extended, delayed or terminated or we may not be able to rely on the data produced by the
trials. Moreover, if any of our relationships with third-party CROs terminate before completion of a clinical trial, we may not be able
to establish arrangements with alternative CROs on commercially reasonable terms, on a timely basis or at all, which could materially
delay or jeopardize the trial. Any such occurrence could delay or prevent us from obtaining regulatory approval for our product candidates
or successfully commercializing our product candidates, which could increase our costs, delay or eliminate our prospects for generating
revenue, and otherwise materially harm the results of our operations, financial condition and prospects.
We
rely on clinical data and results obtained by third parties that could ultimately prove to be inaccurate or unreliable.
As
part of the strategy implemented to mitigate development risk, we seek to develop product candidates with well-studied mechanisms of
action and we utilize biomarkers to assess potential clinical efficacy early in the development process. This strategy necessarily relies
upon clinical data and other results produced or obtained by third parties, which may ultimately prove to be inaccurate or unreliable.
If the third party data and results we rely upon prove to be inaccurate, unreliable or not applicable to our product candidates, we could
make inaccurate assumptions and conclusions about the product candidates, and our research and development efforts could be compromised
and called into question for any marketing applications we submit.
We
may be subject to claims that our consultants or independent contractors have wrongfully used or disclosed to us alleged trade secrets
of their other clients or former employers.
As
is common in the biopharmaceutical industry, we engage the services of consultants to assist in the development of product candidates.
Many of these consultants were previously employed at or may have previously been, or are currently providing, consulting services to,
other pharmaceutical companies, including our competitors or potential competitors. We may become subject to claims related to whether
these consultants have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers
or their former or current customers. Litigation may be necessary to defend against these claims. Even if we are successful in defending
these claims, litigation could result in substantial costs and be a distraction to management.
We
have participated in, and continue to participate in, clinical trials conducted under an approved investigator-sponsored investigational
new drug application, and we have little or no control over the conduct or timing of, or FDA communications regarding, these trials.
We
have participated in and continue to participate in clinical trials conducted under an approved investigator-sponsored IND application.
We also have plans to participate in future investigator-sponsored trials under both INDs and Investigational Device Exemptions (“IDEs”),
since our product candidates are drug-device combination products. In investigator-initiated trials, the investigator typically designs
and implements the study and the investigator or its institution acts as the sponsor of the trial. This trial has control over the design,
conduct and timing of the trial, and as a result, we have limited or no control over the commencement, conduct and completion of these
investigator-initiated trials. In addition, regulations and guidelines imposed by the FDA with respect to INDs and IDEs include a requirement
that the sponsor of a clinical trial perform the study in accordance with an approved investigational plan, and provide ongoing communication
with the FDA as it pertains to the safety of the drug, device, or treatment being tested. It is the responsibility of the investigator,
as the sponsor of the trial, to be the sole point of contact with the FDA for these communications and to exercise all decision-making
authority regarding these or other submissions to the FDA about the trial. Consequently, we may have little or no control over the content
or timing of these communications, including whether they are timely, accurate or complete. Any failures by the investigator sponsoring
these trials could result in reviews, audits, delays or clinical holds by the FDA that could negatively affect the timelines for these
trials or jeopardize their completion. As a result, our lack of control over the conduct and timing of, and communications with the FDA
regarding, these investigator-sponsored trials expose us to additional risks, many of which are outside of our control and the occurrence
of which could severely harm our performance and the commercial prospects for our product candidates.
Regulatory
authorities may not approve our product candidates, or any approvals we achieve may be too limited or too late for us to earn meaningful,
or any, revenue.
The
research, testing, and possible eventual manufacturing, labeling, approval, selling, marketing and distribution of our product candidates
are subject to extensive regulation by the FDA and other regulatory authorities in the United States, as well as comparable regulatory
bodies in other countries. These regulatory agencies have the authority to delay approval of or refuse to approve our product candidates
for a variety of reasons, including, among others, the occurrence of adverse reactions or a failure to meet safety and efficacy endpoints
in our clinical trials or otherwise to the satisfaction of the regulator, disapproval of our or our partners’ trial design, or
disagreement with our interpretation of data from pre-clinical studies or clinical trials. As a result, even if our product candidates
achieve their endpoints in clinical trials, they still may not be approved by any of these regulatory agencies. Moreover, the requirements
to obtain product approvals vary widely from country to country, and the FDA’s approval requirements, review procedures and timelines
may not be the same as or even similar to the requirements of a comparable foreign regulator. As a result, even if we obtain regulatory
approval for a product candidate in one country, we may be required to undertake additional clinical trials or studies, submit additional
information, wait for longer review periods or make other efforts in order to obtain regulatory approvals in other desirable geographic
markets, or may not be able to achieve approval in those other desirable geographic markets.
Although
we have seen no systemic drug-related adverse events in our trials and studies to date, if we cannot adequately demonstrate through the
clinical trial process that a product candidate we are developing is safe and effective, regulatory approval of that product candidate
may never be achieved, which could impair our reputation, increase our costs and delay or prevent us from generating revenue. Importantly,
success in pre-clinical testing and early clinical studies does not ensure that later clinical trials will generate adequate data to
demonstrate the required level of efficacy and safety of an investigational drug. A number of companies in the pharmaceutical and biotechnology
industries, including many with greater resources and experience than we have, have suffered significant setbacks in clinical trials,
even after obtaining promising results in Phase 2, and earlier studies. Further, even if a product candidate is approved, it may be approved
for fewer or more limited indications than requested, may include substantial safety warnings or the approval may be subject to the performance
of significant post-marketing studies. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable
for the successful commercialization of our product candidates. Any limitation, condition or denial of approval could have an adverse
effect on our business, reputation and results of operations.
Furthermore,
because of the substantial competition we face, even if we are ultimately able to achieve regulatory approval for one or more of our
product candidates, delays in such regulatory approval could delay, limit or prevent our ability to successfully commercialize our product
candidates if competing products obtain approvals before ours, or with more permissible, or less-restricted, claims and gain market traction
against which we are not able to compete. Moreover, we may be forced to reevaluate our development strategies and plans in the face of
setbacks or other delays that could jeopardize the value of any regulatory approval that is obtained, which could include abandoning
planned clinical trial efforts for a product candidate that we no longer believe has promising value as a commercial product. If we are
not able to obtain or maintain required regulatory approvals for our product candidates or if we decide or are forced to abandon our
efforts to obtain or maintain these approvals, we would have expended significant costs on assets that may never generate any return.
Such an outcome would have a material adverse effect on our business, results of operations and financial condition, as well as on our
continued viability as a company.
We
will need to obtain FDA approval of any proposed product brand names, and any failure or delay associated with such approval may adversely
impact our business.
A
pharmaceutical product cannot be marketed in the U.S. or other countries until we have completed a rigorous and extensive regulatory
review process, including approval of a brand name. Any brand names we intend to use for our product candidates in the U.S. will require
approval from the FDA regardless of whether we have secured a formal trademark registration from the U.S. Patent and Trademark Office
(“USPTO”). The FDA typically conducts a review of proposed product brand names, including an evaluation, for example,
of potential for confusion with other product names. The FDA may also object to a product brand name if it believes the name implies
inappropriate promotional claims. If the FDA objects to any of our proposed product brand names, we may be required to adopt an alternative
brand name for our product candidates. If we adopt an alternative brand name, we would lose the benefit of our existing trademark applications
for such product candidate and may be required to expend significant additional resources in an effort to identify a suitable product
brand name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to
the FDA. We may be unable to build a successful brand identity for a new trademark in a timely manner or at all, which would limit our
ability to commercialize our product candidates.
Our
in-licensed intellectual property may not provide us with sufficient rights and may not prevent competitors from pursuing similar technology.
In
addition to our owned proprietary rights, we have also exclusively licensed certain patents and patent applications that cover our current
and future clinical platforms. These patents will expire between 2024 and 2032. These method patents protect the use of a product for
a specified method under certain defined parameters. This type of patent does not prevent a competitor from making and marketing a product
that is identical or similar to the protected product under parameters that are outside the scope of the patented method claims. Moreover,
even if competitors do not actively promote such a product for the indications protected by the method patent, physicians could prescribe
the products for these methods on an off-label basis. Although such 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 detect, prevent or prosecute.
We
entered into a cross-license agreement with Inovio in 2011 for certain electroporation technology, which includes among other things,
patents protecting our OMS EP Device. Under the terms of the agreement, Inovio granted us a non-exclusive, worldwide license under
certain of its electroporation patents, and in exchange, we granted to Inovio an exclusive license to certain aspects of our technology
in a limited field of use. However, with the expiration of patents in 2020, no patents acquired by OncoSec under the agreement and licensed
to Inovio remain active. Although we do not currently rely on the technology covered by the intellectual property licensed from Inovio,
our product candidates could in the future utilize this technology. This license is non-exclusive. As such, Inovio could use the technology
to compete with us or other competitors could use the technology that was covered by the intellectual property to compete with us.
We
entered into a license agreement with Gaeta Therapeutics in May 2019. Under the license, we obtained exclusive worldwide rights
to Gaeta Therapeutics’ portfolio of patents and applications covering the combination use of IL-12 protein or DNA and various checkpoint
inhibitor therapies, including anti-CTLA-4 and anti-PD-1 compounds, in key global markets. Although we do not currently rely on the intellectual
property we have licensed from Gaeta, our product candidates could in the future utilize this intellectual property. The in-licensing
of this portfolio provides patent protection on our current clinical methods in certain countries until at least 2032 and also gives
us the potential to block others utilizing IL-12 in combination with various checkpoint inhibitors, which may not be part of our current
clinical platform.
If
we are not able to maintain our existing in-licenses or if we are not able to establish new in-licenses for any other third-party rights
we need, we could become subject to significant costs or royalty or other fees to establish alternative license arrangements, if such
licenses are available when needed, on acceptable terms or at all, or we could be forced to develop modifications to the affected product
candidates or technologies to avoid reliance on the third-party rights, if such modifications are possible. If there is any conflict,
dispute, disagreement or issue of non-performance between us and the respective licensing partner regarding the rights or obligations
under the license agreements, including any conflict, dispute or disagreement arising from a failure to satisfy payment obligations under
such agreements, the ability to develop and commercialize the affected product candidate may be adversely affected. Any inability to
secure and maintain adequate rights to any third-party technologies necessary for the development of our product candidates could severely
limit our continued research and development activities, our efforts to obtain product approvals and, if such approvals are obtained,
our ability to commercialize the approved products, any of which would materially adversely impact our business and prospects.
We
may become involved in litigation or other proceedings in our efforts to protect our patent and other intellectual property rights, which
could require significant time and costs and would be subject to unpredictable outcomes.
We
may become aware of activities by third parties, including our competitors, that infringe our issued patents or other intellectual property
rights. If we choose to file a lawsuit against a potentially infringing third party to try to enforce our patents or other intellectual
property rights, the third party may seek a ruling that the patents are invalid and/or should not be enforced. Such a ruling could severely
limit our ability to protect our rights from use by third parties. Further, patent law is a constantly evolving body of law, and changes
can affect our rights and our ability to execute on our strategy and our financial results. In the past several years, the U.S. Supreme
Court has revised certain tests regarding assessing the validity of patents, which could result in the invalidation of issued patents
and/or their claims based on the application of the current patent validity standards. As a result, in the event of any patent infringement
litigation or other proceedings involving our patents, our patents could be subject to challenge and subsequent invalidation or significant
narrowing of claim scope under the current standards. Moreover, even if the validity of our patents is upheld in a patent infringement
lawsuit, a court could refuse to stop a third party’s activities on the grounds that the activities do not infringe the specific
claims of our patents. Further, even if we were successful in stopping the infringing activity, patent infringement lawsuits are expensive
and could consume significant time, management attention, capital and other resources. Any claims we assert against accused infringers
could provoke these parties to assert counterclaims against us alleging that we infringe their patents; or provoke those parties to petition
the USPTO, to institute inter partes review against the asserted patents, which
may lead to a finding that all or some of the claims of the patent are invalid.
These
risks of third parties’ infringement of our intellectual property rights may increase if we engage in discussions, collaborations
or other strategic arrangements with third parties. Also, new challenges could arise if and to the extent we pursue engagements with
third parties located outside the United States. These factors could increase the risks and costs associated with building and protecting
our intellectual property portfolio and could adversely affect our performance and our business prospects. Despite efforts to protect
our proprietary information during such discussions, third parties may unintentionally or willfully disclose or convert our proprietary
information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.
Third
parties may claim that we infringe their proprietary rights, which could prevent us from pursuing our clinical and other studies and
other research and development activities.
The
validity and infringement of patents or proprietary rights of third parties has been the subject of substantial litigation in the biotechnology
industry. In the course of our research and development activities, we could become subject to legal claims that we, our activities or
our product candidates or technologies infringe the rights of others. This type of patent infringement litigation is costly and time-consuming
and diverts the attention of management and technical personnel. In addition, if we or our product candidates or technologies are found
to infringe the rights of others, we could lose our ability to continue our development programs or could be forced to pay monetary damages.
Although the parties to patent and intellectual property disputes in the biotechnology industry have often settled their disputes by
establishing licenses or similar arrangements, the costs associated with these arrangements may be substantial and could include ongoing
royalties. Furthermore, any such licenses may not be available when needed, on commercially reasonable terms or at all. These risks may
be amplified due to our small size and limited experience and resources relative to many of our competitors. As a result, any claims
of infringement against us, adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses
could materially delay, hinder or restrict our development efforts or prevent us from continuing to pursue our operational and strategic
plans, which could have a material adverse effect on our business, prospects and results of operations.
Publications
of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions
are typically not published until 18 months after a first filing, or in some cases not at all. Therefore, we cannot know with certainty
whether we or our licensors were the first to make the inventions claimed in patents or pending patent applications that we own or licensed,
or that we or our licensors were the first to file for patent protection of such inventions. In the event that a third party has also
filed a U.S. patent application relating to our product candidates or a similar invention, depending upon the priority dates claimed
by the competing parties, we may have to participate in interference proceedings declared by the PTO to determine priority of invention
in the U.S. The costs of these proceedings could be substantial, and it is possible that our efforts to establish priority of invention
would be unsuccessful, resulting in a material adverse effect on our U.S. patent position. As a result, the issuance, scope, validity,
enforceability and commercial value of our patent rights are highly uncertain.
If
we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur
costs that could harm our business; even if we comply with such laws and regulations, they may result in higher costs for us in the form
of higher raw material, energy, freight and compliance costs.
We
are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the
handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable
materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract
with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these
materials. Although we believe that the safety procedures for handling and disposing of these materials comply with the standards prescribed
by these laws and regulations, we cannot eliminate the risk of accidental contamination or injury from these materials. In the event
of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any
liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties for
failure to comply with such laws and regulations.
Although
we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting
from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain
insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal
of biological, hazardous or radioactive materials.
In
addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations.
These current or future laws and regulations may impair our research, development or production efforts. Our failure to comply with these
laws and regulations also may result in substantial fines, penalties or other sanctions. Increased environmental legislation or regulation
could also result in higher costs for us in the form of higher raw materials, as well as energy and freight costs. It is possible that
certain materials might cease to be permitted to be used in our processes. We could also incur additional compliance costs for monitoring
and reporting emissions and for maintaining permits.
The
biotechnology industry is highly competitive, and many of our competitors are significantly larger and more experienced than we are.
The
biotechnology industry is intensely competitive. This competitive environment stimulates an ongoing and extensive search for technological
innovation and necessitates effective and targeted marketing strategies to communicate the effectiveness, safety and value of products
to healthcare professionals in private practice and group practices and payors in managed care organizations, group purchasing organizations,
and Medicare and Medicaid services.
We
face competition from a number of sources, including large pharmaceutical companies, biotechnology companies, academic institutions,
government agencies and private and public research institutions. We compete against all other developers of cancer treatments, including
other immunotherapy treatments as well as other types of treatments for the cancer indications on which we are focused. In particular,
a number of companies, some of which are large, well-established pharmaceutical companies, have development strategies similar to our
current focus. These companies could include, among others, Bristol Myers-Squibb, Iovance Therapeutics, Syndax, Dynavax Technologies,
Checkmate Pharmaceuticals and Idera Pharmaceuticals. In addition, we also compete with other clinical-stage biotechnology companies for
funding and support from healthcare and other investors and potential collaboration relationships with larger pharmaceutical or other
companies, as well as for personnel with expertise in our industry. We are smaller, less experienced and less well-funded than many of
our competitors, and we have a shorter and less proven operating history and a less recognizable and established brand name than many
of our competitors. In addition, some of our competitors have commercially available products, which provide them with operating revenue
and other competitive advantages. Furthermore, recent trends in the biotechnology industry are for large drug companies to acquire smaller
outfits and consolidate into a smaller number of very large entities, which further concentrates financial, technical, and market strength
and increases competitive pressure in the industry.
Our
competitors may obtain regulatory approval of their product candidates more rapidly, or with more or more-extensive claims, than we can
or may obtain more robust patent protection or other intellectual property rights to protect their product candidates and technologies,
which could limit or prevent us from developing or commercializing our product candidates. If we are able to obtain regulatory approval
of one or more of our product candidates, we would face competition from approved products or products under development by larger companies
that may address our targeted indications. If we directly compete with these very large entities for the same markets and/or customers,
their greater resources, brand recognition, sales and marketing experience and financial strength could prevent us from capturing a share
of these markets or customers. Our competitors may also develop products that are more effective, more useful, better tolerated, subject
to fewer or less severe side effects, more widely prescribed, less costly or more widely accepted for other reasons than any of our products
that might obtain regulatory approvals, and our competitors may also be more successful than us in manufacturing, distributing and otherwise
marketing their products.
We
expect our product candidates, if approved and commercialized, to compete on the basis of, among other things, product efficacy and safety,
time to market, price, coverage and reimbursement by third-party payors, extent of adverse side effects and convenience of treatment
procedures. We may not be able to effectively compete in any of these areas, or we may be prevented from being able to compete at all
in these areas due to the performance of our products during clinical trials and/or the circumstances of an approval. Presently, we compete
with other biotechnology companies for funding and support on the basis of our technology platforms and the potential value of our product
candidates based on the factors described above.
If
we are unable to compete effectively, our business, results of operations, financial condition, and prospects may be materially adversely
affected.
We
may incur liability if our presentations of information regarding our product candidates are determined, or are perceived, to be inconsistent
with regulatory requirements or guidelines.
The
FDA provides guidelines regarding appropriate presentation of product information and continuing medical and health education activities.
Even though we do not have any FDA approved products, these guidelines apply to our current activities with respect to disclosures, presentations
or other communications about our product candidates and technologies at healthcare conferences or in other forums. Although we endeavor
to follow these guidelines, the FDA, the Office of the Inspector General of the U.S. Department of Health and Human Services, or the
Department of Justice could disagree, in which case we could be subject to significant liability, including civil and administrative
remedies as well as criminal sanctions. In addition, management’s attention could be diverted and our reputation could be damaged,
any of which could materially harm our business and prospects.
If
we and our contract manufacturers fail to produce our systems and product candidates in the volumes and within the timelines we require,
or if they fail to comply with applicable regulations, we could face delays in the development and commercialization of our equipment
and product candidates.
Currently,
we assemble certain components of our EP system, which is our proprietary delivery mechanism for our TAVO product candidate, and we utilize
the services of contract manufacturers to manufacture the remaining components of these systems and for the manufacture, testing and
storage of all of our supply of our plasmid product candidate for clinical trials or other studies. Except for the facility used to assemble
certain components of our electroporation system, we do not own and have no plans to build our own clinical or commercial manufacturing
capabilities, and we expect to increase our reliance on third-party manufacturers if and when we commercialize any of our product candidates
and systems.
The
manufacture of our systems and product supplies requires significant expertise and capital investment, including the use of advanced
manufacturing techniques and process controls. Manufacturers often encounter difficulties in production, particularly in scaling up for
commercial production if regulatory approvals are obtained. These difficulties include, among others: problems with production costs
and yields; quality control issues, including qualification of the equipment, stability of product candidates and compliance with testing
requirements; shortages of qualified personnel; and compliance with strictly enforced federal, state and foreign regulations. If we or
our manufacturers were to encounter any of these difficulties or our manufacturers otherwise fail to comply with their contractual obligations
to us, our ability to provide our electroporation equipment to our partners and product candidates to patients enrolled in our clinical
trials, or to commercially launch a product if regulatory approvals are obtained, would be jeopardized. Any delay or interruption in
the supply of clinical trial supplies could delay the completion of our clinical trials, increase the costs associated with maintaining
our clinical trial programs, and, depending upon the period of delay, require us to commence new trials at significant additional expense
or terminate the development program completely.
In
addition, all manufacturers of our products must comply with current good manufacturing practices, which are regulated by the FDA through
its facilities inspection programs. These practices include requirements regarding, among other things, quality control, quality assurance
and the generation and maintenance of records and documentation. We are required by law to establish adequate oversight and control over
raw materials, components and finished products furnished by our third-party manufacturers, but we have limited direct control over our
manufacturers’ compliance with these regulations and standards. Any failure by our manufacturers, including our non-U.S. contract
manufacturers, to comply with these requirements could potentially result in fines and civil penalties, suspension of production, restrictions
on imports and exports, suspension or delay in product approval, product seizure or recall or withdrawal of product approval. Additionally,
if the safety of any product candidate or approved product is compromised due to our or our manufacturers’ failure to adhere to
applicable regulatory requirements or for other reasons, we may not be able to obtain or maintain regulatory approval for or successfully
commercialize our products, and we may be held liable for any injuries sustained as a result of the failure. Any of these factors could
cause delays in clinical trials, regulatory submissions or approvals, entail significant costs or hinder our ability to effectively commercialize
our product candidates. Furthermore, assuming we are successful in receiving approval for and commercializing one or more of our product
candidates, if our manufacturers fail to deliver the required commercial quantities on a timely basis, pursuant to provided specifications
and at commercially reasonable prices, we may be unable to meet demand for our products and we could lose potential revenue.
Our
business and operations could suffer in the event of cyber-attacks or system failures.
Despite
the implementation of security measures, our internal computer systems and those of our current and any future partners, contractors
and consultants are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war
and telecommunication and electrical failures. System failures, accidents or security breaches could cause material disruptions to our
commercialization activities, clinical and other development programs, financial and disclosure controls and other reporting functions
and the administrative aspects of our business, in addition to possibly requiring substantial expenditures of capital and other resources
to remedy. Further, any loss of clinical trial data from completed or future clinical trials as a result of such a disruption could result
in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the lost data. Moreover, to
the extent any such disruption results in the loss of or damage to our data or applications or inappropriate disclosure of confidential
or proprietary information, we could incur significant liabilities. The occurrence of any of these circumstances could cause our operations
and our performance to suffer.
We
may be unable to acquire or develop new product candidates or technologies, or we may never be able to commercialize any product candidates
or technologies we do successfully acquire or develop.
As
part of our business strategy, we plan to expand our clinical pipeline and build our portfolio of product candidates through the development,
acquisition or licensing of assets or businesses, product candidates or approved products. The process of identifying, planning, negotiating,
implementing and integrating an acquisition or license of a new business, product candidate or approved product can be lengthy and complex
and can involve numerous difficulties, including difficulties related to:
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identifying
new potential product candidates or promising technologies;
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competing
with other companies for the acquisition or license, including many of our competitors with substantially greater financial, marketing
and sales resources;
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negotiating
the terms of the acquisition or license, at which we have relatively little experience;
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accurately
judging the value or worth of a potential acquisition or in-license candidate;
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paying
for an acquisition or license, including the consideration to acquire or license a business, technology or asset (which could include
cash and/or issuance of equity or debt securities);
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acquisition
and integration efforts could disrupt our business and divert the time and attention of management and other internal personnel from
existing operations;
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any
integration failures could result in the loss or impairment of relationships with employees, consultants, suppliers and other vendors
and partners;
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exposure
to unknown or contingent liabilities based on an acquired company’s operations or assets;
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acquisition
and integration efforts and costs could reduce available liquidity and other resources to pursue other acquisitions or strategic
transactions;
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challenges
establishing appropriate controls and procedures for any acquisition by us of a private company;
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failing
to recoup our investment of time, capital and other resources into a proposed acquisition or license, as a result of failing to complete
the transaction or, for transactions that are completed, failing to realize the anticipated benefits of acquired or licensed business
or asset; and
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challenges
developing and commercializing any product candidates or technologies that we are successful in acquiring or licensing, which is
subject to all of the risks described throughout these risk factors regarding the development of our current product candidates.
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As
a result of these and other difficulties, any efforts to acquire or develop new product candidates, technologies or businesses may not
produce commercially successful products or otherwise result in meaningful revenue or profitability for our business. As a result, the
pursuit of these activities could have a material adverse effect on our business, results of operations, financial condition and prospects.
Any
collaboration arrangements we may establish may not be successful, which could adversely affect our ability to develop and commercialize
our product candidates.
We
may seek collaboration arrangements for the development or commercialization of our current and any future product candidates. To the
extent we pursue collaboration arrangements, we would face significant risks in connection with establishing and maintaining the arrangements,
including, among others:
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we
could be subject to intense competition in seeking appropriate collaborators;
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collaboration
arrangements are complex, costly and time-consuming to negotiate, document and implement, and they could require our payment to the
collaborator of cash or other consideration, including issuances of equity or debt securities, in order to establish the relationship;
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we
may be unsuccessful in establishing and implementing any collaboration we desire to pursue, or the terms of the arrangement may not
be favorable to us;
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collaborations
often would require that we relinquish some or all of the control over the future success of the product candidate to the third-party
collaborator;
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the
success of any collaboration arrangements we may establish would depend heavily on the efforts and activities of our collaborators,
who would likely have significant discretion in determining the efforts and resources they would apply to these collaborations;
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disagreements
between collaborators regarding clinical development and commercialization matters can be difficult to resolve and can lead to delays
in the development process or commercialization of the applicable product candidate and, in some cases, termination of the arrangement;
and
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any
termination of a collaboration arrangement that we are able to establish could adversely affect our performance, particularly to
the extent we become reliant upon the collaboration for revenue or important commercialization processes or efforts.
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addition, collaboration arrangements may also include our pursuit of combination trials to develop and commercialize our product candidates
as combination products, such as our KEYNOTE-695 and KEYNOTE-890 studies with Merck’s KEYTRUDA®. To the extent we continue
to pursue these or any other similar collaborative arrangement, we will face certain additional risks and uncertainties in development,
as drug/device combination products are particularly complex, expensive and time-consuming to develop due to the number of variables
involved in the final product design, including ease of patient and doctor use, establishing clinical efficacy, reliability and cost
of manufacturing, regulatory approval requirements and standards and other important factors. Additionally, combination products face
continued risk and uncertainty post-development in connection with manufacturing and supply regarding the establishment of a reliable
commercial supply chain.
The
occurrence of any of these risks with respect to any collaboration arrangements we pursue or establish could materially adversely affect
our performance, financial condition and reputation.
Our
results of operations and liquidity needs could be materially negatively affected by market fluctuations and economic downturn.
Our
results of operations could be materially negatively affected by economic conditions generally, both in the U.S. and elsewhere around
the world. Continuing concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the U.S. mortgage
market and residential real estate market in the U.S. have contributed to increased volatility and diminished expectations for the economy
and the markets going forward. These factors, combined with volatile oil prices, declining business and consumer confidence and increased
unemployment, have precipitated an economic recession and fears of a possible depression. Domestic and international equity markets continue
to experience heightened volatility and turmoil. These events and the continuing market upheavals may have an adverse effect on us. In
the event of a continuing market downturn, our results of operations could be adversely affected by those factors in many ways, including
making it more difficult for us to raise funds if necessary, and our stock price may further decline.
Unfavorable
global economic conditions could adversely affect our business, financial condition or results of operations.
Our
results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. For
example, the global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged
economic downturn, such as the global financial crisis, could result in a variety of risks to our business, including, weakened demand
for our drug candidates and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy
could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services.
Following
its June 23, 2016 vote to leave the European Union, on March 29, 2017, the United Kingdom invoked Article 50 of the Lisbon Treaty and
formally began the process of exiting the European Union. Although Brexit has already and may continue to adversely affect European and/or
worldwide economic or market, political or regulatory conditions and may contribute to instability in the global financial markets, political
institutions and regulatory agencies, the resulting immediate changes in foreign currency exchange rates have had a limited overall impact
due to natural hedging. The long-term impact of Brexit, including on our business and our industry, will depend on the terms that are
negotiated in relation to the United Kingdom’s future relationship with the European Union, and we are closely monitoring the Brexit
developments in order to determine, quantify and proactively address changes as they become clear. Despite the Brexit developments, we
do not expect macroeconomic conditions to have a significant impact on our liquidity needs, financial condition or results of operations.
We
may not be successful in executing our sales and marketing strategy for the commercialization of any of our product candidates, should
they be approved, in which case we may not be able to generate significant, or any, revenue.
If
one or more of our product candidates are approved, our commercialization strategy may include the establishment of our own sales, marketing
and distribution capabilities to market products to our target markets. Developing these capabilities would require significant expenditures
on personnel and infrastructure. Moreover, we have no experience with these activities. While we currently expect that any approved products
would be marketed for a relatively small patient population, we might not be able to create an effective sales force to address even
a niche market. In addition, some of our product candidates could require, if approved, a large sales force to call on and educate physicians
and patients. We could decide in the future to pursue collaborations with one or more pharmaceutical companies to sell, market and distribute
any approved products, but we may not be able to establish any such arrangement when desired, on acceptable terms or at all. Further,
any such collaboration we do establish may not be effective in generating meaningful revenue to us.
We
may be unsuccessful in implementing the commercialization strategies we have planned. Further, we have not proven our ability to succeed
in the biotechnology industry and are not certain that our commercialization strategies, even if implemented as we envision, would lead
to significant revenue. If we are unable to successfully implement our commercialization plans and drive adoption by patients and physicians
of any product candidates that obtain regulatory approval, then we will not generate meaningful, or any, revenue, which would have a
material adverse effect on our business, results of operations, financial condition and prospects.
If
any product candidate that receives regulatory approval does not achieve broad market acceptance, our revenue potential may be limited.
The
commercial success of any product candidate that obtains marketing approval from the FDA or comparable foreign regulatory authorities
will depend on the acceptance of these products by physicians, patients, third-party payors and the medical community. The degree of
market acceptance of any product candidate that receives regulatory approval will depend on a number of factors, including:
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our
ability to provide acceptable evidence of safety and efficacy;
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acceptance
by physicians and patients of the product as a safe and effective treatment;
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the
prevalence and severity of adverse effects;
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limitations
or warnings contained in a product’s FDA-approved or other regulator-approved labeling;
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the
clinical indications for which the product is approved;
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the
availability and perceived advantages of alternative treatments;
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any
negative publicity related to the product or any competing product;
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the
effectiveness of our or any current or future collaborators’ sales, marketing and distribution strategies;
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pricing
and cost effectiveness;
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our
ability to obtain adequate third-party payor coverage or reimbursement; and
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the
willingness of patients to pay out-of-pocket in the absence of adequate third-party payor coverage and reimbursement.
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Failures
with respect to any one of these factors could severely limit the commercial potential of any product candidate that obtains regulatory
approval, which could materially adversely affect our performance and prospects.
We
may not be able to establish adequate coverage and reimbursement by third-party payors for any product candidate that achieves regulatory
approvals, which could severely limit our market potential, performance and prospects.
Cost
containment has become a significant trend in the U.S. healthcare industry. Third-party payors have attempted to control costs by limiting
coverage and the amount of reimbursement for certain products and procedures. Increasingly, third-party payors are requiring that companies
provide them with predetermined discounts from list prices and are challenging the prices charged for medical products and treatments.
In addition, recent trends in U.S. politics suggest that the U.S. healthcare insurance framework may experience significant changes in
the near term. For all of these and other reasons, coverage and reimbursement at adequate or any levels may not be available for any
product candidate that achieves regulatory approval. If coverage and reimbursement is not available or is not available at an adequate
level for any approved product, the demand for or price of the product could be materially negatively affected, which could severely
limit our revenue potential and prospects.
In
addition, the regulations that govern marketing approvals, pricing, coverage and reimbursement for new therapeutic products vary widely
from country to country. Some countries require approval of the sale price of a product before it can be marketed. In many countries,
the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical
pricing remains subject to continuing government control even after initial approval is granted. As a result, even if we obtain regulatory
approval for a product candidate in a particular country, we could be subject to continuing pricing regulations that could delay our
commercial launch of the product or negatively impact the revenue potential for the product in that country.
Future
growth, including growth in international operations, could strain our resources, and if we are unable to manage any growth we may experience,
we may not be able to successfully implement our business plans.
In
late 2016, we established a subsidiary corporation in Australia in preparation for planned clinical trials in that country. In addition,
our business plan includes continued growth of our operations, including, among other things, growth in our workforce, expansion of our
clinical trial efforts within and outside of the United States, and expansion of our portfolio of product candidates. This growth could
place an additional strain on our management, administrative, operational and financial infrastructure, and will require that we incur
significant additional costs and hire and train additional personnel to support our expanding operations. Further, we must maintain and
continue to improve our operational, financial and management controls and reporting systems and procedures, which can be more challenging
during periods of expansion. As a result, our future success will depend in part on the ability of management to effectively manage any
of this growth we may experience. If we fail to successfully manage any growth we may experience, we may be unable to execute on our
business plan.
In
connection with any geographic expansion we may pursue, international operations would involve substantial additional risks, including,
among others:
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difficulties
complying with the U.S. Foreign Corrupt Practices Act and other applicable anti-bribery laws, such as the United Kingdom Bribery
Act 2010, and similar antibribery and anticorruption laws in other jurisdictions;
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difficulties
complying with foreign laws, regulations, standards and regulatory guidance governing the collection, use, disclosure, retention,
security and transfer of personal data, including the European Union General Data Privacy Regulation, which introduces strict requirements
for processing personal data of individuals within the European Union;
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difficulties
maintaining compliance with the varied and potentially conflicting laws and regulations of multiple jurisdictions that may be applicable
to our business, many of which may be unfamiliar to us;
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difficulties
in managing foreign operations;
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financial
risks, such as longer payment cycles, difficulty in enforcing contracts and collecting accounts receivable, and exposure to foreign
currency exchange rate fluctuations;
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complexities
associated with managing multiple payor-reimbursement regimes or self-pay systems;
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more
complexity in our regulatory and accounting compliance;
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differing
or changing obligations regarding taxes, duties or other fees;
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limited
intellectual property protection in some jurisdictions;
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risks
associated with currency exchange and convertibility, including vulnerability to appreciation and depreciation of foreign currencies
against the U.S. dollar;
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uncertainty
related to developing legal and regulatory systems and standards for economic and business activities in some jurisdictions;
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trade
restrictions or barriers, including tariffs or other charges and import-export regulations, which are subject to uncertainty,
and the trade policies of the current administration regarding existing
and proposed trade agreements and the ability to import goods into the United States;
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changes
in applicable laws or policies;
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possible
failure by us or our distributors to obtain appropriate licenses or regulatory approvals for the sale or use of our product candidates,
if approved, in various countries; and
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business
interruptions resulting from geopolitical actions, economic instability, or the impact of and response to natural disasters, including,
but not limited to, wars and terrorism, political unrest, outbreak of disease, earthquakes, boycotts, curtailment of trade, and other
business restrictions.
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The
occurrence of any of these risks could limit our ability to pursue international expansion, increase our costs or expose us to fines
or other legal sanctions, any of which could negatively impact our business, reputation and financial condition.
If
we are unable to successfully recruit and retain qualified personnel, we may not be able to maintain or grow our business.
In
order to successfully implement and manage our business plans, we depend on, among other things, successfully recruiting and retaining
qualified executives, managers, scientists and other employees with relevant experience in life sciences and the biotechnology industry.
Competition for qualified individuals is intense, particularly in our industry, due to the many larger and more established life science
and biotechnology companies that compete with us for talent. We also experience competition for the hiring of scientific and clinical
personnel from universities and research institutions. In addition, we heavily rely on consultants and advisors, including scientific,
clinical and regulatory advisors, to assist us in formulating our research and development and commercialization strategies. Our consultants
and advisors may be employed by others or may have commitments under consulting or advisory contracts with other entities that may limit
their availability to support us. If we are not able to retain existing personnel, consultants and/or advisors, and find, attract and
retain new qualified personnel, consultants and/or advisors on acceptable terms and in a timely manner to coincide with our needs, we
may not be able to successfully maintain or grow our operations and our business and prospects could suffer.
Additionally,
although we have employment agreements with each of our executive officers, these agreements are terminable by them at will. The loss
of the services of any one or more members of our current senior management team could, among other things, disrupt or divert our focus
from pursuing our business plans while we seek to recruit other executives, impact the perceptions of our existing and prospective employees,
partners and investors regarding our business and prospects, cause us to incur substantial costs in connection with managing transitions
and recruiting suitable replacements and, if the departing personnel are crucial to any of our clinical or other development programs,
delay or prevent the development and commercialization of the affected product candidates. These risks would be amplified if we are not
able to recruit suitable replacements for any departing personnel on acceptable terms and in a timely manner. The occurrence of any of
these or other potential consequences could cause significant harm to our business.
Recent
changes in the Company’s executive management team and Board of Directors may be disruptive to, or cause uncertainty in, its business,
results of operations and the price of the Company’s common stock.
On
June 24, 2021, Daniel J. O’Connor stepped down from his positions as Chief Executive Officer, President and Director of the Company,
and the Company’s Board of Directors appointed Brian A. Leuthner, formerly Chief Operating Officer, as the Company’s interim
Chief Executive Officer. The Company’s Board of Directors commenced a search to recruit a permanent successor with the assistance
of an executive search firm. Subsequently, on August 13, 2021, Mr. Brian A. Leuthner stepped down from his role as interim Chief Executive
Officer of the Company. Also on August 13, 2021, the Company’s Board of Directors formed a temporary Leadership Committee
consisting of three board members, Margaret Dalesandro, Ph.D., Herbert Kim Lyerly, M.D. and Yuhang Zhao, Ph.D., MBA, to lead all development
efforts, with a focus on the Company’s lead asset, TAVO™, until a permanent Chief Executive Officer is hired. These
changes in the Company’s executive management team and to the Board of Directors, may be disruptive to, or cause uncertainty in,
the Company’s business, and any additional changes to the executive management team or the Board of Directors could have a negative
impact on the Company’s ability to manage and grow its business effectively. Any such disruption or uncertainty or difficulty in
efficiently and effectively filling key roles could have a material adverse impact on the Company’s results of operations and the
price of the Company’s common stock.
Extensive
industry regulation has had, and will continue to have, a significant impact on our business, especially our product development, manufacturing
and distribution capabilities.
Biotechnology
companies are subject to extensive, complex, costly and evolving government regulation relating to the ability to market and sell any
drug or medical device. In the United States, these regulations are principally administered and enforced by the FDA and, to a lesser
extent, by the U.S. Drug Enforcement Agency (“DEA”), and comparable state government agencies, and outside the United
States, these types of regulations are typically administered by various regulatory agencies comparable to the FDA in foreign countries
where products or product candidates are researched, tested, manufactured and/or marketed.
The
Food, Drug, and Cosmetic Act (“FDCA”), the Controlled Substances Act, and other federal statutes and regulations,
as well as similar state and foreign statutes and regulations, govern or influence, among other things, the research, development, design,
verification, validation, clinical testing, manufacture, storage, record-keeping, approval, labeling, promotion, marketing, distribution,
post-approval monitoring and reporting, sampling, import and export of product candidates such as ours. Under these regulations, we and
our contract manufacturers may become subject to periodic inspection of our facilities, quality control and other procedures, and operations
and/or product candidate testing by the FDA, DEA and other authorities during and after the approval process for a product candidate,
to confirm compliance with all applicable regulations, including current good manufacturing practices and other applicable requirements.
Further, even if regulatory approval of a product candidate is obtained, such approval would, in the U.S. at least, impose limitations
on the indicated uses for which the product may be marketed, and these limitations could materially limit a product’s market and
revenue potential. Additionally, we would be subject to pervasive and continuing regulation by the FDA and/or comparable foreign regulators
with respect to any approved product. Moreover, we could be required to conduct potentially costly post-approval studies or surveillance
programs to monitor the effect of any approved products, and the FDA and comparable foreign regulators have the authority to stop or
limit further marketing of a product or impose more stringent labeling restrictions based on the results of these post-approval tests
and programs or in the event of any unexpected or serious health or safety concern regarding any approved product.
Possible
penalties or other consequences for failure to comply with these regulatory requirements include, among others, observations, notices,
citations and/or warning letters that could force us to modify our clinical programs or other activities; clinical holds on our ongoing
clinical programs; adverse publicity from the FDA or others; the FDA’s suspension of its review of pending applications; fines;
product recalls or seizures; injunctions; total or partial suspension of production and/or distribution; labeling changes; withdrawal
of previously granted product approvals; enforcement actions; restrictions on imports and exports; injunctions and civil or criminal
prosecution. Any such sanctions, if imposed, could have a material adverse effect on our business, operating results and financial condition.
Moreover,
the regulations, policies and guidance of the FDA or other regulatory agencies could change and new or additional statutes or regulations
could be enacted or promulgated. If changes or new laws are more stringent or impose additional, different, or more challenging requirements,
our costs of compliance could increase, regulatory approval of our product candidates could be delayed or jeopardized, or post-approval
activities for any product candidates that obtain regulatory approval could be further restricted or regulated. If we are not able to
achieve and maintain regulatory compliance, we may not be permitted to market any of our product candidates, which would materially adversely
affect our prospects to generate revenue.
If
we fail to comply with applicable healthcare laws and regulations, we could face substantial penalties and our business, operations,
prospects and financial condition could be adversely affected.
The
healthcare industry is heavily regulated, constantly evolving and subject to significant change and fluctuation. The U.S. federal and
state healthcare laws and regulations that impact our business include, among others:
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the
laws and regulations administered and enforced by the FDA and other state and federal regulatory agencies, including the FDCA, Controlled
Substances Act and other federal statutes and regulations, discussed above;
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the
federal Anti-Kickback Statute, which generally prohibits, among other things, soliciting, receiving or providing remuneration to
induce the referral of an individual for an item or service or the purchasing or ordering of an item 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 laws, which generally prohibit, among other things, knowingly presenting or causing to be presented claims for
payment from Medicare, Medicaid or other third-party payors that are false or fraudulent;
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the
Affordable Care Act, which, in general and among other things, expands the government’s investigative and enforcement authority,
including requiring pharmaceutical companies to record and disclose to government agencies any transfers of value to doctors and
teaching hospitals, and increases the penalties for fraud and abuse, including amendments to the federal False Claims Act and the
Anti-Kickback Statute to make it easier to file lawsuits under these statutes;
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HIPAA
and HITECH, which, in general and among other things, establish comprehensive federal standards with respect to the privacy, security
and transmission of individually identifiable health information and impose requirements for the use of standardized electronic transactions
with respect to transmission of such information;
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the
FCPA and other applicable anti-bribery laws; and
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state
law equivalents of each of these federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed
by any third-party payor, including commercial insurers, and state laws governing the privacy and security of health information
in certain circumstances, many of which differ from each other in significant ways and may not be preempted by applicable federal
laws, thus complicating compliance efforts.
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Additionally,
the healthcare compliance environment is continuously changing, with proposed revisions to or replacement of the Affordable Care Act
at the federal level and with some states mandating implementation of compliance programs, compliance with industry ethics codes, registration
requirements for sales personnel, spending limits and reporting to state governments of gifts, compensation and other remuneration to
physicians. This shifting regulatory environment, as well as our obligation to comply with different reporting and other compliance requirements,
in multiple jurisdictions, including foreign laws and regulations comparable to the U.S. laws and regulations described above, to the
extent we continue to pursue operations in foreign countries, such as our clinical activities in Australia, or if we seek to sell any
product that obtains regulatory approval in a foreign country, increases the possibility that we may violate one or more of these laws.
In addition, these conditions may also adversely affect our ability to obtain regulatory approval for any of our product candidates,
the availability of capital, our ability to generate meaningful or any revenue and, if any of our product candidates achieve regulatory
approval, our ability to establish a price we believe is fair for the approved product. Further, even though we do not and will not control
referrals of healthcare services or bill directly to third-party payors, certain federal and state healthcare laws and regulations pertaining
to fraud and abuse and patients’ rights would be applicable to our business, if any of our product candidates obtain regulatory
approval and become commercially available.
All
of these laws impose penalties or other consequences for non-compliance, some of which may be severe. If we or our operations are found
to be in violation of any of these laws or any other governmental regulations that apply to us, the consequences could include, but are
not limited to, fines or other monetary damages, orders forcing us to curtail or restructure our operations, injunctions and civil or
criminal prosecution. Any such penalties could adversely affect our ability to operate our business and pursue our strategic plans. Additionally,
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
the various U.S. federal and state and foreign laws and regulations that apply to our business could prove costly. The occurrence of
any of these risks could cause our performance and financial condition to materially suffer.
We
are subject to new legislation and regulatory proposals that may affect costs for compliance and adversely affect revenue.
The
117th Congress has closely monitored drug pricing and health care spending in the United States. Many members of Congress
have prioritized policies targeting drug prices and health care spending and are committed to lowering spending in federal government
programs. Legislative efforts to reduce health care spending within federal programs may affect overall health care spending in the United
States. The Prescription Drug Pricing Reduction Act, or PDPRA, which was introduced in Congress in 2019, and again in 2020, proposed
to, among other things, penalize pharmaceutical manufacturers for raising prices on drugs covered by Medicare Parts B and D faster than
the rate of inflation, cap out-of-pocket expenses for Medicare Part D beneficiaries, and several changes to how drugs are reimbursed
in Medicare Part B. A similar drug pricing bill, the Elijah E. Cummings Lower Drug Costs Now Act, proposes to enable direct price negotiations
by the federal government for certain drugs (with the maximum price paid by Medicare capped based on an international index), requires
manufacturers to offer these negotiated prices to other payers, and restricts manufacturers from raising prices on drugs covered by Medicare
Parts B and D. This Act passed in the House of Representatives when it was introduced in 2019, and it has been introduced again in the
2021 term. In September 2021, provisions from this Act were included in budget reconciliation recommendations from several House committees.
These recommendations include a provision advanced by the Ways and Means Committee that would limit federal tax credits associated with
the clinical study of certain drugs intended for use in certain rare diseases. If passed, this law could increase the costs associated
with clinical development and regulatory approval of OncoSec’s products. Further, the House and Senate Judiciary Committees have
also focused heavily on patent and exclusivity reform for prescription drugs. While we cannot predict what proposals may ultimately become
law, elements under consideration could significantly change health care spending in which the U.S. biotechnology and pharmaceutical
markets operate.
President
Joseph Biden, like his predecessor, has prioritized drug pricing and price transparency in the health care industry. On July 9, 2021,
President Biden signed an Executive Order (“EO”) directing federal agencies to develop and implement policies to lower
drug prices. The EO expresses the Biden Administration’s support for a range of drug policy proposals, including Medicare drug
pricing negotiation, inflationary rebates, and drug importation from foreign countries, including Canada. Under the previous Administration,
the Department of Health and Human Services (“HHS”) proposed or enacted several drug pricing measures, including finalization
of a regulation that would prohibit rebates from drug manufacturers to payors (referred to as the Rebate Rule). The Rebate Rule’s
implementation was delayed by courts, and Congress may prevent its implementation through legislation. Legislative or regulatory changes
to the framework of permissible rebates could impact our ability to negotiate with payers to obtain coverage and reimbursement, which
may ultimately impact our ability to market our products.
On
June 24, 2019, President Donald Trump signed an EO directing federal agencies to improve price transparency. Since then, under
both the Trump and Biden Administrations, HHS has proposed and implemented regulations to improve price transparency in both provider
and payor industries. These transparency measures may shift bargaining power among various stakeholders within the U.S. drug supply chain
and could ultimately impact drug pricing and health care costs generally.
Further,
the Centers for Medicare & Medicaid Services (“CMS”), within HHS, has significant regulatory authority to promulgate
regulations and impose other compliance requirements that may increase our compliance costs and impact our ability to attain profitability
and market our products. CMS sets coverage and reimbursement rates for Medicare and oversees the implementation of Medicaid at the state
level. CMS could modify or impose coverage restrictions or modify reimbursement rates on any of our products in a manner that could adversely
impact our business. For example, on January 8, 2021, CMS approved Tennessee’s Medicaid section 1115 demonstration application,
granting the state the unprecedented ability to implement a closed drug formulary without foregoing the state’s entitlement to
rebates under the Medicaid Drug Rebate Program. Implementation of a closed formulary could mean that our products could be excluded from
coverage under Medicaid. Further, CMS has implemented regulations that encourage the implementation of value-based payment models for
drugs within the Medicaid program. Such payment mechanisms, if implemented, could lead to reduced payment for any of our products.
Within
CMS, the Center for Medicare and Medicaid Innovation (“CMMI”), as established by the Affordable Care Act, has broad authority
to design, implement, and test new health care payment models that could potentially lower health care spending while maintaining quality
or increase quality without increasing spending. CMMI has considered implementing models that could have a significant adverse effect
on our business. For example, on November 27, 2020, CMMI finalized a mandatory Medicare Part B drug payment model that would have aligned
payment for drugs with international reference prices, entitled the Most Favored Nation (“MFN”) Model. The MFN Model
was enjoined by a Federal court on December 28, 2020 for failure to comply with rulemaking procedural requirements. The Biden Administration
has withdrawn the MFN Model, but it is unclear whether the Administration will propose and implement the same or a similar model in future
rulemaking, and we cannot predict how future regulatory actions by CMMI or any other component of CMS may impact our business.
In
addition to significant uncertainty with respect to legislation and regulation at the federal level, similar developments by state governments
may impact our business. State legislative and regulatory developments could impact drug development, manufacturing, pricing, marketing,
distribution, coverage, or payment. Jurisdictional and preemption issues between federal and state laws and regulations are complex and
increase the costs of compliance. Further, similar legislative and regulatory uncertainties may arise in foreign drug markets, some of
which are heavily regulated. We cannot predict how developments at the state level may impact our business.
Any
product for which we obtain marketing approval could be subject to restrictions or withdrawal from the market and we may be subject to
penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with products, when and if any
of them is approved.
Any
product for which we might obtain marketing approval, along with the manufacturing processes and facilities, post-approval data, labeling,
advertising and promotional activities for such product, will be subject to continual requirements of and review by the FDA and comparable
regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration
requirements, industry standards and regulatory requirements (e.g. cGMPs and good documentation practices) relating to quality
control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples
to physicians and recordkeeping, and requirements regarding company presentations and interactions with healthcare professionals. Even
if we obtain regulatory approval of a product, the approval may be subject to limitations on the indicated uses for which the product
may be marketed or to the conditions of approval, or contain requirements for costly post-marketing testing, studies, and surveillance
to monitor the safety or efficacy of the product. We also may be subject to state laws and registration requirements covering the marketing,
promotion, and distribution of products. Later discovery of previously unknown problems with products, manufacturers or manufacturing
processes, or failure to comply with legal and regulatory requirements, may result in actions such as:
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restrictions
on product manufacturing, distribution or use;
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restrictions
on the labeling, marketing, or promotion of a product;
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requirements
to conduct post-marketing studies or clinical trials;
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Inspectional
observations or warning letters from regulatory authorities;
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withdrawal
of the products from the market;
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refusal
to approve pending applications or supplements to approved applications that we submit;
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voluntary
or mandatory recall;
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fines;
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suspension
or withdrawal of marketing or regulatory approvals;
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refusal
to permit the import or export of products;
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product
seizure or detentions;
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injunctions
or the imposition of civil or criminal penalties; and
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adverse
publicity.
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If
we or our respective suppliers, third-party contractors, clinical investigators or collaborators are slow to adapt, or are unable to
adapt, to changes in existing regulatory requirements or adoption of new regulatory requirements or policies, we or our respective collaborators
may experience one or more of the actions above, resulting in decreased revenue from milestones, product sales or royalties.
We
are heavily dependent on the success of our clinical product candidates and we cannot provide any assurance that any of our product candidates
will be approved, commercialized or successfully marketed in the future.
We
plan to seek regulatory approval to commercialize our product candidates in the United States, and potentially in the European Union
and additional foreign countries. While the scope of regulatory review and approval can be similar in other countries, to obtain separate
regulatory review and approval in many other countries, we must comply with the numerous and varying regulatory requirements of such
countries, including those regarding safety and efficacy, clinical trials, manufacturing, post-marketing commitments, and commercial
sales, pricing and distribution of our product candidates, and we cannot predict success in those jurisdictions.
In
addition, the clinical trial requirements of the FDA, the European Commission, the European Medicines Agency, or the EMA, the competent
authorities of the European Union, or EU, Member States and other regulatory authorities and the criteria these regulators use to determine
the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market
of such product candidates. The regulatory approval process for novel product candidates such as ours can be more expensive and take
longer than for other, better known or more extensively studied product candidates. Even if we are successful in developing additional
product candidates, it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for these
product candidates in either the United States or the EU, or how long it will take to commercialize any other products for which we receive
marketing approval. In addition, any future marketing authorization granted by the European Commission may not be indicative of what
FDA may require for approval and vice versa.
Further,
in the U.S., the European Union member states, and elsewhere, there have been, and we expect there will continue to be, efforts to control
and reduce healthcare costs. In the U.S. for example, the price of drugs has come under intense scrutiny by the U.S. Congress. Third
party payers decide which drugs they will pay for and establish reimbursement and co-payment levels. Government and other third-party
payers are increasingly challenging the prices charged for healthcare products, examining the cost effectiveness of drugs in addition
to their safety and efficacy, and limiting or attempting to limit both coverage and the level of reimbursement for prescription drugs.
Europe
has enacted a new data privacy regulation, the General Data Protection Regulation, a violation of which could subject us to significant
fines.
In
May 2018, a new privacy regime, the General Data Protection Regulation, or GDPR, took effect across all member states of the European
Economic Area. The new regime increases our obligations with respect to clinical trials conducted in the member states by expanding the
definition of personal data to include coded data, and requiring changes to informed consent practices and more detailed notices for
clinical trial subjects and investigators. In addition, it increases the scrutiny that clinical trial sites located in the member states
should apply to transfers of personal data from such sites to countries that are considered to lack an adequate level of data protection,
such as the United States. The regime imposes substantial fines for breaches of data protection requirements, which can be up to four
percent of global revenues or 20 million Euros, whichever is greater, and it also confers a private right of action on data subjects
for breaches of data protection requirements. Compliance with these directives is a rigorous and time-intensive process that may increase
our cost of doing business, and the failure to comply with these laws could subject us to significant fines.
Our
employees, consultants, or third-party partners may engage in misconduct or other improper activities, including but not necessarily
limited to noncompliance with regulatory standards and requirements or internal procedures, policies or agreements to which such employees,
consultants and partners are subject, any of which could have a material adverse effect on our business.
We
are exposed to the risk of employee fraud or other misconduct. Misconduct by employees, consultants, or third party partners could include
intentional failures to comply with FDA regulations, to provide accurate information to the FDA, to comply with manufacturing standards,
including those we have established, to comply with federal and state healthcare fraud and abuse laws and regulations, to report financial
information or data accurately, to comply with internal procedures, policies or agreements to which such employees, consultants or partners
are subject, or to disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare
industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing, promotion, sales commission, customer
incentive programs and other business arrangements. Employee, consultant, or third-party misconduct could also involve the improper use
of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation.
The precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses
or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such
laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our
rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant
fines or other sanctions.
We
receive a large amount of proprietary information from potential or existing licensors of intellectual property and potential acquisition
target companies, all pursuant to confidentiality agreements. The confidentiality and proprietary invention assignment agreements that
we have in place with each of our employees and consultants prohibit the unauthorized disclosure of such information, but such employees
or consultants may nonetheless disclose such information through negligence or willful misconduct. Any such unauthorized disclosures
could subject us to monetary damages and/or injunctive or equitable relief. The notes, analyses and memoranda that we have generated
based off such information are also valuable to our businesses, and the unauthorized disclosure or misappropriation of such materials
by our employees and consultants could significantly harm our strategic initiatives, especially if such disclosures are made to our competitor
companies.
We
may use biological materials and hazardous materials, and any claims relating to improper handling, storage or disposal of these materials
could be time consuming and costly.
We
may use hazardous materials, including chemicals and biological agents and compounds that could be dangerous to human health and safety
or the environment. Our operations may also produce hazardous waste products. Federal, state and local laws and regulations govern the
use, generation, manufacture, storage, handling and disposal of these materials and wastes. Compliance with applicable environmental
laws and regulations may be expensive, and current or future environmental laws and regulations may impair our product development efforts.
In addition, we cannot entirely eliminate the risk of accidental injury or contamination from these materials or wastes. We do not carry
specific biological or hazardous waste insurance coverage, and our property and casualty and general liability insurance policies specifically
exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Accordingly, in the event
of contamination or injury, we could be held liable for damages or penalized with fines in an amount exceeding our respective resources,
and clinical trials or regulatory approvals could be suspended.
Although
we maintain workers’ compensation insurance to cover costs and expenses incurred due to injuries to our employees resulting from
the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not have insurance
for environmental liability or toxic tort claims that may be asserted in connection with the storage or disposal of biological or hazardous
materials.
In
addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations.
These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these
laws and regulations also may result in substantial fines, penalties or other sanctions.
We
face potential product liability exposure, and if successful claims are brought against us, we could incur substantial liability.
The
clinical use of our product candidates and, if any of our product candidates achieves regulatory approval, any future commercial use
of the approved products, exposes us to the risk of product liability claims. Any side effects, manufacturing defects, misuse, or abuse
associated with our product candidates or any approved products could result in injury to a patient or even death. In addition, a liability
claim could be brought against us even if our product candidates or any approved products merely appear to have caused an injury. These
product liability claims could be brought against us by consumers, healthcare providers, pharmaceutical companies or others that come
into contact with our product candidates or any approved products.
Regardless
of merit or potential outcome, product liability claims against us could result in, among other effects, the inability to continue clinical
testing of our product candidates or, for any approved products, commercialization of the products, impairment of our business reputation,
withdrawal of clinical trial participants and distraction of management’s attention from our primary business activities. In addition,
if we cannot successfully defend against product liability claims, we could incur substantial liabilities, including liabilities that
may be beyond the scope or limits of any applicable insurance policies we may have in place. Any of these outcomes could severely harm
our business, financial condition and prospects.
Our
business depends in large part on our ability to protect our proprietary rights and technologies, and we may be unsuccessful in these
efforts.
We
believe our success and ability to compete depends in large part on obtaining and maintaining patent, trademark and trade secret protection
of our product candidates and their respective components and underlying technologies, including devices, formulations, manufacturing
methods and methods of treatment, as well as successfully defending our intellectual property rights against third-party challenges.
Our ability to stop third parties from making, using or selling products that infringe on our intellectual property rights depends on
the extent to which we have secured and properly safeguarded these rights under valid and enforceable patents or trade secrets.
Although
we previously owned patents protecting our OMS EP Devices, our primary U.S. and foreign patents providing such protection expired in
2017 and 2018, and the final foreign patents expired in late 2019. As a result, we may have limited ability to enforce these rights against
third parties to prevent them from making or selling competing products that rely upon the protected technology, which could harm our
competitive position and prospects. In addition to these proprietary rights that expired between 2017 and 2019, we also own or have exclusively
licensed certain patents and applications that cover our current clinical methods. These patents/patent applications will expire
between 2024 and 2037. These method patents protect the use of a product for a specified method under certain defined parameters. These
types of method patents do not prevent a competitor from making and marketing a product that is identical or similar to the protected
product under parameters that are outside the scope of the patented method claims. Moreover, even if competitors do not actively promote
such a product for the indications protected by the method patent, physicians could prescribe the products for these methods on an off-label
basis. Although such 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 detect, prevent or prosecute. Furthermore, our licensed patents expiring between 2024 and
2032 may not have as broad a scope as our patents that expired between 2017 and 2019, which in turn may limit our remedies against competitors
making and marketing a product that is identical or similar to ours.
To
the extent our existing patents or pending or planned patent applications expire before we are able to commercialize product depending
on the technology or do not otherwise provide sufficient protection, we could be subject to substantially increased competition and our
business and ability to commercialize or license our technology or product candidates could be materially adversely affected.
Even
if we secure patents that cover our proprietary technology, our efforts to protect our intellectual property rights with patents may
prove inadequate. For instance, the breadth of claims in a patent application is often restricted during patent prosecution, resulting
in granted claims with a more limited scope than the claims in the original application. Additionally, pending or future patent applications
may not result in issued patents. Laws and regulations for the prosecution of patents are continuously evolving, and the U.S. Supreme
Court has, in the past several years, revised certain tests regarding both the grant and review of patents that could make it more difficult
to obtain issued patents. Also, any patents that are granted could be subject to post-grant proceedings that could limit their scope
or enforceability, and claims that are amended during post-grant proceedings may not be broad enough to provide meaningful protection.
Moreover, any patents that are issued to us or any future collaborators may be circumvented or invalidated by third-party efforts, may
expire before or shortly after obtaining necessary regulatory approvals, or may not provide sufficient proprietary protection or competitive
advantage for other reasons. Such challenges could include third-party pre-issuance submissions of prior art to the PTO, or opposition,
derivation, reexamination, inter parties review, or post-grant review or interference proceedings challenging our patent rights or the
patent rights of others. The cost of these proceedings could be substantial, and it is possible that our efforts to establish priority
or validity of the invention would be unsuccessful, resulting in a material adverse effect on our U.S. patent position. An adverse determination
in any such submission, patent office trial, proceeding or litigation could reduce the scope of, render unenforceable, or invalidate,
our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us,
or result in our inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the
breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating
with us to license, develop or commercialize current or future product candidates. Further, obtaining and maintaining patent protection
depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by government patent
agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. These risks may be amplified
in some foreign jurisdictions, where patent protection may not be as strong or as effective as it is in the United States.
Our
reliance on unpatented proprietary rights, including trade secrets and know-how, may also pose significant risks. For instance, it can
be difficult to protect these rights and they may lose their value if they are independently developed by a third party or if their secrecy
is lost. Although we have taken measures to protect these rights, including establishing confidentiality agreements with employees, consultants
and other third parties, these measures may not sufficiently safeguard our unpatented proprietary rights and may not provide adequate
remedies in the event of unauthorized use or disclosure of the confidential information. Despite these efforts, any of these parties
may breach the agreements and may unintentionally or willfully disclose our proprietary information, including our trade secrets, and
we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated
a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside
the U.S. are less willing or unwilling to protect trade secrets. Moreover, if any of our trade secrets were to be lawfully obtained or
independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that
technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor,
our competitive position would be harmed.
If
we are unable to secure patent protection for our patentable technologies, if any of our issued patents are limited or found to be invalid
or unenforceable, or if we are otherwise unable to adequately protect our patented or unpatented proprietary rights, our business and
prospects could be materially negatively affected.
If
we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results and stockholders
and the investment community could lose confidence in our financial reporting, which could harm our business.
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. Although management has
determined that our internal control over financial reporting was effective as of July 31, 2021, our controls over financial processes
and reporting may not continue to be effective, or we may identify significant deficiencies or material weaknesses in our internal controls
in the future. Any failure to maintain effective internal control over financial reporting, including failures to implement new or improved
controls as needed in a timely and effective manner or remediate any significant deficiency or material weakness that is identified in
the future, could cause noncompliance with our public reporting obligations, an inability to produce reliable financial reports or material
misstatements in our financial statements or other public disclosures. If any of these circumstances were to occur, investors could lose
confidence in our financial and other reported information, our reputation could otherwise be harmed, the investment of our stockholders
in our company could be negatively affected and the costs to us of raising additional capital could materially increase, any of which
could harm our business and prospects.
Maintaining
compliance with our reporting and other obligations as a public company could strain our resources and distract management.
As
a public company, we experience significant demands that are not applicable to private companies. For example, the Sarbanes-Oxley Act
of 2002 and related and other rules implemented by the SEC and the Nasdaq Capital Market, which maintains the securities exchange on
which our common stock is listed for trading, impose a number of requirements on public companies, including with respect to corporate
governance practices, periodic reporting and other disclosure requirements and financial and disclosure controls and procedures. Further,
the SEC and other regulators have continued to adopt new rules and make changes to existing regulations that require our compliance,
such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the corporate governance and executive compensation-related
disclosure requirements of this legislation.
Maintaining
compliance with the rules and regulations applicable to public companies involves significant legal, accounting and financial costs.
Additionally, if we grow as anticipated, we may need to hire additional personnel and implement new and more sophisticated financial
and accounting systems and procedures to continue to meet our public company obligations. Our management and other personnel devote substantial
attention to maintaining our compliance with these obligations, which diverts attention from other aspects of our business. Any failure
to comply with these public company requirements could have a material adverse effect on our business and prospects and could materially
harm our stockholders’ investment in our Company.
We
may not be able to realize value from, or otherwise preserve and utilize, our net operating loss carryforwards and certain other tax
attributes.
If
a corporation undergoes an “ownership change” within the meaning of Section 382 of the Internal Revenue Code of 1986, as
amended, the corporation’s net operating loss carryforwards and certain other tax attributes arising prior to the ownership change
are subject to limitations on use after the ownership change. In general, an ownership change occurs if there is a cumulative change
in the corporation’s equity ownership by certain stockholders that exceeds 50% over a rolling three-year period. Similar rules
may apply under state tax laws. If we experience such an ownership change, our net operating loss carryforwards generated prior to the
ownership change would be subject to annual limitations that could reduce, eliminate or defer the utilization of these losses.
Moreover,
the recognition and measurement of net operating loss carryforwards may include estimates and judgments by management, and the Internal
Revenue Service could, upon audit or other investigation, disagree with the amount of net operating loss carryforwards or the determination
of whether an ownership change has occurred. Additionally, legislative or regulatory changes or judicial decisions could further negatively
impact the ability to use any tax benefits associated with net operating loss carryforwards. Any inability to use net operating loss
carryforwards to reduce our U.S. federal or state income tax liability could materially harm our financial condition and results of operations.
Our
tax position could be affected by recent changes in United States federal income tax laws.
On
December 22, 2017, legislation commonly referred to as the “Tax Cuts and Jobs Act” was signed into law and is generally effective
after December 31, 2017. The Tax Cuts and Jobs Act made significant changes to the United States federal income tax rules for taxation
of individuals and business entities. Most of the changes applicable to individuals are temporary and apply only to taxable years beginning
after December 31, 2017 and before January 1, 2026. For corporations, the Tax Cuts and Jobs Act reduced the top corporate income tax
rate to 21% and repealed the corporate alternative minimum tax, limits the deduction for net interest expense, limits the deduction for
net operating losses and eliminates net operating loss carrybacks, modifies or repeals many business deductions and credits, shifts the
United States toward a more territorial tax system, and imposes new taxes to combat erosion of the United States federal income tax base.
The Company accounted for the identified changes and adjusted the carrying amounts of gross deferred tax assets and corresponding valuation
allowance in the year ended July 31, 2018. There was no net impact to the Company’s financial statements as a result. However,
the effect of the Tax Cuts and Jobs Act on us and our affiliates, whether adverse or favorable, is uncertain, and may not become evident
for some period of time. This document does not discuss such legislation or the manner in which it might affect us or purchasers of our
common stock. Prospective investors are urged to consult with their legal and tax advisors with respect to the Tax Cuts and Jobs Act
and any other regulatory or administrative developments and proposals, and their potential effects on them based on their unique circumstances.
Additionally, in September 2021, the Ways and Means Committee advanced a provision that would limit federal tax credits associated with
the clinical study of certain drugs intended for use in certain rare diseases. If passed, this law could increase the costs associated
with clinical development and regulatory approval of OncoSec’s products.
Risks
Related to Our Growth Strategy
If
we acquire, enter into joint ventures with or obtain a controlling interest in companies in the future, it could adversely affect our
operating results and the value of our Common Stock thereby diluting stockholder value and disrupting our business.
As
part of our growth strategy, we might acquire, enter into joint ventures with, or obtain a significant ownership stake in other companies.
Acquisitions of, joint ventures with and investments in other companies involve numerous risks, including, but not necessarily limited
to:
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risk
of entering new markets in which we have little to no experience;
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diversion
of financial and managerial resources from existing operations;
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successfully
negotiating a proposed acquisition or investment timely and at a price or on terms and conditions favorable to us;
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the
impact of regulatory reviews on a proposed acquisition or investment;
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the
outcome of any legal proceedings that may be instituted with respect to the proposed acquisitions or investment;
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with
respect to an acquisition, difficulties in integrating operations, technologies, services and personnel; and
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potential
inability to maintain relationships with customers of the companies we may acquire or invest in.
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If
we fail to properly evaluate potential acquisitions, joint ventures or investments, we might not achieve the anticipated benefits of
any such transaction, we might incur costs in excess of what we anticipate, and management resources and attention might be diverted
from other necessary or valuable activities.
If
we cannot continue to fund our research and development programs, we may be required to reduce product development, which will adversely
impact our growth strategy.
Our
research and development (“R&D”) programs will require substantial additional capital to conduct research, preclinical
testing and human studies, establish pilot scale and commercial scale manufacturing processes and facilities, and establish and develop
quality control, regulatory, marketing, sales and administrative capabilities to support these programs. We expect to fund our R&D
activities from a combination of cash generated from royalties and milestones from our partners in various past, ongoing and future collaborations
and additional equity or debt financings from third parties. These financings could depress our stock price. If additional funds are
required to support our operations and such funds cannot be obtained on favorable terms, we may not be able to develop products, which
will adversely impact our growth strategy.
Risks
Related to Our Common Stock
The
price and trading volume of our common stock may be subject to extreme volatility, and stockholders could lose all or part of their investment
in our company.
The
trading volume and market price of our common stock has experienced, and is likely to continue to experience, significant volatility.
This volatility could negatively impact our ability to raise additional capital or utilize equity as consideration in any acquisition
transactions we may seek to pursue, and could make it more difficult for existing stockholders to sell their shares of our common stock
at a price they consider acceptable or at all. This volatility is caused by a variety of factors, including, among the other risks described
in these risk factors:
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adverse
research and development or clinical trial results;
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our
liquidity and ability to obtain additional capital, including the market’s reaction to any capital-raising transaction we may
pursue;
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declining
working capital to fund operations, or other signs of financial uncertainty;
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any
negative announcement by the FDA or comparable regulatory bodies outside the United States, including that it has denied any request
to approve any of our product candidates for commercialization;
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conducting
open-ended clinical trials, which could lead to results (either positive or negative) being available to the public prior to a formal
announcement;
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market
assessments of any strategic transaction or collaboration arrangement we may pursue;
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potential
negative market reaction to the terms or volume of any issuance of shares of our common stock or other securities to new investors
pursuant to strategic or capital-raising transactions or to employees, directors or other service providers;
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sales
of substantial amounts of our common stock, or the perception that substantial amounts of our common stock may be sold, by stockholders
in the public market;
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issuance
of new or updated research or reports by securities analysts or changed recommendations for our common stock;
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significant
advances made by competitors that adversely affect our competitive position;
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the
loss of key management and scientific personnel and the inability to attract and retain additional highly-skilled personnel; and
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general
market and economic conditions, including factors not directly related to our operating performance or the operating performance
of our competitors, such as increased uncertainty in the U.S. healthcare regulatory environment following the results of the 2020
U.S. presidential election.
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addition, the stock market in general, and the market for stock of companies in the life sciences and biotechnology industries in particular,
has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance
of specific companies. In addition, in the past, following periods of volatility in the overall market and the market price of a particular
company’s securities, securities class action litigation has often been instituted against a company. This type of litigation,
if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
The
possibility of the economy’s return to recessionary conditions and the possibility of further turmoil or volatility in the financial
markets would likely have an adverse effect on our business, financial position, and results of operations.
The
economy in the United States and globally has experienced volatility in recent years and may continue to experience such volatility for
the foreseeable future. There can be no assurance that economic conditions will not worsen. Unfavorable or uncertain economic conditions
can be caused by declines in economic growth, business activity, or investor or business confidence, limitations on the availability
or increases in the cost of credit and capital, the timing and impact of changing governmental policies, natural disasters, epidemics
/ pandemics, such as COVID-19, terrorist attacks, acts of war, or a combination of these or other factors. A worsening of business and
economic conditions could have adverse effects on our business, including substantial fluctuations in the market price of our common
stock, which could decline below current levels.
If
we issue additional equity securities in the future, our existing stockholders would be diluted.
Our
articles of incorporation authorize the issuance of up to 100,000,000 shares of our common stock. In addition to capital-raising activities,
on which we have historically relied for cash to fund our operations, other possible business and financial uses for our authorized common
stock include, among others, stock splits, acquiring other businesses or assets in exchange for shares of our common stock, issuing shares
of our common stock to collaborators in connection with strategic alliances, issuing common stock to vendors for services performed,
attracting and retaining employees with equity compensation or other transactions and corporate purposes that our Board of Directors
deems to be in the best interest of our Company. Additionally, issuances of common stock could be used for anti-takeover purposes or
to delay or prevent changes in control or management of our Company. Any future issuances of our common stock may be consummated on terms
that are not favorable, may not enhance stockholder value and may adversely affect the trading price of our common stock. Further, any
such issuance will reduce the book value per share of our common stock and reduce the proportionate ownership and voting power of our
existing stockholders.
We
have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to
the value of your stock.
We
have never paid dividends on our common stock and do not anticipate paying any dividends for the foreseeable future. You should not rely
on an investment in our stock if you require dividend income. Further, you will only realize income on an investment in our stock in
the event you sell or otherwise dispose of your shares at a price higher than the price you paid for your shares. Such a gain would result
only from an increase in the market price of our common stock, which is uncertain and unpredictable.
If
outstanding options or warrants to purchase shares of our common stock are exercised or outstanding restricted stock units vest and settle,
our existing stockholders would be diluted.
As
of July 31, 2021, we had outstanding (i) options to purchase approximately 3.1 million shares of our common stock, (ii) warrants to purchase
approximately 1.7 million shares of our common stock, and (iii) approximately 0.4 million restricted stock units. In addition, as of
July 31, 2021, there were approximately 0.8 million shares reserved for future issuance under our stock incentive and stock purchase
plans. The exercise of options and warrants, the vesting and settlement of restricted stock units or the issuance of additional equity
awards under our stock incentive and stock purchase plans could have an adverse effect on the market for our common stock, including
the price that any stockholder could obtain for its shares. Further, our existing stockholders could experience significant dilution
in the net tangible book value of their investment upon the issuance of additional shares of our common stock through the exercise of
derivative securities that are currently outstanding or that we may issue in the future.
Sales
of common stock by our stockholders, or the perception that such sales may occur, could depress the market price of our common stock.
The
market price of our common stock could decline as a result of sales by, or the perceived possibility of sales by, our existing stockholders.
Since March 2011, we have completed a number of offerings of our common stock and warrants. Future sales of common stock by significant
stockholders, including by those who acquired their shares in our prior equity offerings, or the perception that such sales may occur,
could depress the price of our common stock.