This
description contains certain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially
from the results discussed in the forward-looking statements as a result of certain of the risks set forth herein. We assume no obligation
to update any forward-looking statements contained herein.
Overview
Oragenics,
Inc. is a development-stage company dedicated to fighting infectious diseases including coronaviruses and multidrug-resistant organisms.
Its lead product is an intranasal immunization vaccine candidate to prevent COVID-19 and variants of the SARS-CoV-2 virus. The
NT-CoV2-1 program leverages coronavirus spike protein research licensed from the National Institute of Health and the National
Research Council of Canada with a focus on reducing viral transmission and offering a more patient-friendly intranasal administration.
Our lantibiotics program features a novel class of antibiotics against bacteria that have developed resistance to
commercial antibiotics.
Our
SARS-CoV-2 Vaccine Product Candidate— NT-CoV2-1
Following
our May 2020 acquisition of one hundred percent (100%) of the total issued and outstanding common stock of Noachis Terra, Inc. (“Noachis
Terra”) we are focused on the development and commercialization of a vaccine product candidate to provide long lasting immunity
from the novel Severe Acute Respiratory Syndrome coronavirus (“SARS-CoV-2”), which causes the coronavirus disease 2019 (“COVID-19”).
Noachis Terra is a party to a worldwide, nonexclusive intellectual property and biological materials license agreement with the National
Institute of Allergy and Infectious Diseases (“NIAID”), an institute within the National Institutes of Health (“NIH”),
relating to certain research, patent applications and biological materials involving pre-fusion stabilized coronavirus spike proteins
and their use in the development and commercialization of a vaccine to provide specific, long lasting immunity from SARS-CoV-2. Since
the acquisition we have conducted testing in animal models, including SARS-CoV-2 challenge studies in hamsters, using specific formulations
for intramuscular administration (our Terra CoV-2 vaccine candidate) and intranasal administration (our NT-CoV2-1 vaccine candidate),
both based on the NIAID pre-fusion stabilized spike protein antigens. Following consideration of a number of factors, including but not
limited to the competitive landscape, we determined to bring the intranasal vaccine candidate NT-CoV2-1 into further development due
to the greater differentiation versus current COVID-19 vaccines and the potential benefits of intranasal over intramuscular administration.
We believe these benefits could include a higher reduction of transmission of SARS-CoV-2 and would offer a needle-free delivery option.
We therefore are currently focusing our development efforts on our more highly differentiated NT-CoV2-1 vaccine candidate.
Coronaviruses
are a family of viruses that can lead to upper-respiratory infections in humans. Recent clinical reports also suggest that the SARS-CoV-2
virus can affect other body-systems, including the nervous, cardiovascular, gastrointestinal and renal systems. Among the recent iterations
of coronaviruses to move from animal to human carriers is SARS-CoV-2 (often referred to as COVID-19), which, beginning in Wuhan, China,
in late 2019, caused a global pandemic due to its rapid spread and the relatively high mortality rate (as compared to the seasonal influenza).
In late January of 2022, the World Health Organization’s estimates indicate the number of worldwide COVID-19 infections have exceeded
365 million and the number of deaths directly attributed to COVID-19 have exceeded 5.6 million. Pfizer/-BioNTech received FDA approval
for their COVID-19 vaccines in August of 2021 and the Moderna vaccine in January 2022. The Janssen vaccine is currently available in
the United States under Emergency Use Authorizations (“EUA”) by the FDA. We believe given the size of the worldwide pandemic
that even with additional vaccines projected to be available in the months ahead, there will be demand for the highly differentiated
NT-CoV2-1 vaccine, once development is successfully completed. We intend to combine the research, patent applications and biological
materials covered by our NIAID license with our existing clinical research and manufacturing capabilities to respond rapidly to this
ongoing, global, public health crisis. We believe our NT-CoV2-1 vaccine holds the possibility of playing an important role in addressing
this crisis.
Coronaviruses,
such as SARS-CoV-2, possess signature protein spikes on their outer capsule. The NIAID license covers patents and data on a vaccine candidate
that were created based on a stabilized pre-fusion spike trimeric protein. By stabilizing the spike protein in the pre-fusion state,
the number of immunogenic centers is increased thereby allowing for a greater likelihood of successful antibody binding, resulting in
an improved immunogenic response. The genetic code, acquired from the NIH, for the stabilized pre-fusion spike protein was provided to
Aragen Bioscience, Inc. (“Aragen”) for the purpose of insertion of the spike protein gene sequence into a Chinese Hamster
Ovary (“CHO”) cell line. Aragen is a leading contract research organization focused on accelerating pre-clinical biologics
product development, has extensive experience building CHO cell lines for recombinant proteins, such as monoclonal antibodies. Aragen
has successfully inserted the NIH pre-fusion spike protein gene sequence into a CHO cell line and is currently developing both the analytical
tests and identifying preliminary cell line growth conditions to optimize the spike protein titers. Currently, “mini-pool”
production and analytical development is underway. The process to transfer to full-scale manufacture has begun.
The
NIH’s pre-clinical study shows that this spike protein, adjuvanted with the mouse specific TLR-4-agonist Sigma Adjuvant System
(“SAS”, a TLR-4 agonist) that induces T cell activation), generates neutralizing antibody titers in both a pseudovirus neutralization
assay and a plaque reduction neutralization titer (PRNT) assay. Recently released information indicated that pretreatment of mice with
the NIH-created COVID-19 spike protein in combination with the SAA adjuvant completely inhibited viral growth in the nasal cavities and
lungs of infected animals compared to unvaccinated control animals. In October 2020, we received feedback to our Type B Pre-Investigational
New Drug (“IND”) Meeting Request from the FDA. The response indicated that the FDA broadly supported our planned approach
to the pre-clinical program that would support the clinical development of the Terra CoV-2 vaccine. Due to our focus on our intranasal
vaccine product we expect to meet with the FDA in connection with our IND filing.
We
also entered into a material transfer agreement with Biodextris Inc. for the use of three intranasal mucosal adjuvants in our Terra CoV-2
and NT-CoV2-1 vaccine candidates. BDX100, BDX300 and BDX301 are proteosome-based adjuvants comprised of proteins and lipopolysaccharides
with improved attributes including enhanced immune response, manufacturing efficiency and the benefits of intranasal vaccine administration.
The agreement allows for the future collaboration regarding the intranasal delivery of vaccine during clinical development with the opportunity
to enter into a commercial agreement upon regulatory approval of the intranasal vaccine.
The
NT-CoV2-1 vaccine containing Inspirevax’s intranasal mucosal adjuvant BDX301 has been studied in pre-clinical animal studies, including
hamster viral challenge studies and mouse immunogenicity studies. A rabbit toxicology study has been initiated and is required for regulatory
approval prior to the Phase 1 clinical study. We believe the NT-CoV2-1 vaccine has the potential to lead to a higher reduction of transmission
of SARS-CoV-2 and offers a needle-free delivery option. This vaccine could also permit cost effective storage and distribution at refrigerated
temperatures, which should facilitate distribution.
On
July 26, 2021, we entered into a licensing agreement with the NRC that enables us to pursue the rapid development of next-generation
vaccines against the SARS-CoV-2 virus and its variants. The license was subsequently extended to include the Omicron variant. In addition,
we broadened the non-exclusive field of use to include all diseases caused by coronaviruses and any genetic variants thereof. The NRC
technologies, in combination with the U.S. NIH elements found in our NT-CoV2-1 vaccine candidates, provide us with a platform that can
generate cell lines for high-yield production of spike protein antigens for existing and emerging variants of concern. This platform
should allow production of cell lines within six to eight weeks of spike gene sequence availability, compared with six to nine months
for traditional production of such cell lines. The NRC technologies, developed with support from the NRC’s Pandemic Response Challenge
Program, are expected to expedite the evaluation of SARS-CoV-2 antigen candidates in pre-clinical and clinical studies.
We
began pre-clinical studies in June of 2021 through our collaboration and material transfer agreement with the NRC. We initiated an immunogenicity
study in mice to evaluate several adjuvant candidates. On August 30, 2021, we announced the successful completion of these mouse immunogenicity
studies that supported further development using either the intramuscular or intranasal routes of administration. A hamster challenge
study was initiated in September of 2021 to assess inhibition of viral replication using adjuvants specific for intramuscular and intranasal
administration. In December of 2021, we announced that both formulations generated robust immune responses and reduced the SARS-CoV-2
viral loads to undetectable levels in the nasal passages and lungs five days following a viral challenge. By contrast, hamsters in the
control groups that had received saline or adjuvants alone had no detectable immune response and substantial viral loads. The vaccines
delivered by intranasal and intramuscular routes generated immune responses as measured by multiple assays.
Through
assessment of a variety of factors including evolving variants and available vaccines in use, we have determined to focus our development
efforts on the intranasal delivery of our vaccine product candidate, NT-CoV2-1, which is more highly differentiated than the currently
available and late-stage COVID-19 vaccines. As a result, we expect to file an IND application with the FDA in the third quarter of 2022
and immediately upon receipt of approval from the FDA to commence a Phase 1 clinical study with NT-CoV2-1, the protocol for which is
currently under development.
We
expect to use our currently available cash resources to continue to advance the development of NT-CoV2-1 through IND-enabling studies,
including immunogenicity, viral challenge studies, toxicology studies, and the Phase 1 trial with further clinical development being
contingent upon the receipt of additional funding, including non-dilutive government grant funding which we continue to pursue or partnering
or out-licensing opportunities.
Our
Antibiotic Product Candidate-Oragenics Derived Compound (ODC-x)
Members
of our scientific team discovered that a certain bacterial strain of Streptococcus mutans, produces Mutacin 1140 (MU1140), a molecule
belonging to the novel class of antibiotics known as lantibiotics. Lantibiotics, such as MU1140, are highly modified peptide antibiotics
made by a small group of Gram-positive bacterial species. Over 60 lantibiotics have been discovered, to date. We believe lantibiotics
are generally recognized by the scientific community to be potent antibiotic agents.
In
nonclinical testing, MU1140 has shown activity against all Gram-positive bacteria against which it has been tested, including those responsible
for a number of healthcare associated infections, or HAIs. A high percentage of hospital-acquired infections are caused by highly antibiotic-resistant
bacteria such as methicillin-resistant Staphylococcus aureus (MRSA) or multidrug-resistant Gram-negative bacteria. We believe
the need for novel antibiotics is increasing as a result of the growing resistance of target pathogens to existing FDA approved antibiotics
on the market.
Lantibiotics
have been difficult to investigate for their clinical usefulness as therapeutic agents in the treatment of infectious diseases due to
a general inability to produce or synthesize sufficient quantities of pure amounts of these molecules. Traditional fermentation methods
can only produce minute amounts of the lantibiotic.
In
June 2012, we entered into a worldwide exclusive channel collaboration agreement with Precigen, Inc (formerly known as Intrexon Corporation),
ILH Holdings, Inc. (n/k/a Eleszto Genetika, Inc. (“EGI”), for the development and commercialization of the native strain
of MU1140 and related homologs to use its advanced transgene and cell engineering platforms. In
September of 2021, we and EGI, mutually terminated the amended and restated worldwide exclusive channel collaboration agreement
dated March 1, 2021 (the “Lantibiotic ECC”) pursuant to which we were pursuing the development of OG716 as a lead product
candidate for the treatment of C. diff. As a result of the mutual termination of the Lantibiotic ECC, we ceased pre-clinical development
of our product candidate OG716 and other compounds covered by the Lantibiotic ECC, all licenses provided pursuant to the Lantibiotic
ECC between the parties were terminated and there are no continuing obligations between the parties, except as to confidentiality. We
made no payments to EGI in connection with the mutual termination. Each party retained all right and title to their own respective intellectual
property. The termination of the Lantibiotic ECC was to enable us to focus on our continuing independent research and development efforts
relative to lantibiotics in order to identify new compounds to pursue.
The
timing of the filing of an IND regarding any future lantibiotic candidate is subject to our having sufficient available human, material
and financing capital, which includes research subjects, both animal and human, given all of our anticipated needs and expected requirements
in connection with our ongoing research and development initiatives. We expect to continue to advance our lantibiotics program to an
IND filing based on the availability of both human and financial capital. Based upon the current funding we expect to continue to focus
on the identification of new potential product lantibiotic candidates, efficient and cost-effective improvements in the manufacturing
processes and pre-clinical studies required to support a first in human Phase 1 clinical study.
We
recently announced that we were awarded a small business innovation research grant in the amount of $250,000 (“Computer-aided Design
for Improved Lantibiotics” R41GM136034) for the Company’s continued research and development of lantibiotics, including its
collaborative program with the Biomolecular Sciences Institute at Florida International University (FIU). The grant provides the Company
with funding to develop novel lantibiotics for the treatment of ESKAPE pathogens (defined as Enterococcus faecium, Staphylococcus
aureus, Klebsiella pneumoniae, Acinetobacter baumannii, Pseudomonas aeruginosa, and Enterobacter spp.).
Product
Candidates.
Through
our wholly-owned subsidiary, Noachis Terra, we began the research and development stage for our new Terra CoV-2 and NT-CoV2-1 vaccine
product candidate. We hold a nonexclusive, worldwide intellectual property license agreement for certain research, patent applications
and biological materials relating to the use of pre-fusion coronavirus spike proteins for the development and commercialization of a
vaccine against SARS-CoV-2.
Additionally,
we are developing semi-synthetic lantibiotic analogs that may be effective against systemic Gram-positive multidrug infections, and analogs
that may be effective in treating Gram negative infections. We seek to protect our product candidates through patents and patent applications.
Product/Candidate |
|
Description |
|
Application |
|
Status |
NT-CoV2-1
Terra
CoV-2 |
|
Intranasal
vaccine candidate (plasmid + adjuvant) to provide long lasting immunity against SARS-CoV-2
Intramuscular
vaccine candidate (plasmid + adjuvant) to provide long lasting immunity against SARS-CoV-2 |
|
Broad,
community-based vaccine immunity against SARS-CoV-2
Broad,
community-based vaccine immunity against SARS-CoV-2 |
|
Pre-clinical
Pre-clinical |
|
|
|
|
|
|
|
Antibiotics |
|
Semi-synthetic
analogs of MU1140: Member of lantibiotic class of antibiotics |
|
Healthcare-associated
infections |
|
Pre-clinical |
Our
Business Development Strategy
Success
in the biopharmaceutical and product development industry relies on the continuous development of novel product candidates. The large
majority of product candidates do not make it past all clinical trials which forces companies to look externally for innovation.
Accordingly,
we expect from, time to time, to seek strategic opportunities through various forms of business development, which can include strategic
alliances, licensing deals, joint ventures, collaborations, equity or debt-based investments, dispositions, mergers and acquisitions.
We view these business development activities as a necessary component of our strategies, and we seek to enhance shareholder value by
evaluating business development opportunities both within and complementary to our current business as well as new and separate from
the development of our existing product candidates due to the experience we are acquiring.
Our
SARS-CoV-2 Vaccine Product Candidate-NT-CoV2-1
Market
Opportunity
The
worldwide revenues for the Pfizer and Moderna mRNA COVID-19 vaccines in 2021 were $37 billion and $18 billion, respectively. Pfizer projects
revenues of $32 billion and Moderna projects $22 billion for their COVID-19 vaccines in 2022. In late January of 2022, the World Health
Organization’s estimates indicate the number of worldwide COVID-19 infections have exceeded 356,000,000 and the number of deaths
directly attributed to COVID-19 have exceeded 5,610,000.
The
overall disease burden has continued to increase in the US despite 88% of those 65 years of older being fully vaccinated and 68% of those
5 years of age or older. The current vaccines have reduced the rates of hospitalization and death due to COVID-19 in vaccinated individuals
but the transmission levels even in vaccinated individuals has allowed the SARS-CoV-2 variants to continue to circulate, especially the
Omicron variant since it emerged in late 2021. We believe an intranasally administered COVID-19 vaccine has the potential to reduce transmission
more effectively than intramuscularly administered vaccines because the intranasal vaccine could induce mucosal immunity in the nose
and throat, which are the early entry points for SARS-CoV-2. Label expansions to include children down to five years of age have already
been implemented and Pfizer/BioNTech are submitting data to the FDA requesting use in those 6 months of age or older. The inclusion of
COVID-19 vaccines in the routine childhood immunization schedule may be anticipated assuming COVID-19 enters an endemic phase. Intranasal
COVID-19 vaccines could play an important role in routine pediatric immunization since they create less anxiety in needle-phobic children
and can more easily fit into an increasingly crowded schedule of injected vaccines.
COVID-19
disease epidemiology is closely monitored and as such recommendations as to vaccinations and treatments have been evolving accordingly.
The identification of new COVID-19 variants including Delta and Omicron, and the spread of such variants have altered the dynamics of
disease spread and led to the requirement of booster shots in the US and other countries to help facilitate control of the newer viral
strains.
Our
Strategy
We
seek to develop NT-CoV2-1 vaccine candidate to the point of entering into a licensing deal or strategic partnership. In connection with
the development of our NT-CoV2-1 vaccine candidate we expect to focus on differentiation of our vaccine product candidate by using intranasal
administration, which none of the currently available intramuscular vaccines can offer. We believe that development of a vaccine that
has differentiated attributes to those currently being used will be beneficial in helping to control the SARS–CoV-2 pandemic. We
anticipate that the main use of NT-CoV2-1 will be as a booster dose for those already vaccinated with a different COVID -19 vaccine,
since the vaccination coverage rates in developed countries is already very high. A potential longer-term objective would be to offer
NT-CoV2-1 as an intranasal vaccine for the primary immunization of infants or children in the routine childhood immunization schedule.
Should
the current COVID-19 pandemic be brought under control quickly and thereby potentially impact our efforts to commercialize our NT-CoV2-1
as a vaccine candidate, we believe we could identify and pursue other vaccines to develop that are capable of preventing new infectious
disease threats.
Regulatory
We
held a pre- IND meeting with the FDA on our Terra CoV-2 vaccine candidate. The broad support for our approach by the FDA included a number
of activities, including: (i) use of the Research Cell Bank in the early manufacturing process development; (ii) Use of early pilot batch
manufacture under Good Manufacturing Processes (GMP) for the anticipated Phase 1 clinical trials; and, (iii) submission of draft toxicology
reports during IND filing. We have conducted the pre-clinical studies including the Syrian Hamster virus challenge study, the mouse immunogenicity
study with positive results for both the intramuscular formulation (Terra CoV-2) and the intranasal formulation (NT-CoV2-1). Due to the
potential for greater differentiation with the intranasal vaccine NT-Cov2-1, we are moving that candidate forward into a rabbit toxicology
study. Data from the hamster and mouse studies and the rabbit toxicology study will be submitted as part of the IND filing prior to initiation
of the Phase 1 human clinical trial for NT-CoV2-1.
Manufacturing
The
creation of a stable pool Master Cell Bank is complete and GMP manufacturing of the bulk drug substance has been completed by our Phase
1 biologics contract development and manufacturing organization, Biodextris, Inc. Creation of the clonal Research Cell Bank, required
for later stage manufacturing, is completed and will be followed by manufacturing of the clonal Master Cell Bank prior to Phase 2 GMP
manufacturing. We use third-party suppliers for the development of our vaccine product candidate, including with respect to the manufacturing
of our vaccine candidate for use in pre-clinical studies and expected clinical trials. We enter into agreements with these third-party
suppliers as part of, and in connection with, our product development plans and timing. In order to have sufficient product available
for anticipated future clinical trials we need to enter into agreements with GMP certified manufactures that have the capability and
capacity to meet our expected product needs and timing in advance of when our actual needs will arise in order for us to be positioned
to continue development without delays due to the manufacturing process and capabilities of qualified manufacturers.
In
March 2022 we entered into an agreement with KBI Biopharma, Inc. for the process transfer, process optimization and cGMP manufacturing
of our vaccine candidate in anticipation of a future Phase 2 clinical trial. This agreement obligates us to make certain payments to
KBI in connection with the manufacture of our vaccine product candidate based upon our current expected timing. If the timing of our
current development plans changes, we could be required to make additional payments to KBI associated with such delays and/or associated
with the cancellation of the agreement without achieving the benefits anticipated from the agreement. Additionally, a fill/finish, packaging
and labeling company has been identified to support the Phase 1 program and is scheduled for GMP manufacturing of clinical material in
2Q22.
Homologs
of MU1140 and Other Lantibiotics
In
the course of research and development, MU1140 was found to be a potent antibiotic that is naturally produced by the parent of the SMaRT
strain. MU1140 shows antibacterial activity against all Gram-positive bacteria against which it has been tested, including those responsible
for a variety of multi-drug resistant organisms and healthcare-associated infections, or HAIs.
We
intend to develop lantibiotics, a novel class of antibiotics, as active pharmaceutical ingredients toward the goal of commercialization
for the treatment of infectious diseases in humans, focusing on infections caused by the most dangerous bacteria identified by the WHO
and CDC priority list. Antibiotic resistance is spurred by overuse and misuse of antibiotics and worsened by the lack of scientific innovation.
The timing of the filing of an IND regarding homologs of MU1140 is subject to our having sufficient available capital given all of our
anticipated needs and expected requirements in connection with our ongoing research and development initiatives. We expect to continue
to advance our lantibiotics program to an IND filing based on the availability of both human and financial capital. Based upon the current
funding we expect to continue to focus on the identification of new potential product lantibiotic candidates, efficient and cost-effective
improvements in the manufacturing processes and pre-clinical studies required to support a first in human Phase 1 clinical study. In
addition, we have undertaken research programs to expand our capabilities to improve the physical chemical characteristics (i.e., solubility
and stability) of lantibiotics for use to treat systemic Gram-positive infections and also exploring lantibiotics that may be efficient
against Gram negative bacteria.
Market
Opportunity
Many
Gram-positive related HAIs are caused by drug-resistant bacteria, including methicillin-resistant Staphylococcus aureus, or MRSA;
vancomycin-resistant Enterococcus faecalis, or VRE; and Clostridium difficile, or C. diff. According to the most
recent Centers for Disease Control and Prevention, (CDC) report on Antibiotic Resistance Threats in the US (2019), the number of people
facing antibiotic resistance in the United States is too high. More than 2.8 million antibiotic-resistant infections occur in the United
States each year, and more than 35,000 people die as a result. In addition, nearly 223,900 people in the United States required hospital
care for C. difficile and at least 12,800 people died in 2017.
Antimicrobial
resistance is one of the greatest threats to global health. Without innovation, we risk falling into a post-antimicrobial era in which
minor infections will become life threatening, and routine medical procedures will be nearly impossible to perform. The World Health
Organization predicts that by 2050, antimicrobial resistance could cause 10 million deaths each year, surpassing the projected number
of deaths due to cancer. Notably, antimicrobials have a prominent role in the treatment of secondary bacterial infection complications
of viral respiratory infections, such as the novel coronavirus.
The
literature review findings indicate that the cost of AMR across the globe is extremely high. The CDC estimated that the cost of antimicrobial
resistance is $55 billion every year in the United States, $20 billion for health care and about $35 billion for loss of productivity.
Recent research by the World Bank indicates that antimicrobial resistance would elevate the rate of poverty and impact low-income countries
compared to the rest of the world. Studies show that annual global GDP could decrease by approximately 1% and there would be a 5–7%
loss in developing countries by 2050. This percentage ultimately translates into $100-210 trillion.
The
need for novel antibiotics is increasing but unfortunately, the worldwide rise of bacterial pathogens resistant
to antibacterial agents cannot be counteracted by the current low development pace of therapeutics with new mode(s) of action. While
there are nearly 4,000 immuno-oncology agents in development, only about 30–40 new antibacterial compounds are currently in the
clinical trial phases of development, and, notably, those candidates targeting World Health Organization (WHO) priority pathogens are
derivatives of existing classes. Less than 25% of current drugs in the clinical development pipeline represent a novel class or act through
a novel mechanism, and none of these are potentially active against Gram-negative ESKAPE or WHO critical threat pathogens. Only
a small fraction of the antibiotics approved over the past 40 years represents new compound classes, while
the majority were derived from already known chemical structures, and the most recent new class of antibiotics was discovered during
the 1980s. According to Nature.com, no new class of Gram-negative antibiotics has been launched
for more than 50 years.
Lantibiotics
such as MU1140 are highly modified peptide antibiotics made by a small group of Gram-positive bacterial species. Over 60 lantibiotics
have been discovered since the first lantibiotic, nisin, was discovered. Lantibiotics are generally known to be potent antibiotic agents;
however, attempts to investigate their clinical usefulness have generally met with failure due to the inability to produce sufficient
pure amounts of any of these molecules to be able to test them as a therapeutic agent for the treatment of infectious diseases. Standard
fermentation methods, such as those used to make a variety of other antibiotics, have historically resulted in the production of only
minute amounts of the lantibiotic.
Our
Solution
To
develop homologs of MU1140 and, engineered in parallel, high producing strains to the point of partnership, and to develop additional
lantibiotics in connection with our work on MU1140. MU1140 has demonstrated activity against a wide variety of disease-causing Gram-positive
bacteria, including MRSA, VRE, and C. difficile.
To
develop homologs of MU1140 paired with high producing strains to the point of partnership, and to develop additional lantibiotics in
connection with our work on MU1140. MU1140 has demonstrated activity against a wide variety of disease-causing Gram-positive bacteria,
including MRSA, VRE, C. diff, Mycobacterium tuberculosis and Bacillus anthracis.
Our
Strategy
We
are developing and testing recombinantly derived homologs of the native MU1140 molecule and its chemical derivative with improved therapeutic
profiles and physical-chemical characteristics. The data generated over the past few years enabled us to engineer hundreds of homologs
of MU1140, and select those homolog candidates with improved profiles, including homologs of higher activity and stability, lower toxicity
and with a scalable manufacturability. The best homolog candidates were further developed internally and through the use of several Contract
Research Organizations (“CROs”). We believe that this strategy represented the best and most efficient path to produce sufficient
quantities of MU1140 homologs, to support continued research, selection of a lead candidate, nonclinical studies, clinical studies and
ultimately commercialization. We intend to continue to follow this proven discovery path to identify novel MU1140 derivatives to treat
other multi-drug resistant infections and HAIs.
Regulatory
Status
We
have performed nonclinical testing on MU1140 and several of its homologs, which has demonstrated the molecule’s novel mechanism
of action. We expect to continue our research and pre-clinical development activities on derivatives of MU1140 subject to the availability
of adequate financing as we move towards the filing of an IND.
Manufacturing
While
we have been able to produce a significant increase in the fermentation titer of homologs of MU1140, we continue to work to improve on
the manufacturing through collaborations with fermentation and purification experts and third party CROs. We will need to further optimize
and scale up the production/purification scheme internally and through third party vendors. The need to examine many new homologs of
MU1140 has resulted in the need to reproduce the fermentation and purification steps on each individual homolog candidate being studied.
Each homolog requires different optimizations for both the fermentation, purification and chemical derivatization steps and in some cases
requires a new approach. As such, our work on the research and development of new lantibiotic homologs using genetically modified bacteria
continues. We believe these developments represent progress toward our goal of commercial production of sufficient quantities of our
MU1140 homologs and deliver a step in validating the lantibiotics platform targeting infectious diseases.
We
are working with a third-party manufacturer to produce additional quantities of designated homologs, based upon the developments achieved
from our work with our outside contractors. The production of additional quantities of designated homologs, that are needed for the consummation
and pursuit of our nonclinical testing activities supporting the IND filing, are ongoing. We will continue to explore improved methods
of manufacturing and synthesis to improve our yields and ultimately, potentially reduce our cost of manufacture.
Our
License Agreements
Our
NIH License Agreement
Through
our wholly-owned subsidiary, Noachis Terra, we are party to a Patent License and Biological Materials License Agreement (the “License
Agreement” or “NIH License”), dated March 23, 2020, with the United States Department of Health and Human Services
(the “HHS”), as represented by the NIAID, an Institute of the NIH. Under the terms of the License Agreement, we hold a nonexclusive,
worldwide license to certain specified patent rights (including patent applications, provisional patent applications and Patent Cooperation
Treaty (“PCT”) patent applications) and biological materials relating to the use of prefusion coronavirus spike proteins
to exploit products (“Licensed Products”) and practice processes (“Licensed Processes”) that are covered by the
licensed patent rights and biological materials for the purpose of developing and commercializing a vaccine product candidate for SARS-CoV-2.
The License Agreement is subject to certain statutory limits and reserved rights, as required under federal law and NIH requirements,
including the requirement to provide reasonable quantities of Licensed Products or materials made through the Licensed Processes for
NIH research and to manufacture Licensed Products or materials made through the Licensed Processes substantially in the United States.
We may not sublicense the intellectual property or biological materials licensed to us under the License Agreement.
Pursuant
to the License Agreement, we must use reasonable commercial efforts to manufacture, practice or operate the Licensed Products and the
Licensed Processes, including adhering to a commercial development plan and achieving certain benchmarks. Additionally, following the
first commercial sale of any Licensed Products or the practice of any Licensed Processes, we must use reasonable commercial efforts to
make the Licensed Products and the Licensed Processes reasonably accessible to the United States public and reasonable quantities of
the Licensed Products and the Licensed Processes available to patient assistance program, among other educational support activities.
The NIAID has agreed to assume responsibility for the preparation, filing, prosecution and maintenance of all patent applications and
patents covered by the licensed patent rights.
Under
the terms of the License Agreement, the NIAID is entitled to receive a non-creditable, nonrefundable upfront license issue royalty (which
has already been paid), as well as reimbursement for our pro rata share of the NIAID’s past and future patent prosecution-related
expenses. Additionally, the NIAID is entitled to receive nonrefundable minimum annual royalties, which increase each year after the first
commercial sale of any Licensed Products or the practice of any Licensed Processes, as well as benchmark royalties following our completion
of certain commercial development and sales-related benchmarks. The NIH is entitled to receive earned royalties on the annual net sales
of Licensed Products and the practice of any Licensed Processes (subject to certain reductions), at certain low- to mid-single digit
royalty rates, which rates vary based on the total amount of annual net sales and the geographic market in which those sales occur. We
must provide regular written reports to the NIAID on the development status of and royalty payments relating to the Licensed Products
and the Licensed Processes.
We
must indemnify and hold the NIAID and its associates harmless from and against all liability and damages in connection with or arising
out of (a) the use or beneficial use of the Licensed Patent rights by us, our directors, employees or third parties and (b) the design,
manufacture, distribution or use of any Licensed Products or Licensed Processes, including other products or processes developed in connection
with the Licensed Patent Rights.
Unless
terminated earlier, the License Agreement will terminate upon the earlier of (a) twenty (20) years from the first commercial sale where
no licensed patent rights exist or have ceased to exist or (b) the expiration of the last to expire of any licensed patent rights. At
this time, no patents covered by the licensed patent rights have been issued. We may terminate the License Agreement at any time, subject
to advance notice. Subject to certain cure and appeal rights, the NIAID may terminate or modify the License Agreement in the event of
a material breach or default, including, among others, the following:
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We
become insolvent or the subject of a bankruptcy petition; |
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(ii) |
We
fail to follow the commercial development plan, fail to achieve certain commercial development and sales-related benchmarks or cannot
otherwise demonstrate progress toward a practical application of the Licensed Products or Licensed Processes; |
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(iii) |
We
fail to keep any Licensed Products or Licensed Processes reasonably available to the public following the commencement of commercial
use or fail to reasonably justify noncompliance with its domestic production obligation; |
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(iv) |
We
cannot reasonably satisfy public health and safety needs; or |
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The
NIAID determines termination or modification is necessary because we cannot meet federal public use regulatory requirements, as issued
after the effective date of the License Agreement. |
Our
NRC License Agreement
On
July 26, 2021, we entered into a non-exclusive Technology License Agreement (the “License Agreement”) with the National Research
Council of Canada (“NRC”) pursuant to which the NRC granted us a license to use NRC’s inventions, patents, trade secrets,
know-how, copyright, biological material, designs, and/or technical information created by or on behalf of the NRC (the “NRC Technologies”)
relating to the derivatives of CHO 2353 TM Cell Line listed in the License Agreement (the “Stable Cells”) to: (i) make, research,
and develop SARS-CoV-2 spike protein manufactured by a Stable Cell (the “Drug Substance”) within Canada, Australia, the United
Kingdom, the European Union and the United States (U.S.) (collectively the “Territory”); (ii) file regulatory approval, export
and sell the final formulation of the Drug Substance (“Products”) and (iii) engage contractors to use the Stable Cells to
make Drug Substance or Products on our behalf to be used and sold, worldwide, by us. The License Agreement was subsequently amended to
include the Delta and Omicron variants. In addition, we subsequently amended the License Agreement to broaden the non-exclusive field
of use to include all diseases caused by coronaviruses and any genetic variants thereof.
As
consideration for the grant of the license, we will pay to the NRC an annual (low five digits) license fee, with the initial portion
of the fee covering the first three years of the license. Additionally, we will pay certain milestone payments (a) upon transfer of each
Stable Cell listed in the Agreement and (b) with regard to each of the first three Products, (i) upon submission of the IND application
related thereto, (ii) upon dosing the first patient in a Phase 1 or Phase 2 clinical trial, (iii) upon dosing the first patient in a
Phase 3 clinical trial and (iv) upon first regulatory approval. Milestone payments range from the low five digits to high six digits.
In addition, Oragenics will pay a low single-digit royalty to the NRC for the sale of Products, based on sales revenue, commencing after
the first commercial sale.
Pursuant
to the License Agreement, the NRC is required to bear the responsibility and pay the costs to obtain and maintain patents related to
the NRC Technologies in the U.S., Canada, Brazil, European Union, Japan, South Korea, Singapore, Australia, China, and India, and the
NRC shall use reasonable efforts to obtain and maintain those patents. Additional countries may be requested by us, in which event, the
NRC will file and maintain such patents, at our expense.
Pursuant
to the License Agreement, we are required to indemnify and hold the NRC and its employees and agents harmless from and against all liability
and damages in connection with or arising out of all claims, demands, losses, damages, costs including solicitor and client costs, actions,
suits or proceedings brought by any third party that are in any manner based upon, arising out of, related to, occasioned by, or attributable
to the manufacturing, distribution, shipment, offering for sale, sale, or use of Products, services based on the NRC Technologies and
product liability and infringement of intellectual property rights other than copyright, if any, licensed under the License Agreement.
Unless
terminated earlier, the License Agreement will terminate twenty (20) years from the effective date of the License Agreement. Either party
may terminate the License Agreement, by giving written notice to the other party, if the other party defaults or is in breach of the
License Agreement, provided that if the defaulting party cures the breach within 60 days after the notice is given, the License Agreement
shall continue in full force and effect. The NRC may terminate the License Agreement if we become bankrupt, or insolvent, or has a receiver
appointed to continue its operations, or passes a resolution for winding up. The License Agreement contains customary confidentiality
obligations.
Other
Product Candidates and Technologies
We
have historically developed other product candidates and potential product candidates. For example, we developed a weight loss candidate,
LPT3-04, and a topical treatment to prevent dental carries which we refer to as SMaRT Replacement Therapy. We out licensed LPT3-04 to
a third party and continue to monitor our licensee’s performance under the license. We do not expect the LPT3-04 license to have
a material effect on our business or operations. While we retain certain intellectual property rights with respect to homologs through
our (i) prior relationship with Texas A&M University Systems and (ii) ILH Holdings (as assignee of Precigen) that could allow for
the continued research and development of compounds for the SMaRT replacement Therapy, we do not intend to pursue further development
of SMaRT Replacement Therapy and as such we do not consider these rights to be a material part of our business and operations.
Government
Regulations
In
the United States, foods (including dietary supplements), drugs (including biological products), medical devices, cosmetics, tobacco
products and radiation-emitting products are subject to extensive regulation by the FDA. The FDC Act and other federal and state statutes
and regulations govern, among other things, the manufacture, distribution and sale of these products. These laws and regulations prescribe
criminal and civil penalties that can be assessed, and violation of these laws and regulations can result in enforcement action by the
FDA and other regulatory agencies.
FDA
Regulation of Drugs-New Drug Approval Process
Pharmaceutical
products are subject to extensive regulation by the FDA. The FDC Act, and other federal and state statutes and regulations, govern, among
other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution,
post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products. Failure to comply with applicable
U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending
NDAs or BLAs, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution,
injunctions, fines, civil penalties and criminal prosecution.
Pharmaceutical
product development for a new product or certain changes to an approved product in the United States typically involves the following
steps before a biological product or new drug may be marketed in the United States:
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pre-clinical
laboratory tests, animal studies and formulation studies in compliance with the FDA’s Good Laboratory Practice and Good Manufacturing
Practice regulations; |
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submission
to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may commence; |
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performance
of adequate and well-controlled clinical trials in three phases, as described below, to establish the safety and efficacy of the
drug for each indication according to Good Clinical Practices; |
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submission
of an NDA or Biologics License Application (“BLA”) to the FDA for review; |
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random
inspections of clinical sites to ensure validity of clinical safety and efficacy data; |
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satisfactory
completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with
current good manufacturing practices; |
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FDA
approval of the NDA or BLA; and |
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payment
of user and establishment fees, if applicable. |
Satisfaction
of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the
type, complexity and novelty of the product or disease.
Pre-clinical
tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal trials to assess the characteristics
and potential safety and efficacy of the product. The conduct of the pre-clinical tests must comply with federal regulations and requirements,
including good laboratory practices. The results of pre-clinical testing are submitted to the FDA as part of an IND along with other
information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long
term pre-clinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.
A
30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA
has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin.
Clinical
trials involve the administration of the IND to healthy volunteers or patients under the supervision of a qualified investigator. Clinical
trials must be conducted: (i) in compliance with federal regulations; (ii) in compliance with good clinical practice, or GCP, an international
standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors;
as well as (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness
criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the
FDA as part of the IND.
The
FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it believes
that the clinical trial is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial
patients. The trial protocol and informed consent information for patients in clinical trials must also be submitted to an institutional
review board or IRB for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently,
for failure to comply with the IRB’s requirements, or may impose other conditions.
Clinical
trials to support NDAs or BLAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap.
In Phase 1, after the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess metabolism,
pharmacokinetics, pharmacological actions, side effects associated with increasing doses, and, if possible, early evidence on effectiveness.
Phase 2 usually involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication,
dosage tolerance, and optimum dosage, and to identify common adverse effects and safety risks. If a compound demonstrates evidence of
effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken to obtain the additional information
about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit
the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug.
In most cases the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the drug. A single
Phase 3 clinical trial with other confirmatory evidence may be sufficient in rare instances where the trial is a large multicenter trial
demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible
morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically
or ethically impossible.
The
length of time and related costs necessary to complete clinical trials varies significantly and may be difficult to predict. Clinical
trial results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory approvals. Additional
factors that can cause delay or termination of our clinical trials, or cause the costs of these clinical trials to increase, include:
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slow
patient enrollment due to the nature of the protocol, the proximity of patients to clinical sites, the eligibility criteria for the
trial, competition with clinical trials for other drug candidates or other factors; |
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inadequately
trained or insufficient personnel at the trial site to assist in overseeing and monitoring clinical trials; |
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delays
in approvals from a trial site’s IRB; |
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longer
than anticipated treatment time required to demonstrate effectiveness or determine the appropriate product dose; |
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lack
of sufficient supplies of the drug candidate for use in clinical trials; |
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adverse
medical events or side effects in treated patients; and |
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lack
of effectiveness of the drug candidate being tested. |
Any
drug is likely to produce some toxicities or undesirable side effects in animals and in humans when administered at sufficiently high
doses and/or for sufficiently long periods of time. Unacceptable toxicities or side effects may occur at any dose level, and at any time
in the course of animal studies designed to identify unacceptable effects of a drug candidate, known as toxicological studies, or in
clinical trials of our drug candidates. The appearance of any unacceptable toxicity or side effect could cause us or regulatory authorities
to interrupt, limit, delay or abort the development of any of our drug candidates, and could ultimately prevent their marketing approval
by the FDA or foreign regulatory authorities for any or all targeted indications.
The
FDA’s fast track and breakthrough therapy designation programs are intended to facilitate the development and expedite the review
of drug candidates intended for the treatment of serious or life-threatening conditions and that demonstrate the potential to address
unmet medical needs for these conditions. Under these programs, FDA can, for example, review portions of an NDA or BLA for a drug candidate
before the entire application is complete, thus potentially beginning the review process at an earlier time.
We
cannot guarantee that the FDA will grant any of our requests for fast track or breakthrough therapy designations, that any such designations
would affect the time of review or that the FDA will approve the NDA or BLA submitted for any of our drug candidates, whether or not
these designations are granted. Additionally, FDA approval of a fast track/breakthrough product can include restrictions on the product’s
use or distribution (such as permitting use only for specified medical conditions or limiting distribution to physicians or facilities
with special training or experience). Approval of such designated products can be conditioned on additional clinical trials after approval.
In
addition, the manufacturer of an investigational drug in a Phase 2 or Phase 3 clinical trial for a serious or life-threatening disease
is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for expanded access.
After
completion of the required clinical testing, an NDA or BLA is prepared and submitted to the FDA. FDA approval of the NDA or BLA is required
before marketing of the product may begin in the U.S. The NDA or the BLA must include the results of all pre-clinical, clinical and other
testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture and controls. The cost of preparing
and submitting an NDA is substantial. The submission of most NDAs and BLAs is additionally subject to a substantial application user
fee, currently approximately $2,875,842 for fiscal year 2021. These fees typically increase annually.
The
FDA has 60 days from its receipt of an NDA or BLA to determine whether the application will be filed based on the agency’s threshold
determination that it is sufficiently complete to permit substantive review. If the NDA or BLA submission is filed, the FDA reviews the
NDA or BLA to determine, among other things, whether the proposed product is safe and effective for its intended use. The FDA has agreed
to certain performance goals in the review of NDAs or BLAs. Most such applications for standard review drug products are reviewed within
ten to twelve months; most applications for priority review drugs are reviewed in six to eight months. Priority review can be applied
to drugs that the FDA determines offer major advances in treatment, or provide a treatment where no adequate therapy exists. For biologics,
priority review is further limited to drugs intended to treat a serious or life-threatening disease relative to the currently approved
products. The review process for both standard and priority review may be extended by the FDA for three additional months to consider
certain late-submitted information, or information intended to clarify information already provided in the submission.
The
FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to
an advisory committee – typically a panel that includes clinicians and other experts – for review, evaluation and a recommendation
as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally
follows such recommendations. Before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance
with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve
the product unless compliance with cGMPs is satisfactory and the NDA or BLA contains data that provide substantial evidence that the
drug is safe and effective in the indication studied.
After
the FDA evaluates the NDA or BLA and the manufacturing facilities, it issues either an approval letter or a complete response letter.
A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information,
in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction
in a resubmission of the NDA or BLA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in
two or six months depending on the type of information included.
An
approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition
of NDA or BLA approval, the FDA may require a risk evaluation and mitigation strategy, or REMS, to help ensure that the benefits of the
drug outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals, and elements
to assure safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing,
dispensing only under certain circumstances, special monitoring and the use of patient registries. The requirement for a REMS can materially
affect the potential market and profitability of the drug. Moreover, product approval may require substantial post-approval testing and
surveillance to monitor the drug’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory
standards is not maintained or problems are identified following initial marketing.
Changes
to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes
or facilities, require submission and FDA approval of a new NDA or BLA supplement before the change can be implemented. An NDA or BLA
supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same
procedures and actions in reviewing NDA or BLA supplements as it does in reviewing NDAs or BLAs.
The
required testing, data collection, analysis and compilation of an IND and a BLA or NDA are labor intensive and costly and may take a
great deal of time. Tests may have to be redone or new tests performed in order to comply with FDA requirements. It can take considerable
time (e.g., 5-10 years) and resources to achieve enrollment sufficient to commence such trials and complete Phase 2 or 3 clinical trials.
Moreover, there is no guarantee a product will be approved.
In
Canada, the Therapeutic Products Directorate and the Biologics and Genetic Therapies Directorate of HC ensure that clinical trials are
properly designed and undertaken and that subjects are not exposed to undue risk. Regulations define specific Investigational New Drug
Submission (or IND) application requirements, which must be complied with before a new drug can be distributed for trial purposes. The
Directorates currently review the safety, efficacy and quality data submitted by the sponsor and approve the distribution of the drug
to the investigator. The sponsor of the trial is required to maintain accurate records, report adverse drug reactions, and ensure that
the investigator adheres to the approved protocol. Trials in humans should be conducted according to generally accepted principles of
good clinical practice. Management believes that these standards provide assurance that the data and reported results are credible and
accurate, and that the rights, integrity, and privacy of clinical trial subjects are protected.
Sponsors
wishing to conduct clinical trials in Phases 1 to 3 of development must apply under a 30-day default system. Applications must contain
the information described in the regulations, including: a clinical trial attestation; a protocol; statements to be contained in each
informed consent form, that set out the risks posed to the health of clinical trial subjects as a result of their participation in the
clinical trial; an investigator’s brochure; applicable information on excipients (delivery vehicles); and chemistry and manufacturing
information.
The
sponsor can proceed with the clinical trial if the Directorates have not objected to the sale or importation of the drug within 30 days
after the date of receipt of the clinical trial application and Research Ethics Board approval for the conduct of the trial at the site
has been obtained. Additional information is available on Health Canada’s website - www. hc-sc.gc.ca.
Outside
the United States and Canada, our ability to market a product is contingent upon receiving a marketing authorization from the appropriate
regulatory authorities. The requirements governing the conduct of clinical trials, marketing authorization, pricing and reimbursement
vary widely from country to country. At present, foreign marketing authorizations are applied for at a national level, although within
the European Union (EU) registration procedures are available to companies wishing to market a product in more than one EU member state.
If the regulatory authority is satisfied that adequate evidence of safety, quality and efficacy has been presented, a marketing authorization
may be granted. This foreign regulatory approval process involves all of the risks associated with FDA approval discussed above and may
also include additional risks.
The
Orphan Drug Act provides incentives to manufacturers to develop and market drugs for rare diseases and conditions affecting fewer than
200,000 persons in the United States at the time of application for orphan drug designation. The first developer to receive FDA marketing
approval for an orphan drug is entitled to a seven-year exclusive marketing period in the United States for the orphan drug indication.
However, a drug that the FDA considers to be clinically superior to, or different from, another approved orphan drug, even though for
the same indication, may also obtain approval in the United States during the seven-year exclusive marketing period.
Under
the FDA Modernization Act of 1997, designation as a Fast-Track product for a new drug or biological product means that the FDA will take
such actions as are appropriate to expedite the development and review of the application for approval of such product.
Legislation
similar to the Orphan Drug Act has been enacted in other countries outside of the United States, including the EU. The orphan legislation
in the EU is available for therapies addressing conditions that affect five or fewer out of 10,000 persons, are life-threatening or chronically
debilitating conditions and for which no satisfactory treatment is authorized. The market exclusivity period is for ten years, although
that period can be reduced to six years if, at the end of the fifth year, available evidence establishes that the product does not justify
maintenance of market exclusivity.
Emergency
Use Authorization
The
FDA also has the authority to grant an EUA to allow unapproved medical products to be used in an emergency to diagnose, treat, or prevent
serious or life-threatening diseases or conditions when there are no adequate, approved, and available alternatives. Emergency Use Authorizations
granted by the FDA would permit a drug candidate to be able to be distributed under the conditions set forth in the Emergency Use Authorization
prior to FDA approval. Due to the global COVID-19 pandemic, certain of our competitors have sought and obtained EUA from the FDA for
their COVID-19 vaccines. Furthermore, the FDA may revoke an Emergency Use Authorization where it is determined that the underlying health
emergency no longer exists or warrants such authorizations.
Pediatric
Information
Under
the Pediatric Research Equity Act, or PREA, NDAs, BLAs or supplements to NDAs or BLAs must contain data to assess the safety and effectiveness
of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric
subpopulation for which the drug is safe and effective. The FDA may grant full or partial waivers, or deferrals, for submission of data.
Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted,
except a product with a new active ingredient that is a molecularly targeted cancer product intended for the treatment of an adult cancer
and directed at a molecular target determined by FDA to be substantially relevant to the growth or progression of a pediatric cancer
that is subject to an NDA submitted on or after August 18, 2020.
The
Best Pharmaceuticals for Children Act, or BPCA, provides NDA holders a six-month extension of any exclusivity – patent or non-patent
– for a drug if certain conditions are met. For BLAs, the BPCA provides a six-month extension for non-patent exclusivity if certain
conditions are met. Conditions for exclusivity include the FDA’s determination that information relating to the use of a new drug
in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric studies, and
the applicant agreeing to perform, and reporting on, the requested studies within the statutory timeframe. Applications under the BPCA
are treated as priority applications, with all of the benefits that designation confers.
Disclosure
of Clinical Trial Information
Sponsors
of clinical trials of FDA-regulated products, including drugs, are required to register and disclose certain clinical trial information.
Information related to the product, patient population, phase of investigation, study sites and investigators, and other aspects of the
clinical trial is then made public as part of the registration. Sponsors are also obligated to discuss the results of their clinical
trials after completion. Disclosure of the results of these trials can be delayed in certain circumstances for up to two years after
the date of completion of the trial. Competitors may use this publicly available information to gain knowledge regarding the progress
of development programs.
The
Hatch-Waxman Amendments
Orange
Book Listing
In
seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims covering the applicant’s
product or method of using the product. Upon approval of a drug, each of the patents listed in the application for the drug is then published
in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in
the Orange Book can, in turn, be cited by potential generic competitors in support of approval of an abbreviated new drug application,
or ANDA. An ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths and dosage form
as the listed drug and has been shown to be bioequivalent to the listed drug. Other than the requirement for bioequivalence testing,
ANDA applicants are not required to conduct, or submit results of, pre-clinical or clinical tests to prove the safety or effectiveness
of their drug product. Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug, and
can often be substituted by pharmacists under prescriptions written for the original listed drug.
The
ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book.
Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired;
(iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or (iv)
the listed patent is invalid or will not be infringed by the new product. The ANDA applicant may also elect to submit a section viii
statement certifying that its proposed ANDA labeling does not contain (or carves out) any language regarding the patented method-of-use
rather than certify to a listed method-of-use patent. If the applicant does not challenge the listed patents, the ANDA application will
not be approved until all the listed patents claiming the referenced product have expired.
A
certification that the new product will not infringe the already approved product’s listed patents, or that such patents are invalid,
is called a Paragraph IV certification. If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must
also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been received by the FDA. The NDA
and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing
of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving
the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit or a decision in the infringement case that
is favorable to the ANDA applicant.
The
ANDA application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the referenced product
has expired.
Exclusivity
Exclusivity
provisions under the FDC Act also can delay the submission or the approval of certain applications. The FDC Act provides a five-year
period of non-patent exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity,
or NCE. A drug is entitled to NCE exclusivity if it contains a drug substance no active moiety of which has been previously approved
by the FDA. During the exclusivity period, the FDA may not accept for review an ANDA or file a 505(b)(2) NDA submitted by another company
for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval.
However, an application may be submitted after four years if it contains a Paragraph IV certification. The FDC Act also provides three
years of market exclusivity for an NDA, including a 505(b)(2) NDA, or supplement to an existing NDA if new clinical investigations, other
than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval
of the application, for example, for new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only
the conditions for use associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs for
the original conditions of use, such as the originally approved indication. Five-year and three-year exclusivity will not delay the submission
or approval of a full NDA; however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to
all the non-clinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.
Patent
Term Extension
After
NDA approval, the owner of relevant drug patent may apply for up to a five-year patent term extension. Only one patent may be extended
for each regulatory review period, which is composed of two parts: a testing phase, and an approval phase. The allowable patent term
extension is calculated as half of the drug’s testing phase – the time between the day the IND becomes effective and NDA
submission – and all of the review phase – the time between NDA submission and approval up to a maximum of five years. The
time can be shortened if the FDA determines that the applicant did not pursue approval with due diligence. The total patent term after
the extension may not exceed 14 years and only one patent may be extended.
For
patents that might expire during the application phase, the patent owner may request an interim patent extension. An interim patent extension
increases the patent term by one year and may be renewed up to four times. For each interim patent extension granted, the post-approval
patent extension is reduced by one year. The director of the U.S. Patent and Trademark Office must determine that approval of the drug
covered by the patent for which a patent extension is being sought is likely. Interim patent extensions are not available for a drug
for which an NDA has not been submitted.
Section
505(b)(2) New Drug Applications
Most
drug products obtain FDA marketing approval pursuant to an NDA or an ANDA. A third alternative is a special type of NDA, commonly referred
to as a Section 505(b)(2), or 505(b)(2), NDA, which enables the applicant to rely, in part, on studies not conducted by, or for, the
applicant and for which the applicant has not obtained a right of reference or use, such as the FDA’s findings of safety and/or
effectiveness for a similar previously approved product, or published literature, in support of its application.
505(b)(2)
NDAs often provide an alternate path to FDA approval for new or improved formulations or new uses of previously approved products. Section
505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted
by, or for, the applicant and for which the applicant has not obtained a right of reference. If the 505(b)(2) applicants can establish
that reliance on the FDA’s previous approval is scientifically appropriate, it may eliminate the need to conduct certain pre-clinical
or clinical trials of the new product. The FDA may also require companies to perform additional studies or measurements to support the
change from the approved product. The FDA may then approve the new product candidate for all, or some, of the label indications for which
the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant.
To
the extent that the Section 505(b)(2) applicant is relying on studies conducted for an already approved product, the applicant is required
to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant
would. Thus approval of a 505(b)(2) NDA can be stalled until all the listed patents claiming the referenced product have expired, until
any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, listed in the Orange Book for the referenced
product has expired, and, in the case of a Paragraph IV certification and subsequent patent infringement suit, until the earlier of 30
months, settlement of the lawsuit or a decision in the infringement case that is favorable to the Section 505(b)(2) applicant.
Post-Approval
Requirements
Once
an NDA or BLA is approved, a product will be subject to certain post-approval requirements. For instance, the FDA closely regulates the
post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion,
industry-sponsored scientific and educational activities and promotional activities involving the internet. Drugs may be marketed only
for the approved indications and in accordance with the provisions of the approved labeling.
Adverse
event reporting and submission of periodic reports are required following FDA approval of an NDA or BLA. The FDA also may require post-marketing
testing, known as Phase 4 testing, REMS, and surveillance to monitor the effects of an approved product, or the FDA may place conditions
on an approval that could restrict the distribution or use of the product. In addition, quality-control, drug manufacture, packaging
and labeling procedures must continue to conform to cGMPs after approval. Drug manufacturers and certain of their subcontractors are
required to register their establishments with the FDA and certain state agencies. Registration with the FDA, subjects entities to periodic
unannounced inspections by the FDA, during which the agency inspects manufacturing facilities to assess compliance with cGMPs. Accordingly,
manufacturers must continue to expend time, money and effort in the areas of production and quality-control to maintain compliance with
cGMPs. 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.
In addition, prescription drug manufacturers in the United States must comply with applicable provisions of the Drug Supply Chain Security
Act and provide and receive product tracing information, maintain appropriate licenses, ensure they only work with other properly licensed
entities, and have procedures in place to identify and properly handle suspect and illegitimate products.
Failure
to comply with the applicable FDA requirements may subject manufacturers and distributors to administrative or judicial sanctions. These
sanctions could include, among other things, warning letters, product seizures, total or partial suspension of production or distribution,
injunctions, civil money penalties, fines, restitution, disgorgement, or civil or criminal penalties. Further, the FDA has authority
to issue mandatory recalls for medical devices and biologics, and we may need to undertake a voluntary recall for any of our products.
In
addition to regulations enforced by the FDA, we are also subject to regulation under the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other federal, state and local regulations.
Our research and development activities involve the controlled use of hazardous materials, chemicals, biological materials and radioactive
compounds.
Biologics
Biological
products used for the prevention, treatment or cure of a disease or condition of a human being are subject to regulation under the FDC
Act, except the section of the FDC Act which governs the approval of NDAs. Biological products are approved for marketing under provisions
of the Public Health Service Act, or PHSA, via a BLA. However, the application process and requirements for approval of BLAs are very
similar to those for NDAs, and biologics are associated with similar approval risks and costs as drugs. To help reduce the increased
risk of the introduction of adventitious agents, the PHSA emphasizes the importance of manufacturing controls for products whose attributes
cannot be precisely defined. The PHSA also provides authority to the FDA to immediately suspend licenses in situations where there exists
a danger to public health, to prepare or procure products in the event of shortages and critical public health needs, and to authorize
the creation and enforcement of regulations to prevent the introduction or spread of communicable diseases in the US and between states.
After
a BLA is approved, the product may also be subject to official lot release as a condition of approval. As part of the manufacturing process,
the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product
is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release
protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed
on the lot. The FDA may also perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the
lots for distribution by the manufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on the
safety, purity, potency, and effectiveness of biological products. As with drugs, after approval of biologics, manufacturers must address
any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.
The
Biologics Price Competition and Innovation Act of 2009, or BPCIA, creates an abbreviated approval pathway for biological products shown
to be highly similar to or interchangeable with an FDA-licensed reference biological product. Biosimilarity sufficient to reference a
prior FDA-approved product requires that there be no differences in conditions of use, route of administration, dosage form, and strength,
and no clinically meaningful differences between the biological product and the reference product in terms of safety, purity and potency.
Biosimilarity must be shown through analytical studies, animal studies, and at least one clinical trial, absent a waiver by the Secretary.
A biosimilar product may be deemed interchangeable with a prior approved product if it meets the higher hurdle of demonstrating that
it can be expected to produce the same clinical results as the reference product and, for products administered multiple times, the biologic
and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished
efficacy relative to exclusive use of the reference biologic. To date, only four biosimilar products and no interchangeable products
have been approved under the BPCIA. Complexities associated with the larger, and often more complex, structures of biological products,
as well as the process by which such products are manufactured, particularly with respect to interchangeability, are still being evaluated
by the FDA.
A
reference biologic is granted twelve years of exclusivity from the time of first licensure of the reference product, and no application
for a biosimilar can be submitted for four years from the date of licensure of the reference product. The first biologic product submitted
under the abbreviated approval pathway that is determined to be interchangeable with the reference product has exclusivity against a
finding of interchangeability for other biologics for the same condition of use for the lesser of (i) one year after first commercial
marketing of the first interchangeable biosimilar, (ii) eighteen months after the first interchangeable biosimilar is approved if there
is no patent challenge, (iii) eighteen months after resolution of a lawsuit over the patents of the reference biologic in favor of the
first interchangeable biosimilar applicant, or (iv) 42 months after the first interchangeable biosimilar’s application has been
approved if a patent lawsuit is ongoing within the 42-month period.
Regulation
Outside the United States
In
order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements
of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing
authorization, commercial sales and distribution of drug products. Whether or not it obtains FDA approval for a product, the company
would need to obtain the necessary approvals by the comparable foreign regulatory authorities before it can commence clinical trials
or marketing of the product in those countries or jurisdictions. The approval process ultimately varies between countries and jurisdictions
and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other
countries and jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country
or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country
or jurisdiction may negatively impact the regulatory process in others.
Regulation
and Marketing Authorization in the European Union
The
process governing approval of medicinal products in the European Union follows essentially the same lines as in the United States and,
likewise, generally involves satisfactorily completing each of the following:
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pre-clinical
laboratory tests, animal studies and formulation studies all performed in accordance with the applicable EU Good Laboratory Practice
regulations; |
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submission
to the relevant national authorities of a clinical trial application, or CTA, which must be approved before human clinical trials
may begin; |
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performance
of adequate and well-controlled clinical trials to establish the safety and efficacy of the product for each proposed indication; |
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submission
to the relevant competent authorities of a marketing authorization application, or MAA, which includes the data supporting safety
and efficacy as well as detailed information on the manufacture and composition of the product in clinical development and proposed
labeling; |
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satisfactory
completion of an inspection by the relevant national authorities of the manufacturing facility or facilities, including those of
third parties, at which the product is produced to assess compliance with strictly enforced current cGMP; |
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potential
audits of the non-clinical and clinical trial sites that generated the data in support of the MAA; and |
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review
and approval by the relevant competent authority of the MAA before any commercial marketing, sale or shipment of the product. |
Pre-clinical
Studies
Pre-clinical
tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animal
studies, in order to assess the potential safety and efficacy of the product. The conduct of the pre-clinical tests and formulation of
the compounds for testing must comply with the relevant EU regulations and requirements. The results of the pre-clinical tests, together
with relevant manufacturing information and analytical data, are submitted as part of the CTA.
Clinical
Trial Approval
Requirements
for the conduct of clinical trials in the European Union including GCP are implemented in the Clinical Trials Directive 2001/20/EC and
the GCP Directive 2005/28/EC. Pursuant to Directive 2001/20/EC and Directive 2005/28/EC, as amended, a system for the approval of clinical
trials in the European Union has been implemented through national legislation of the member states. Under this system, approval must
be obtained from the competent national authority of an EU member state in which a study is planned to be conducted, or in multiple member
states if the clinical trial is to be conducted in a number of member states. To this end, a CTA is submitted, which must be supported
by an investigational medicinal product dossier, or IMPD, and further supporting information prescribed by Directive 2001/20/EC and Directive
2005/28/EC and other applicable guidance documents. Furthermore, a clinical trial may only be started after a competent ethics committee
has issued a favorable opinion on the clinical trial application in that country.
In
April 2014, the EU legislators passed the new Clinical Trials Regulation, (EU) No 536/2014, which replaced the current Clinical Trials
Directive 2001/20/EC. To ensure that the rules for clinical trials are identical throughout the European Union, the new EU clinical trials
legislation was passed as a regulation that is directly applicable in all EU member states. All clinical trials performed in the European
Union are required to be conducted in accordance with the Clinical Trials Directive 2001/20/EC until the new Clinical Trials Regulation
(EU) No 536/2014 becomes applicable. According to the current plans of the European Medicines Agency, or EMA, the new Clinical Trials
Regulation which became applicable in 2019. The Clinical Trials Directive 2001/20/EC will, however, still apply three years from the
date of entry into application of the Clinical Trials Regulation to (i) clinical trials applications submitted before the entry into
application and (ii) clinical trials applications submitted within one year after the entry into application if the sponsor opts for
old system.
The
new Regulation (EU) No 536/2014 aims to simplify and streamline the approval of clinical trial in the European Union. The main characteristics
of the regulation include:
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streamlined application procedure via a single-entry point, the EU portal. |
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single set of documents to be prepared and submitted for the application as well as simplified reporting procedures that will spare
sponsors from submitting broadly identical information separately to various bodies and different member states. |
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harmonized procedure for the assessment of applications for clinical trials, which is divided in two parts. Part I is assessed jointly
by all member states concerned. Part II is assessed separately by each member state concerned. |
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Strictly
defined deadlines for the assessment of clinical trial application. |
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The
involvement of the ethics committees in the assessment procedure in accordance with the national law of the member state concerned
but within the overall timelines defined by the Regulation (EU) No 536/2014. |
Marketing
Authorization
Authorization
to market a product in the member states of the European Union proceeds under one of four procedures: a centralized authorization procedure,
a mutual recognition procedure, a decentralized procedure or a national procedure.
Centralized
Authorization Procedure
The
centralized procedure enables applicants to obtain a marketing authorization that is valid in all EU member states based on a single
application. Certain medicinal products, including products developed by means of biotechnological processes, must undergo the centralized
authorization procedure for marketing authorization, which, if granted by the European Commission, is automatically valid in all 28 EU
member states. The EMA and the European Commission administer this centralized authorization procedure pursuant to Regulation (EC) No
726/2004.
Pursuant
to Regulation (EC) No 726/2004, this procedure is mandatory for:
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medicinal
products developed by means of one of the following biotechnological processes: |
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recombinant
DNA technology; |
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controlled
expression of genes coding for biologically active proteins in prokaryotes and eukaryotes including transformed mammalian cells;
and |
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hybridoma
and monoclonal antibody methods; |
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advanced
therapy medicinal products as defined in Article 2 of Regulation (EC) No. 1394/2007 on advanced therapy medicinal products; |
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medicinal
products for human use containing a new active substance that, on the date of effectiveness of this regulation, was not authorized
in the European Union, and for which the therapeutic indication is the treatment of any of the following diseases: |
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acquired
immune deficiency syndrome; |
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cancer; |
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neurodegenerative
disorder; |
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diabetes; |
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auto-immune
diseases and other immune dysfunctions; and |
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viral
diseases; |
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medicinal
products that are designated as orphan medicinal products pursuant to Regulation (EC) No 141/2000. |
The
centralized authorization procedure is optional for other medicinal products if they contain a new active substance or if the applicant
shows that the medicinal product concerned constitutes a significant therapeutic, scientific or technical innovation or that the granting
of authorization is in the interest of patients in the European Union.
Administrative
Procedure
Under
the centralized authorization procedure, the EMA’s Committee for Human Medicinal Products, or CHMP, serves as the scientific committee
that renders opinions about the safety, efficacy and quality of medicinal products for human use on behalf of the EMA. The CHMP is composed
of experts nominated by each member state’s national authority for medicinal products, with an expert appointed to act as Rapporteur
for the co-ordination of the evaluation with the possible assistance of a further member of the Committee acting as a Co-Rapporteur.
After approval, the Rapporteur(s) continue to monitor the product throughout its life cycle. The CHMP has 210 days to adopt an opinion
as to whether a marketing authorization should be granted. The process usually takes longer in case additional information is requested,
which triggers clock-stops in the procedural timelines. The process is complex and involves extensive consultation with the regulatory
authorities of member states and a number of experts. When an application is submitted for a marketing authorization in respect of a
drug that is of major interest from the point of view of public health and in particular from the viewpoint of therapeutic innovation,
the applicant may pursuant to Article 14(9) Regulation (EC) No 726/2004 request an accelerated assessment procedure. If the CHMP accepts
such request, the time-limit of 210 days will be reduced to 150 days but it is possible that the CHMP can revert to the standard time-limit
for the centralized procedure if it considers that it is no longer appropriate to conduct an accelerated assessment. Once the procedure
is completed, a European Public Assessment Report, or EPAR, is produced. If the opinion is negative, information is given as to the grounds
on which this conclusion was reached. After the adoption of the CHMP opinion, a decision on the MAA must be adopted by the European Commission,
after consulting the E.U. member states, which in total can take more than 60 days.
Conditional
Approval
In
specific circumstances, EU legislation (Article 14(7) Regulation (EC) No 726/2004 and Regulation (EC) No 507/2006 on Conditional Marketing
Authorizations for Medicinal Products for Human Use) enables applicants to obtain a conditional marketing authorization prior to obtaining
the comprehensive clinical data required for an application for a full marketing authorization. Such conditional approvals may be granted
for product candidates (including medicines designated as orphan medicinal products) if (1) the risk-benefit balance of the product candidate
is positive, (2) it is likely that the applicant will be in a position to provide the required comprehensive clinical trial data, (3)
the product fulfills unmet medical needs and (4) the benefit to public health of the immediate availability on the market of the medicinal
product concerned outweighs the risk inherent in the fact that additional data are still required. A conditional marketing authorization
may contain specific obligations to be fulfilled by the marketing authorization holder, including obligations with respect to the completion
of ongoing or new studies, and with respect to the collection of pharmacovigilance data. Conditional marketing authorizations are valid
for one year, and may be renewed annually, if the risk-benefit balance remains positive, and after an assessment of the need for additional
or modified conditions and/or specific obligations. The timelines for the centralized procedure described above also apply with respect
to the review by the CHMP of applications for a conditional marketing authorization.
Marketing
Authorization under Exceptional Circumstances
Under
Article 14(8) Regulation (EC) No 726/2004, products for which the applicant can demonstrate that comprehensive data (in line with the
requirements laid down in Annex I of Directive 2001/83/EC, as amended) cannot be provided (due to specific reasons foreseen in the legislation)
might be eligible for marketing authorization under exceptional circumstances. This type of authorization is reviewed annually to reassess
the risk-benefit balance. The fulfillment of any specific procedures/obligations imposed as part of the marketing authorization under
exceptional circumstances is aimed at the provision of information on the safe and effective use of the product and will normally not
lead to the completion of a full dossier/approval.
Market
Authorizations Granted by Authorities of E.U. Member States
In
general, if the centralized procedure is not followed, there are three alternative procedures as prescribed in Directive 2001/83/EC:
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The
decentralized procedure allows applicants to file identical applications to several EU member states and receive simultaneous national
approvals based on the recognition by EU member states of an assessment by a reference member state. |
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The
national procedure is only available for products intended to be authorized in a single EU member state. |
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A
mutual recognition procedure similar to the decentralized procedure is available when a marketing authorization has already been
obtained in at least one E.U. member state. |
A
marketing authorization may be granted only to an applicant established in the European Union.
Pediatric
Studies
Prior
to obtaining a marketing authorization in the European Union, applicants have to demonstrate compliance with all measures included in
an EMA-approved Pediatric Investigation Plan, or PIP, covering all subsets of the pediatric population, unless the EMA has granted a
product-specific waiver, a class waiver, or a deferral for one or more of the measures included in the PIP. The respective requirements
for all marketing authorization procedures are set forth in Regulation (EC) No 1901/2006, which is referred to as the Pediatric Regulation.
This requirement also applies when a company wants to add a new indication, pharmaceutical form or route of administration for a medicine
that is already authorized. The Pediatric Committee of the EMA, or PDCO, may grant deferrals for some medicines, allowing a company to
delay development of the medicine in children until there is enough information to demonstrate its effectiveness and safety in adults.
The PDCO may also grant waivers when development of a medicine in children is not needed or is not appropriate, such as for diseases
that only affect the elderly population.
Before
a marketing authorization application can be filed, or an existing marketing authorization can be amended, the EMA determines that companies
actually comply with the agreed studies and measures listed in each relevant PIP.
Periods
of Authorization and Renewals
A
marketing authorization is valid for five years in principle and the marketing authorization may be renewed after five years on the basis
of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the authorizing member state. To this end,
the marketing authorization holder must provide the EMA or the competent authority with a consolidated version of the file in respect
of quality, safety and efficacy, including all variations introduced since the marketing authorization was granted, at least six months
before the marketing authorization ceases to be valid. Once renewed, the marketing authorization is valid for an unlimited period, unless
the European Commission or the competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with one additional
five-year renewal. Any authorization which is not followed by the actual placing of the drug on the EU market (in case of centralized
procedure) or on the market of the authorizing member state within three years after authorization ceases to be valid (the so-called
sunset clause).
Regulatory
Data Protection
EU
legislation also provides for a system of regulatory data and market exclusivity. According to Article 14(11) of Regulation (EC) No 726/2004,
as amended, and Article 10(1) of Directive 2001/83/EC, as amended, upon receiving marketing authorization, new chemical entities approved
on the basis of complete independent data package benefit from eight years of data exclusivity and an additional two years of market
exclusivity. Data exclusivity prevents regulatory authorities in the European Union from referencing the innovator’s data to assess
a generic (abbreviated) application. During the additional two-year period of market exclusivity, a generic marketing authorization can
be submitted, and the innovator’s data may be referenced, but no generic medicinal product can be marketed until the expiration
of the market exclusivity. The overall ten-year period will be extended to a maximum of 11 years if, during the first eight years of
those ten years, the marketing authorization holder, or MAH, obtains an authorization for one or more new therapeutic indications which,
during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing
therapies. Even if a compound is considered to be a new chemical entity and the innovator is able to gain the period of data exclusivity,
another company nevertheless could also market another version of the drug if such company obtained marketing authorization based on
an MAA with a complete independent data package of pharmaceutical test, pre-clinical tests and clinical trials. However, products designated
as orphan medicinal products enjoy, upon receiving marketing authorization, a period of ten years of orphan market exclusivity. Depending
upon the timing and duration of the EU marketing authorization process, products may be eligible for up to five years’ supplementary
protection certificates, or SPCs, pursuant to Regulation (EC) No 469/2009. Such SPCs extend the rights under the basic patent for the
drug.
Regulatory
Requirements After a Marketing Authorization has been Obtained
If
we obtain authorization for a medicinal product in the European Union, we will be required to comply with a range of requirements applicable
to the manufacturing, marketing, promotion and sale of medicinal products:
Pharmacovigilance
and other requirements
We
will, for example, have to comply with the EU’s stringent pharmacovigilance or safety reporting rules, pursuant to which post-authorization
studies and additional monitoring obligations can be imposed. Other requirements relate, for example, to the manufacturing of products
and APIs in accordance with good manufacturing practice standards. EU regulators may conduct inspections to verify our compliance with
applicable requirements, and we will have to continue to expend time, money and effort to remain compliant. Non-compliance with EU requirements
regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population,
can also result in significant financial penalties in the European Union. Similarly, failure to comply with the EU’s requirements
regarding the protection of individual personal data can also lead to significant penalties and sanctions. Individual EU member states
may also impose various sanctions and penalties in case we do not comply with locally applicable requirements.
Manufacturing
The
manufacturing of authorized drugs, for which a separate manufacturer’s license is mandatory, must be conducted in strict compliance
with the EMA’s Good Manufacturing Practices, or GMP, requirements and comparable requirements of other regulatory bodies in the
European Union, which mandate the methods, facilities and controls used in manufacturing, processing and packing of drugs to assure their
safety and identity. The EMA enforces its current GMP requirements through mandatory registration of facilities and inspections of those
facilities. The EMA may have a coordinating role for these inspections while the responsibility for carrying them out rests with the
member states competent authority under whose responsibility the manufacturer falls. Failure to comply with these requirements could
interrupt supply and result in delays, unanticipated costs and lost revenues, and could subject the applicant to potential legal or regulatory
action, including but not limited to warning letters, suspension of manufacturing, seizure of product, injunctive action or possible
civil and criminal penalties.
Marketing
and Promotion
The
marketing and promotion of authorized drugs, including industry-sponsored continuing medical education and advertising directed toward
the prescribers of drugs and/or the general public, are strictly regulated in the European Union under Directive 2001/83/EC. The applicable
regulations aim to ensure that information provided by holders of marketing authorizations regarding their products is truthful, balanced
and accurately reflects the safety and efficacy claims authorized by the EMA or by the competent authority of the authorizing member
state. Failure to comply with these requirements can result in adverse publicity, warning letters, corrective advertising and potential
civil and criminal penalties.
Patent
Term Extension
In
order to compensate the patentee for delays in obtaining a marketing authorization for a patented product, a supplementary certificate,
or SPC, may be granted extending the exclusivity period for that specific product by up to five years. Applications for SPCs must be
made to the relevant patent office in each E.U. member state and the granted certificates are valid only in the member state of grant.
An application has to be made by the patent owner within six months of the first marketing authorization being granted in the European
Union (assuming the patent in question has not expired, lapsed or been revoked) or within six months of the grant of the patent (if the
marketing authorization is granted first). In the context of SPCs, the term “product” means the active ingredient or combination
of active ingredients for a medicinal product and the term “patent” means a patent protecting such a product or a new manufacturing
process or application for it. The duration of an SPC is calculated as the difference between the patent’s filing date and the
date of the first marketing authorization, minus five years, subject to a maximum term of five years.
A
six-month pediatric extension of an SPC may be obtained where the patentee has carried out an agreed pediatric investigation plan, the
authorized product information includes information on the results of the studies and the product is authorized in all member states
of the European Union.
Pharmaceutical
Coverage, Pricing and Reimbursement
Significant
uncertainty exists as to the coverage and reimbursement status of products approved by the FDA and other government authorities. Sales
of products will depend, in part, on the extent to which the costs of the products will be covered by third-party payors, including government
health programs in the United States such as Medicare and Medicaid, commercial health insurers and managed care organizations. The process
for determining whether a payor will provide coverage for a product may be separate from the process for setting the price or reimbursement
rate that the payor will pay for the product once coverage is approved. Third-party payors may limit coverage to specific products on
an approved list, or formulary, which might not include all of the approved products for a particular indication.
In
order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic
studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain
FDA or other comparable regulatory approvals. A payor’s decision to provide coverage for a drug product does not imply that an
adequate reimbursement rate will be approved. Third-party reimbursement may not be sufficient to maintain price levels high enough to
realize an appropriate return on investment in product development.
There
has been an increased focus on drug pricing in recent years in the United States. Although there are no direct government price controls
over private sector purchases in the United States, there are rebates and other financial requirements for federal and state health care
programs. The Medicare Modernization Act, enacted in December 2003, established the Medicare Part D outpatient prescription drug benefit,
which is provided primarily through private entities that attempt to negotiate price concessions from pharmaceutical manufacturers. The
health care reform legislation enacted in 2010, known as the Affordable Care Act, requires drug manufacturers to pay 50% of the Medicare
Part D coverage gap, also known as the “donut hole,” on prescriptions for branded products filled when the beneficiary reaches
this coverage. The Deficit Reduction Act of 2005 resulted in changes to the way drug prices are reported to the government and the formula
using such information to calculate the required Medicaid rebates. The Affordable Care Act increased the minimum basic Medicaid rebate
for branded prescription drugs from 15.1% to 23.1% and requires pharmaceutical manufacturers to pay states rebates on prescription drugs
dispensed to Medicaid managed care enrollees. In addition, the Affordable Care Act increased the additional Medicaid rebate on “line
extensions” (such as extended-release formulations) of solid oral dosage forms of branded products, revised the definition of average
manufacturer price by changing the classes of purchasers included in the calculation, and expanded the entities eligible for discounted
pricing under the federal 340B drug pricing program. Current orphan drugs are excluded from the expanded 340B hospitals eligible for
discounts.
The
Affordable Care Act imposes a significant annual fee on companies that manufacture or import branded prescription drug products. The
fee (which is not deductible for federal income tax purposes) is based on the manufacturer’s market share of sales of branded drugs
and biologics (excluding orphan drugs) to, or pursuant to coverage under, specified U. S. government programs. The Affordable Care Act
also contains a number of provisions, including provisions governing the way that health care is financed by both governmental and private
insurers, enrollment in federal health care programs, reimbursement changes, the increased use of comparative effectiveness research
in health care decision-making, and enhancements to fraud and abuse requirements and enforcement, that are affecting existing government
health care programs and will result in the development of new programs. The Affordable Care Act also contains requirements for manufacturers
to publicly report certain payments or other transfers of value made to physicians and teaching hospitals. We are unable to predict the
future course of federal or state health care legislation and regulations, including regulations that will be issued to implement provisions
of the Affordable Care Act. The Affordable Care Act and further changes in the law or regulatory framework that reduce our revenues or
increase our costs could also have a material adverse effect on our business, financial condition and results of operations and cash
flows.
Public
and private health care payers control costs and influence drug pricing through a variety of mechanisms, including through negotiating
discounts with the manufacturers and through the use of tiered formularies and other mechanisms that provide preferential access to certain
drugs over others within a therapeutic class. Payers also set other criteria to govern the uses of a drug that will be deemed medically
appropriate and therefore reimbursed or otherwise covered. Payers may require physicians to seek approval from them before a product
will be reimbursed or covered, commonly referred to as prior authorization. In particular, many public and private health care payers
limit reimbursement and coverage to the uses of a drug that are either approved by the FDA or appear in a recognized drug compendium.
Drug compendia are publications that summarize the available medical evidence for particular drug products and identify which uses of
a drug are supported or not supported by the available evidence, whether or not such uses have been approved by the FDA. For example,
in the case of Medicare Part D coverage for oncology drugs, the Medicare Modernization Act, with certain exceptions, provides for Medicare
coverage of unapproved uses of an FDA-approved drug if the unapproved use is reasonable and necessary and is supported by one or more
citations in CMS-approved compendia, such as the National Comprehensive Cancer Network Drugs and Biologics Compendium. Different pricing
and reimbursement schemes exist in other countries. For example, in the European Union, governments influence the price of pharmaceutical
products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost
of such products to consumers. The approach taken varies from member state to member state. Some jurisdictions operate positive or negative
list systems under which products may only be marketed once a reimbursement price has been agreed. Other member states allow companies
to fix their own prices for medicines, but monitor and control company profits and may limit or restrict reimbursement. The downward
pressure on health care costs in general, and prescription drugs in particular, has become very intense. As a result, increasingly high
barriers are being erected to the entry of new products, as exemplified by the actions of the National Institute for Clinical Excellence
in the United Kingdom, which evaluates the data supporting new medicines and passes reimbursement recommendations to the government.
In addition, in some countries cross-border imports from low-priced markets (parallel imports) exert a commercial pressure on pricing
within a country.
In
the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that drug products
may be marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that
compare the cost-effectiveness of our drug candidate to currently available therapies (so called health technology assessment) in order
to obtain reimbursement or pricing approval. For example, the European Union provides options for its member states to restrict the range
of drug products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products
for human use. E.U. member states may approve a specific price for a drug product or it may instead adopt a system of direct or indirect
controls on the profitability of the company placing the drug product on the market. Other member states allow companies to fix their
own prices for drug products, but monitor and control prescription volumes and issue guidance to physicians to limit prescriptions. The
downward pressure on health care costs in general, particularly prescription drugs, has become intense. As a result, increasingly high
barriers are being erected to the entry of new products. In addition, there can be considerable pressure by governments and other stakeholders
on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may
further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing
used by various E.U. member states, and parallel distribution (arbitrage between low-priced and high-priced member states), can further
reduce prices. Any country that has price controls or reimbursement limitations for drug products may not allow favorable reimbursement
and pricing arrangements.
Healthcare
Law and Regulation
Healthcare
providers, physicians and third-party payors play a primary role in the recommendation and prescription of drug products that are granted
marketing approval. Arrangements with third-party payors and customers are subject to broadly applicable fraud and abuse and other healthcare
laws and regulations. Such restrictions under applicable federal and state healthcare laws and regulations, include the following:
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the
federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving
or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for,
or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal
healthcare program such as Medicare and Medicaid; |
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the
federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or
entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent
or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; |
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the
federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing
a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; |
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HIPAA,
as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes
obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually
identifiable health information; |
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the
federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making
any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; |
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the
federal transparency requirements under the Health Care Reform Law requires manufacturers of drugs, devices, biologics and medical
supplies to report to the Department of Health and Human Services information related to payments and other transfers of value to
physicians and teaching hospitals and physician ownership and investment interests; and |
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analogous
state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements
and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers. |
An
increasing number of states have enacted legislation requiring pharmaceutical and biotechnology companies to file periodic reports of
expenses relating to the marketing and promotion of drug products and gifts and payments to individual healthcare practitioners in these
states; to make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities; to report information
pertaining to and justifying price increases; or to register their sales representatives. Other states prohibit various marketing-related
activities, such as the provision of certain kinds of gifts or meals; price gouging; or pharmacies and other healthcare entities from
providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing. In addition,
states such as California, Connecticut, Nevada, and Massachusetts require pharmaceutical companies to implement compliance programs and/or
marketing codes. State and foreign laws also govern the privacy and security of health information in some circumstances, many of which
differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Environmental,
Health and Safety Matters
The
manufacturing facilities of the third-parties that develop our product candidates are subject to extensive environmental, health and
safety laws and regulations in a number of jurisdictions, governing, among other things: the use, storage, registration, handling, emission
and disposal of chemicals, waste materials and sewage; chemicals, air, water and ground contamination; air emissions and the cleanup
of contaminated sites, including any contamination that results from spills due to our failure to properly dispose of chemicals, waste
materials and sewage.
These
laws, regulations and permits could potentially require the expenditure by us of significant amounts for compliance or remediation. If
the third-party manufacturers fail to comply with such laws, regulations or permits, we may be subject to fines and other civil, administrative
or criminal sanctions, including the revocation of permits and licenses necessary to continue our business activities. In addition, we
may be required to pay damages or civil judgments in respect of third-party claims, including those relating to personal injury (including
exposure to hazardous substances we use, store, handle, transport, manufacture or dispose of), property damage or contribution claims.
Some environmental, health and safety laws allow for strict, joint and several liability for remediation costs, regardless of comparative
fault. We may be identified as a responsible party under such laws. Such developments could have a material adverse effect on our business,
financial condition and results of operations.
In
addition, laws and regulations relating to environmental, health and safety matters are often subject to change. In the event of any
changes or new laws or regulations, we could be subject to new compliance measures or to penalties for activities that were previously
permitted.
Competition
Our
industry is subject to rapid and intense technological change. Competition is intense among manufacturers of nutritional, non-prescription,
and prescription pharmaceuticals. We face, and will continue to face, competition from nutraceutical, pharmaceutical, biopharmaceutical,
medical device and biotechnology companies developing similar products and technologies both in the United States and abroad, as well
as numerous academic and research institutions, governmental agencies and private organizations engaged in drug funding or research and
discovery activities both in the United States and abroad. Academic institutions, government agencies and other public and private research
organizations may also conduct research, seek patent protection and establish collaborative arrangements for discovery, research and
clinical development of technologies and products similar to ours. We also face competition from entities and healthcare providers using
more traditional methods. We believe there are a substantial number of products under development by numerous nutraceutical, pharmaceutical,
biopharmaceutical, medical device and biotechnology companies, and it is likely that other competitors will emerge.
Many
of our existing and potential competitors are large, well established pharmaceutical, chemical or healthcare companies with considerably
greater research and product development capabilities and financial, scientific, marketing and human resources than we have. As a result,
these competitors may succeed in developing competing products earlier than we do; obtain patents that block or otherwise inhibit our
ability to further develop and commercialize our product candidates; obtain approvals from the FDA or other regulatory agencies for products
more rapidly than we do; or develop treatments or cures that are safer or more effective than those we propose to develop. These competitors
may also devote greater resources to marketing or selling their products and may be better able to withstand price competition. In addition,
these competitors may introduce or adapt more quickly to new technologies or scientific advances, which could render our technologies
obsolete, and may introduce products or technologies that make the continued development, production, or marketing of our product candidates
uneconomical. These competitors may also be more successful in negotiating third-party licensing or collaborative arrangements and may
be able to take advantage of acquisitions or other strategic opportunities more readily than we can. These actions by competitors or
potential competitors could materially affect our business, financial condition and results of operations. We cannot assure you that
we will be able to compete successfully.
We
have a limited ability to predict how competitive our products and product candidates will be in the market place. The competition we
believe currently exists with respect to each of our products is as follows:
NT-CoV2-1
Vaccine
The
COVID-19 vaccine market is intensely competitive, characterized by rapid technological progress.
The SARS-CoV-2 pandemic is also evolving rapidly with the generation of new virus variants including Delta and Omicron that impact vaccine
efficacy. This creates a changing competitive landscape for the Terra CoV-2 and NT-CoV2-1 vaccine candidates. We compete with worldwide
research-based biopharmaceutical companies and smaller companies that manufacture and sell products that treat diseases or indications
similar to those treated by our vaccine candidate. In December 2020, Pfizer and Moderna both received EUA to begin distributing their
vaccines. Pfizer received full FDA approval in August 2021 and Moderna in January 2022. The combined market shares of these two mRNA
vaccines are 96% in the US and 89% in the EU. Johnson & Johnson has developed a single dose vaccine and received an EUA in the US
in February 2021. In early February 2022, the WHO listed 10 vaccines approved for use, including those from Oxford/Astra Zeneca, Novavax,
the Serum Institute of India, Bharat Biotech, Sinopharma (Beijing) and Sinovac as well as those from Pfizer, Moderna and Janssen.
According
to the WHO, there are 172 vaccines currently in clinical development, of which 65 are currently in Phase 3 clinical trials, and there
are currently 194 vaccines which are in the pre-clinical development phase. There are just 7 vaccines in active clinical development
that contemplate use of intranasal administration. Our intranasal NT-CoV2-1
vaccine candidate is in pre-clinical development.
Additionally,
several companies are working on antiviral drugs, some of which are already in use against other illnesses, to treat people who have
COVID-19. The FDA has also issued EUAs
for several other treatments, including antivirals, monoclonal antibodies, convalescent plasma therapy, a drug used to sedate people
placed on a ventilator, and drugs for people undergoing a type of blood purification known as continuous renal replacement therapy. To
the extent these drug treatments are effective there can reduce demand for vaccines against the disease and the potential market for
our vaccine product candidate.
Our
vaccine development will depend on our ability to identify key points of product differentiation relative to our competitors and conduct
pre-clinical testing and file an IND followed by proceeding to a Phase 1 clinical trial. If the Phase 1 trial results support further
development, a Phase 2 clinical trial may be initiated and/or a partnership to advance further development may be sought. The competition
we face with the development of our vaccines is extensive and could adversely affect us in many ways including the increased numbers
of vaccines currently being administered under emergency use authorizations, supplies of raw materials including adjuvants for clinical
testing, timing of manufacturers to make our vaccine for testing, available government funding and other funding through partnerships.
MU1140
Homologs and Other Lantibiotics
MU1140
will likely compete directly with antibiotic drugs such as vancomycin and newer drugs, including Cubicin® (daptomycin) and Zyvox
® (linezolid). Given the growing resistance of target pathogens to even new antibiotics, we believe that there is ample room in the
marketplace for additional antibiotics. Many of our competitors are taking approaches to drug development differing from our approach,
including using traditional screening of natural products; genomics to identify new targets, and combinatorial chemistry to generate
new chemical structures. Competition in the pharmaceutical industry is based on drug safety, efficacy, ease of use, patient compliance,
price, marketing, and distribution. Our lantibiotic development will depend on our success in developing MU1140 homologs and to the point
of commercialization or partnership and in the process securing and protecting our intellectual property.
Our
Intellectual Property
We
rely upon a combination of licenses, patents, trade secrets, know-how, and licensing opportunities to develop our business. Our future
prospects depend on our ability to protect our intellectual property. We also need to operate without infringing the proprietary rights
of third parties.
Patents
We
attempt to protect our technology and products through patents and patent applications pursuant to the terms of our license agreements.
We have a worldwide, nonexclusive intellectual property and biological materials license agreement with NIAID, an institute within the
NIH, relating to certain research, patent applications and biological materials involving prefusion coronavirus spike proteins and their
use in the development and commercialization of vaccine to provide specific, lifetime immunity from SARS-CoV-2. We also have worldwide,
nonexclusive intellectual property and biological materials license agreement with the NRC which provides us with a platform that can
generate cell lines for high-yield production of spike protein antigens for existing and emerging variants of concern. This platform
should allow production of cell lines within six to eight weeks of spike gene sequence availability, compared with six to nine months
for traditional production of such cell lines. We co-own the intellectual property for certain homologs of our MU1140 product candidate
with the Texas A&M University System.
The
effect of issued patents is that they provide patent protection for the claims covered by the patents. While the expiration of a product
patent normally results in a loss of market exclusivity for the covered product or product candidate, commercial benefits may continue
to be derived from: (i) later-granted patents on processes and intermediates related to the most economical method of manufacture of
the active ingredient of such product; (ii) patents relating to the use of such product; (iii) patents relating to novel compositions
and formulations; and (iv) in the United States and certain other countries, market exclusivity that may be available under relevant
law. The effect of patent expiration on products or product candidates also depends upon many other factors such as the nature of the
market and the position of the product in it, the growth of the market, the complexities and economics of the process for manufacture
of the active ingredient of the product and the requirements of new drug provisions of the Federal Food, Drug and Cosmetic Act or similar
laws and regulations in other countries.
We
believe that the protection of discoveries in connection with our development activities, our proprietary products, technologies, processes
and know-how and all of our intellectual property are important to our business. To achieve a competitive position, we rely on trade
secrets, non-patented proprietary know-how and continuing technological innovation, where patent protection is not believed to be appropriate
or attainable. In addition, as outlined above, we have a number of patent licenses from third parties, some of which may be important
to our business. There can be no assurance that any of our patents, licenses or other intellectual property rights will afford us any
protection from competition.
Trademarks
Our
trademarks are important to our business. We currently use the following unregistered trademarks: SMaRT Replacement Therapy™, MU1140™,
and LPT3-04™. We currently have pending with the USPTO, an application for registration of the mark of ORAGENICS™ (therapeutic
products; anti-infectives and vaccine products). We also have rights to use other names essential to our business. Federally registered
trademarks have a perpetual life, as long as they are maintained and renewed on a timely basis and used properly as trademarks, subject
to the rights of third parties to seek cancellation of the trademarks if they claim priority or confusion of usage. We regard our trademarks
and other proprietary rights as valuable assets and believe they have significant value to us.
Protection
of Trade Secrets
We
attempt to protect our trade secrets, including the processes, concepts, ideas and documentation associated with our technologies, through
the use of confidentiality agreements and non-competition agreements with our current employees and with other parties to whom we have
divulged such trade secrets. There can be no assurance that these agreements will not be breached, that we will have adequate remedies
for any breach, that others will not independently develop equivalent proprietary information or that other third parties will not otherwise
gain access to our trade secrets and other intellectual property. If our employees or other parties breach our confidentiality agreements
and non-competition agreements or if these agreements are not sufficient to protect our technology or are found to be unenforceable,
our competitors could acquire and use information that we consider to be our trade secrets and we may not be able to compete effectively.
Most of our competitors have substantially greater financial, marketing, technical and manufacturing resources than we have and we may
not be profitable if our competitors are also able to take advantage of our trade secrets.
We
may find it necessary to initiate litigation to enforce our patent rights, to protect our intellectual property or to determine the scope
and validity of the proprietary rights of others. Litigation is costly and time-consuming, and there can be no assurance that our litigation
expenses will not be significant in the future or that we will prevail in any such litigation.
Government
Grants
We
have previously received funding from government agencies under the National Science Foundation’s and National Institute of Health’s
Small Business Innovation Research, or SBIR, grants. Eligibility of public companies to receive such grants is based on size and ownership
criteria which are under review by the Small Business Administration, or SBA. As a result, our eligibility may change in the future and
additional funding from this source may not be available. We have also applied for funding pursuant to BARDA but did not receive a grant
award. While we continue to pursue grants and or government funding related to the COVID-19 pandemic it may not be available to us. In
addition, although we seek to protect the competitive benefits we derive from our patents, proprietary information, and other intellectual
property, we may not have the right to prohibit the U.S. government from using certain technologies developed or acquired by us due to
federal research grants or to prohibit third-party companies, including our competitors, from using those technologies in providing products
and services to the U.S. government. The U.S. government could have the right to royalty-free use of technologies that we may develop
under such grants. We may commercially exploit those government-funded technologies and may assert our intellectual property rights against
other non-government users of technology developed by us, but we may not be successful in our efforts to do so.
We
recently announced that we were awarded a small business innovation research grant in the amount of $250,000 (“Computer-aided Design
for Improved Lantibiotics” R41GM136034) for our continued research and development of lantibiotics, including its collaborative
program with the Biomolecular Sciences Institute at (FIU). The grant provides us with funding to develop novel lantibiotics for the treatment
of ESKAPE pathogens (defined as Enterococcus faecium, Staphylococcus aureus, Klebsiella pneumoniae, Acinetobacter baumannii, Pseudomonas
aeruginosa, and Enterobacter spp.).
Human
Capital
Employees
We
have five full-time employees. We enjoy good relations with our employees. None of our employees are a member of any labor union, and
we are not a party to any collective bargaining agreement.
Consultants
We
have consulting agreements with a number of scientists, clinicians and regulatory experts. They serve as important contacts for us throughout
the broader scientific and clinical communities. They are distinguished individuals with expertise in numerous fields, including vaccine
development and regulatory matters.
We
retain each consultant according to the terms of a consulting agreement. Under such agreements, we pay them a consulting fee and reimburse
them for out-of-pocket expenses incurred in performing their services for us. In addition, some consultants hold options to purchase
our common stock, subject to the vesting requirements contained in separate award agreements. Our consultants may be employed by other
entities and therefore may have commitments to their employer or may have other consulting or advisory agreements that may limit their
availability to us.
Corporate
Information
We
were incorporated in November 1996 and commenced operations in 1999. We consummated our initial public offering in June 2003. Our corporate
office is located at 4902 Eisenhower Boulevard, Suite 125, Tampa, Florida 33634.
Available
Information
Our
website is www.oragenics.com. On our website we make available at no cost our annual reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and amendments to those reports filed or furnished as soon as reasonably practicable after we electronically
file such material with, or furnish them to, the United States Securities and Exchange Commission (“SEC”). The information
contained on our website is not a part of this annual report on Form 10-K.
An
investment in our common stock involves a high degree of risk. You should carefully consider the risks described below before making
an investment decision in our securities. These risk factors are effective as of the date of this Form 10-K and shall be deemed to be
modified or superseded to the extent that a statement contained in our future filings modifies or replaces such statement. All of these
risks may impair our business operations. The forward-looking statements in this Form 10-K involve risks and uncertainties and actual
results may differ materially from the results we discuss in the forward-looking statements. If any of the following risks actually occur,
our business, financial condition or results of operations could be materially adversely affected. In that case, the trading price of
our stock could decline, and you may lose all or part of your investment.
Risk
Factor Summary
The
below summary of risk factors provides an overview of many of the risks we are exposed to in the normal course of our business activities.
As a result, the below summary risks do not contain all of the information that may be important to you, and you should read the summary
risks together with the more detailed discussion of risks set forth following this section as well as elsewhere in this Annual Report.
Additional risks, beyond those summarized below or discussed elsewhere in this Annual Report, may apply to our activities or operations
as currently conducted or as we may conduct them in the future or in the markets in which we operate or may in the future operate. Consistent
with the foregoing, we are exposed to a variety of risks, including risks associated with the following:
Risks
Related to Our Business
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We have incurred significant losses since our inception and expect to continue to experience losses for the foreseeable future.
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We will need to raise additional capital in the future to complete the development and commercialization of our product candidates and
operate our business.
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We were denied funding from the Biomedical Advanced Research and Development Authority (“BARDA”) and we may be unable to
win any government contracts, grants, agreement or other funding in the future. Even if we are successful in obtaining such contracts,
grants, agreements or other funding, we cannot assure the success of our NT-CoV2-1 vaccine product candidate, that it will be approved
by the FDA or other public health regulatory authority or that any funding provided will be sufficient to complete development and successful
commercialization.
●
We may rely on government funding and collaboration with government entities for our vaccine development, which adds uncertainty to our
research and development efforts and may impose requirements that increase the costs of development, commercialization and production
of any programs developed under those government-funded programs.
●
We have limited vaccine-specific research, development, manufacturing, testing, regulatory, commercialization, sales, distribution, and
marketing experience, and we may need to invest significant financial and management resources to establish these capabilities. Despite
such investments and our best efforts, our strategic acquisition of Noachis Terra may turn out to be unsuccessful.
●
We have limited financial resources and we may not be able to maintain our current level of operations or be able to fund the further
development of our new NT-CoV2-1 vaccine product candidate.
●
Our vaccine product candidate is at the pre-clinical stage and has not been approved for sale. We have not conducted substantial research
and development for a vaccine product candidate, and we may be unable to produce a vaccine that successfully prevents the virus in a
timely and economical manner, if at all.
●
The market opportunities for our vaccine product candidate may be smaller than we believe them to be. Moreover, any pandemic threat may
abate, the underlying virus may mutate, or alternative vaccines or technologies may be adopted, before our vaccines achieve regulatory
approval.
●
If we are unable to successfully develop our product candidates, our operating results and competitive position could be harmed. Research
and development involves a lengthy and complex process, and we may not be successful in our efforts to develop and commercialize our
product candidates. The further development and ultimate commercialization of product candidates for SARS-CoV-2 and COVID-19, as well
as our other product candidates, are keys to our strategy.
●
If we are successful in producing a vaccine against SARS-CoV-2, we may need to devote significant resources to its scale-up and development,
including for use by the U.S. government or other foreign authorities. Moreover, government involvement may limit the commercial success
of our vaccine product candidate.
●
Our product candidates, if approved, will face significant competition and our failure to compete effectively may prevent us from achieving
significant market penetration.
●
Because our vaccine product development efforts depend on new and rapidly evolving technologies, we cannot be certain that our efforts
will be successful.
●
Our SARS-CoV-2 vaccine product candidate may face competition from biosimilars approved through an abbreviated regulatory pathway.
●
We may be unable to refine a method to produce MU1140 homologs in large-scale commercial quantities. If we cannot, we will be unable
to generate significant revenues from sales of a MU1140 homolog product candidate.
●
Our success will depend on our ability to obtain regulatory approval of our product candidate under our Lantibiotics Program and its
successful commercialization.
●
We may choose not to continue developing or commercializing any of our product candidates at any time during development or after approval,
which would reduce or eliminate our potential return on investment for those product candidates.
●
We have limited experience in the conduct of clinical trials. We have never initiated a vaccine-related clinical trial. We have never
obtained approval of any product candidates. We may be unable to undertake any of those actions successfully.
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We cannot assure you that the market and consumers will accept our products or product candidates. If they do not, we will be unable
to generate significant revenues from our products or product candidates and our business, financial condition and results of operations
will be materially adversely affected.
●
Failure to obtain marketing approval in international jurisdictions would prevent our product candidates from being marketed abroad.
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We will need to further increase the size and complexity of our organization in the future, and we may experience difficulties in executing
our growth strategy and managing our growth.
●
If our manufacturers and suppliers in general fail to meet our requirements and the requirements of regulatory authorities, our research
and development may be materially adversely affected.
●
We rely on the significant experience and specialized expertise of our senior management and scientific team and the loss of any of our
key personnel or our inability to successfully hire their successors could harm our business.
●
We need to hire and retain additional qualified scientists and other highly skilled personnel to maintain and grow our business.
●
If any of our product candidates are shown to be ineffective or harmful in humans, we will be unable to generate revenues from these
product candidates.
●
Because we are new to vaccine development, we must identify vaccines for development with our technologies and establish successful third-party
relationships.
●
We intend to seek licensing partners to cover a portion of the costs associated with obtaining regulatory approval for, and manufacturing
and marketing of, our product candidates. If we are unable to obtain agreements with third parties to fund these costs, we will have
to fund such costs ourselves or we may be unable to extract any value from these technologies.
●
We might not be successful at acquiring, investing in or integrating businesses, entering into joint ventures or divesting businesses.
●
We may face product liability exposure, and if successful claims are brought against us, we may incur substantial liability if our insurance
coverage for those claims is inadequate.
●
We may be adversely affected by natural disasters, pandemics and other catastrophic events, and by man-made problems such as terrorism,
that could disrupt our business operations and our business continuity and disaster recovery plans may not adequately protect us from
a serious disaster.
●
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited, each of which could harm our
business.
●
Our auditor has previously expressed substantial doubt about our ability to continue as a going concern and absent additional financing
we may be unable to remain a going concern.
Risks
Related to Our Intellectual Property and Data Security and Privacy
●
Our vaccine research and development efforts are to a large extent dependent upon our intellectual property and biologicals materials
license with the NIAID, the NIH, and the NRC(“Licensors”).
●
We may incur additional expenses and obligations in connection with our NIH and NRC licenses (“Licenses Agreements”).
●
The intellectual property covered by our License Agreements concerns patent applications and provisional applications. We cannot assure
investors that any of the currently pending or future patent applications will result in granted patents, nor can we predict how long
it will take for such patents to be granted.
●
We cannot prevent the Licensors or other companies, including our competitors, from licensing the same intellectual property and biological
materials that we have licensed or from otherwise duplicating our business model and operations.
●
Our Lantibiotic Development program development efforts are to a large extent dependent upon our intellectual property and is based on
early-stage technology in its field.
●
We may be subject to claims challenging the inventorship of our patents and other intellectual property.
●
Changes in patent law or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect
our product candidates.
●
If we are unable to protect our trademarks or other intellectual property from infringement, our business prospects may be harmed.
●We
may not be able to protect our intellectual property rights throughout the world.
●
If we fail to comply with our obligations under our intellectual property license agreements, we could lose our license rights that are
important to our business and development of our product candidates.
●
If we are sued for infringing intellectual property rights of third parties, it will be costly and time-consuming and an unfavorable
outcome in that litigation could have a material adverse effect on our business.
●
We may become involved in lawsuits to protect or enforce our patents or other intellectual property or the patents of our licensors,
which could be expensive and time-consuming.
●
Our success will depend on our ability to partner or sub-license our product candidates and their subsequent successful commercialization.
●
If our intellectual property rights do not adequately protect our products or product candidates, or if third parties claim we are infringing
their intellectual property rights, others could compete against us more directly or we could be subject to significant litigation. Such
results could prevent us from marketing our products or product candidates and hurt our profitability.
●
Our business and operations would suffer in the event of cybersecurity/information systems risk.
●
We may incur costs of addressing a cybersecurity incident.
●
Our business and operations would suffer in the event of failures in our internal computer systems or those of our collaborators.
Risks
Related to Government Regulations
●
Our product candidates are subject to substantial government regulation, including the regulation of nonclinical testing and clinical
trials. If we are unable to obtain regulatory approval for our product candidates, we will be unable to generate revenues.
●
We may be unable to obtain regulatory approval for our SARS-CoV-2 vaccine product candidate, or other early-stage product candidates
under applicable regulatory requirements. The FDA and foreign regulatory bodies have substantial discretion in the approval process,
including the ability to delay, limit or deny approval of product candidates. The delay, limitation or denial of any regulatory approval
would adversely impact commercialization, our potential to generate revenue, our business and our operating results.
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Delays or difficulties in the enrollment of patients in clinical trials may result in additional costs and delays in our ability to generate
significant revenues, and may delay or prevent our receipt of any regulatory approvals necessary to commercialize our planned and future
products.
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Any product candidates that we commercialize will be subject to ongoing and continued regulatory review.
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Our product candidates may cause serious or undesirable side effects or possess other unexpected properties that could delay or prevent
their regulatory approval, limit the commercial profile of approved labeling or result in post-approval regulatory action.
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If any of our product candidates are approved for marketing and we are found to have improperly promoted off-label uses, or if physicians
misuse our products or use our products off-label, we may become subject to prohibitions on the sale or marketing of our products, product
liability claims and significant fines, penalties and sanctions, and our brand and reputation could be harmed.
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We may also be subject to healthcare laws, regulation and enforcement and our failure to comply with those laws could adversely affect
our business, operations and financial condition.
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Our employees, independent contractors, principal investigators, consultants, vendors and CROs may engage in misconduct or other improper
activities, including noncompliance with regulatory standards and requirements.
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Even if our current product candidates or any future product candidates obtain regulatory approval, they may fail to achieve the broad
degree of health care payers, physician and patient adoption and use necessary for commercial success.
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If we are unable to achieve and maintain coverage and adequate levels of reimbursement for any of our product candidates for which we
receive regulatory approval, or any future products we may seek to commercialize, their commercial success may be severely hindered.
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If our products do not receive favorable third-party reimbursement, or if new restrictive legislation is adopted, market acceptance of
our products may be limited and we may not generate significant revenues.
Risks
Related to Coronavirus Disease (COVID-19)
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Our business is subject to risks arising from public health crises, epidemic or pandemic diseases, such as the recent global outbreak
of the coronavirus disease (COVID-19).
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Our ability to conduct clinical trials may be impeded, delayed, limited or prevented entirely due to the spread of COVID-19, the imposition
of government restrictions and the concurrent disruptions to ordinary business activities globally.
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Our business involves international components, and we are exposed to various global and local risks related to the coronavirus disease
2019 (COVID-19) that could have a material adverse effect on our financial condition and results of operations.
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Macroeconomic pressures in the markets in which we operate, including, but not limited to, the effectives of the coronavirus disease
(COVID-19) may alter the ways in which we conduct our business operations and manage our financial capacities.
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Economic uncertainty may adversely affect our access to capital, cost of capital and ability to execute our business plan as scheduled.
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Inadequate funding for the FDA, the SEC and other government agencies in light of the coronavirus pandemic could hinder their ability
to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a
timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may
rely, which could negatively impact our business.
Risks
Related to Our Common Stock
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The issuance of additional equity securities by us in the future would result in dilution to our existing common shareholders.
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Our financial results could vary significantly from quarter to quarter and are difficult to predict.
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Our Series A and Series B preferred stock, if not converted into common stock, has a distribution and liquidation preference senior to
our common stock in liquidation which could negatively affect the value of our common stock and impair our ability to raise additional
capital.
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The conversion of our Series A Preferred Stock, and Series B Preferred Stock and the exercise of currently outstanding warrants and options
could result in significant dilution to the holders of our common stock.
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Certain provisions of our articles of incorporation, bylaws, executive employment agreements and stock option plan may prevent a change
of control of our company that a shareholder may consider favorable.
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The price and volume of our common stock has been volatile and fluctuates substantially, which could result in substantial losses for
stockholders.
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We may be subject to securities litigation, which is expensive and could divert management attention.
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Future sales or issuances of our common stock in the public markets, or the perception of such sales, could depress the trading price
of our common stock.
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The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract
and retain qualified members for our Board of Directors.
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If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent
fraud which could subject us to regulatory sanctions, harm our business and operating results and cause the trading price of our stock
to decline.
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We will continue to incur significant costs as a result of and devote substantial management time to operating as a public company listed
on the NYSE American.
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If securities or industry analysts publish research or publish inaccurate or unfavorable research about our business, our stock price
and trading volume could decline.
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We may issue debt or debt securities convertible into equity securities, any of which may be senior to our common stock as to distributions
and in liquidation, which could negatively affect the value of our common stock.
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We are a “smaller reporting company” and, as a result of the reduced disclosure and governance requirements applicable to
smaller reporting companies, our common stock may be less attractive to investors.
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We have never paid cash dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.
Risks
Related to Our Business
We
have incurred significant losses since our inception and expect to continue to experience losses for the foreseeable future.
We
have incurred significant net losses and negative cash flow in each year since our inception, including net losses of approximately $15.7
million and $26.4 million for the years ended December 31, 2021, and 2020, respectively. As of December 31, 2021, our accumulated deficit
was approximately $171.3 million. We have devoted a significant amount of our financial resources to research and development, including
our nonclinical development activities and clinical trials, as well as licensing and acquisitions related to our product candidates.
We expect that the costs associated with our plans to continue pre-clinical research, contract manufacturing and file an IND for our
vaccine product candidate and the research and development of our product candidates in the area of lantibiotics (“Lantibiotics
Program”) will increase the level of our overall expenses significantly going forward. Additionally, our License Agreements also
requires the payment of certain recurring and performance-based royalties that may negatively impact our financial capabilities. As a
result, we expect to continue to incur substantial net losses and negative cash flow for the foreseeable future. These losses and negative
cash flows have had, and will continue to have, an adverse effect on our shareholders’ equity and working capital. Because of the
numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing
or amount of substantial expenses or when, or if, we will be able to generate the revenue necessary to achieve or maintain profitability.
We
will need to raise additional capital in the future to complete the development and commercialization of our product candidates and operate
our business.
Developing
and commercializing biopharmaceutical products, including conducting nonclinical studies and clinical trials and establishing manufacturing
capabilities, is expensive, and the progress of our efforts to develop and commercialize our product candidates, including our acquisition
of a vaccine product candidate, can cause us to use our limited, available capital resources faster than we currently anticipate. Our
actual costs may ultimately vary from our current expectations, which could materially impact our use of capital and our forecast of
the period of time through which our financial resources will be adequate to support our operations. Our current cash, cash equivalents
and short-term investments are not sufficient to fully implement our business strategy and sustain our operations beyond the end of the
current year, 2022. Accordingly, we will need to seek additional sources of financing and such additional financing may not be available
on favorable terms, if at all. Until we can generate a sufficient amount of product revenue, if ever, we expect to finance future cash
needs through public or private equity offerings, debt financings or corporate or government collaboration and licensing arrangements.
If we do not succeed in raising additional funds on acceptable terms, we may be unable to complete existing nonclinical and planned clinical
trials or obtain approval of our product candidates from the FDA and other regulatory authorities. We expect capital outlays and operating
expenditures to increase over the next several years as we continue our research and development activities. Specifically, we need to
raise additional capital to, among other things:
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conduct
pre-clinical research for our NT-CoV2-1 vaccine product candidate, file an IND with the FDA and, if approved, engage in Phase 1 clinical
trial and commence preparation for Phase 2 clinical trials; |
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engage
third parties in GMP and non-GMP manufacturing for our product candidates at the pre-clinical research and clinical trial stages; |
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expand
our clinical laboratory operations; |
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fund
our clinical validation study activities; |
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expand
our research and development activities; and |
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finance
our capital expenditures and general and administrative expenses. |
Our
present and future funding requirements will depend on many factors, including:
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the
current and continued microeconomic impact of the COVID-19 pandemic on our ability, the ability of our third-party contractors and
suppliers, and the ability of government regulators to conduct ordinary business operations in a timely and efficient manner, as
well as the pandemic’s broader, macroeconomic impact on the U.S., foreign and global economic markets; |
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the
level of research and development investment budgeted to develop our current and future product candidates; |
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costs
of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; |
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our
need or decision to acquire or license complementary technologies or acquire complementary businesses; |
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changes
in test development plans needed to address any difficulties in product candidate selection to pursue for commercialization; |
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competing
vaccines and technological and market developments; |
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our
interaction and relationship with the FDA, or other, regulatory agencies; and |
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changes
in regulatory policies or laws that affect our operations. |
Additional
capital may not be available on satisfactory terms, or at all. Furthermore, if we raise additional funds by issuing equity securities,
dilution to our existing stockholders would result. Any equity securities issued also may provide for rights, preferences or privileges
senior to those of holders of our common stock. If we raise additional funds by issuing debt securities, these debt securities would
have rights, preferences and privileges senior to those of holders of our common stock, and the terms of the debt securities issued could
impose significant restrictions on our operations. If we raise additional funds through collaborations and licensing arrangements, we
might be required to relinquish significant rights to our technologies or our products under development, or grant licenses on terms
that are not favorable to us, which could lower the economic value of those programs to us. If adequate funds are not available, we may
have to scale back our operations or limit our research and development activities, which may cause us to progress at a slower pace,
or not at all, and our business could be adversely affected.
In
addition, we could be forced to discontinue product development and commercialization of one or more of our product candidates, and/or
forego licensing attractive business opportunities.
We
were denied funding from the Biomedical Advanced Research and Development Authority (“BARDA”) and we may be unable to win
any government contracts, grants, agreement or other funding in the future. Even if we are successful in obtaining such contracts, grants,
agreements or other funding, we cannot assure the success of our NT-CoV2-1 vaccine product candidate, that it will be approved by the
FDA or other public health regulatory authority or that any funding provided will be sufficient to complete development and successful
commercialization.
From
time to time, we may apply for contracts, grants, agreements or other funding from government agencies, academic institutions and non-profit
organizations. Such contracts or grants can be highly attractive because they provide capital to fund the ongoing development of our
technologies and vaccine candidates without diluting our stockholders. However, significant competition exists for these contracts, grants,
agreements or other funding. Entities offering such contracts, grants, agreements or other funding may have requirements to apply for
or to otherwise be eligible to receive such contracts, grants, agreements or other funding that our competitors may be able to satisfy
that we cannot. In addition, such entities have limited funding available to award and may make arbitrary decisions as to whether to
offer contracts or make grants, to whom the contracts or grants will be awarded and the size of the contracts or grants to each awardee.
Even if we are able to satisfy the award requirements, we may not be a successful awardee. Therefore, we may not be able to win any contracts
or grants in a timely manner, if at all. For example, we applied for BARDA funding in connection with our license with the NIH and received
notification that are request for BARDA funding had been denied.
Even
if we receive a financing through one of the aforementioned mechanisms, the success of our NT-CoV2-1 vaccine product candidate cannot
be assured solely by our ability to obtain such financing, nor can it assure that any vaccine product candidate so financed will succeed
in clinical trials and receive regulatory approval from the FDA or other public health regulatory authorities. Moreover, we cannot guarantee
that our receipt of such financing will obviate the need for future financial resources to support the further development of our NT-CoV2-1
vaccine product candidate, as additional development activities may be needed, and the vaccine approval and development process can be
costly and unpredictable. We have no control over the resources and funding that government agencies may devote to these agreements,
which may be subject to annual renewal and which generally may be terminated by the government agencies at any time. Accordingly, our
receipt of such funding cannot be relied upon solely as an indicator or guarantee of the success of our NT-CoV2-1 vaccine product candidate.
We
may rely on government funding and collaboration with government entities for our vaccine development, which adds uncertainty to our
research and development efforts and may impose requirements that increase the costs of development, commercialization and production
of any programs developed under those government-funded programs.
Because
we anticipate the resources necessary to develop our new NT-CoV2-1 vaccine product candidate will be substantial, we may explore funding
and development collaboration opportunities with the U.S. government and its agencies. For example, we may continue to apply for certain
grant funding from BARDA, the NIH or other government agencies to further the research, development, manufacture, testing, and regulatory
approval of our NT-CoV2-1 vaccine product candidate. We have no control or input over whether an application for BARDA grant funding
or any other funding will be accepted or approved, in full or in part, and we cannot provide investors with any assurances that we will
receive such funding.
Similar
to the requirements imposed by our new NIH license, contracts and grants funded by the U.S. government and its agencies, contain provisions
that reflect the government’s substantial rights and remedies, many of which are not typically found in commercial contracts, including
powers of the government to:
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reduce
or modify the government’s obligations under such agreements without the consent of the other party; |
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claim
rights, including IP rights, in products and data developed under such agreements; |
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audit
contract-related costs and fees, including allocated indirect costs; |
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suspend
the contractor or grantee from receiving new contracts pending resolution of alleged violations of procurement laws or regulations; |
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impose
U.S. manufacturing requirements for products that embody inventions conceived or first reduced to practice under such agreements; |
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suspend
or debar the contractor or grantee from doing future business with the government; |
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control
and potentially prohibit the export of products; |
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pursue
criminal or civil remedies under the False Claims Act, False Statements Act, and similar remedy provisions specific to government
agreements; and |
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limit
the government’s financial liability to amounts appropriated by the U.S. Congress on a fiscal-year basis, thereby leaving some
uncertainty about the future availability of funding for a program even after it has been funded for an initial period. |
In
addition, government contracts and grants, ordinarily contain additional requirements that may increase our costs of doing business,
reduce our profits, and expose us to liability for failure to comply with these terms and conditions, including the following:
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specialized
accounting systems unique to government contracts and grants; |
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mandatory
financial audits and potential liability for price adjustments or recoupment of government funds after such funds have been spent; |
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public
disclosures of certain contract and grant information, which may enable competitors to gain insights into our research program; and |
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mandatory
socioeconomic compliance requirements, including labor standards, non-discrimination, and affirmative action programs, and environmental
compliance requirements. |
If
we received such grants or agreements, we may not have the right to prohibit the U.S. government from using certain technologies developed
by us, and we may not be able to prohibit third-parties, including our competitors, from using those technologies in providing products
and services to the U.S. government. Further, under such agreements we could be subject to obligations to and the rights of the U.S.
government set forth in the Bayh-Dole Act of 1980, meaning the U.S. government may have rights in certain inventions developed under
these government-funded agreements, including a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for
any governmental purpose. In addition, the U.S. government could have the right to require us to grant exclusive, partially exclusive,
or nonexclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to
commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is
necessary to meet requirements for public use under federal regulations, also referred to as “march-in rights.” Although
the U.S. government’s historic restraint with respect to these rights indicates they are unlikely to be used, any exercise of the
march-in rights could harm our competitive position, business, financial condition, results of operations, and prospects. In the event
we would be subject to the U.S. government’s exercise such march-in rights, we may receive compensation that is deemed reasonable
by the U.S. government in its sole discretion, which may be less than what we might be able to obtain in the open market.
Additionally,
as is the case under our new NIH license, the U.S. government requires that any products embodying any invention generated through the
use of U.S. government funding be manufactured substantially in the United States. The license with the NRC also contains similar manufacturing
requirements which may conflict with the NIH license. The manufacturing preference requirement can be waived if the owner of the intellectual
property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that
would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially
feasible. This preference for U.S. manufacturers may limit our ability to contract with non-U.S. manufacturers for products covered by
such intellectual property. Obligations relating to manufacturing preferences and vaccine availability in Canada are included in the
NRC license agreement.
Although
we will need to comply with some of these obligations in relation to our NIH license, not all of the aforementioned obligations may be
applicable to us unless and only to the extent that we receive a government grant, contract or other agreement. However, as an organization,
we are relatively new to government contracting and new to the regulatory compliance obligations that such contracting entails. If we
were to fail to maintain compliance with those obligations, we may be subject to potential liability and to termination of our contracts,
including the NIH license, which may have a materially adverse effect on our ability to develop our NT-CoV2-1 vaccine product candidate.
We
have limited vaccine-specific research, development, manufacturing, testing, regulatory, commercialization, sales, distribution, and
marketing experience, and we may need to invest significant financial and management resources to establish these capabilities. Despite
such investments and our best efforts, our strategic acquisition of Noachis Terra may turn out to be unsuccessful.
As
part of our business strategy, we monitor and analyze strategic acquisition opportunities that we believe will be strategic fits for
the Company and beneficial to the Company’s shareholders. As demonstrated by our acquisition of Noachis Terra in May of 2020, we
may acquire companies, businesses, products and technologies that complement, augment or transform our existing business. However, such
acquisitions could involve numerous risks that may prevent us from fully realizing the benefits that we anticipated as a result of such
transactions.
Prior
to our acquisition of Noachis Terra, we had little-to-no experience in the development and commercialization of vaccines. Although, in
connection with the acquisition, we added experienced vaccine researchers and consultants and appointed an experienced vaccine industry
professional to our board of directors, given our size and current pre-clinical stage of development, we still have limited vaccine-specific
research, development, manufacturing, testing, regulatory, commercialization, sales, distribution, and marketing experience. To successfully
develop our NT-CoV2-1 vaccine product candidate, we will need to dedicate significant amounts of our limited financial and management
resources to bolster our expertise in this area. Our success depends significantly on the continued contributions of our executive officers,
financial, scientific and technical personnel and consultants, and on our ability to attract additional personnel.
During
our operating history, many essential responsibilities have been assigned to a relatively small number of individuals, and we currently
depend heavily upon the efforts and abilities of our management team. However, as we advance into vaccine development, the demands on
our key employees will expand and we will need to recruit additional qualified employees or consultants for our Company. The competition
for such qualified personnel is intense, particularly in light of the demand for vaccines or other treatment for SARS-CoV-2 and/or COVID-19.
The loss of services of any of our existing consultants or our inability to attract additional personnel to fill critical positions could
adversely affect our ability to efficiently develop our NT-CoV2-1 vaccine product candidate. The loss or unavailability of the services
of any of these individuals could have a material adverse effect on our business, prospects, financial condition and results.
Alternatively,
or in addition to the above, we may enter into strategic alliances or partnership with other vaccine industry entities to utilize their
research, development, manufacturing, testing, regulatory or commercialization skills, but we may be unable to enter into such agreements
on favorable terms, if at all. If our future strategic collaborators do not commit sufficient resources to our alliances or partnerships
and the progress of our vaccine development, if any, and we are unable to develop the necessary capabilities on our own, we may be unable
to advance the development of our NT-CoV2-1 vaccine product candidate to the point of commercialization, even if we obtain regulatory
approval. We will be competing with many companies that currently have existing, extensive and well-funded operations, and without a
significant internal team or the support of a third party to perform essential functions related to vaccine research, development, manufacturing,
testing, regulatory approval, and commercialization, we may be unable to compete successfully against these more established companies
and our NT-CoV2-1 vaccine product candidate may fail.
Any
failure by us to effectively limit such risks as we implement our strategic acquisition could have a material adverse effect on our business,
financial condition or results of operations and cause the price of our securities to fall.
We
have limited financial resources and we may not be able to maintain our current level of operations or be able to fund the further development
of our new NT-CoV2-1 vaccine product candidate.
To
date, Oragenics has never developed a vaccine product candidate, and we cannot assure investors that we will be able to successfully
develop a vaccine to prevent SARS-CoV-2 or COVID-19 with our current resources and capabilities. Because our new NT-CoV2-1 vaccine product
candidate is in early stages of development, and contemplates nasal administration it will require extensive pre-clinical and clinical
testing, and we will need significant additional funding to conduct such research and testing. We do not expect to generate revenue from
product sales, licensing fees, royalties, milestones, contract research or other sources of funds in amounts sufficient to fully fund
our operations for the foreseeable future, and we will therefore use our cash resources, and expect to require additional funds, to maintain
our existing operations, continue our research and development programs, commence future pre-clinical studies and clinical trials for
our NT-CoV2-1 vaccine product candidate, and to seek regulatory approvals.
We
anticipate seeking such additional funds through a combination of public or private equity or debt financings, as well as potential collaborations,
strategic alliances and marketing, distribution or licensing arrangements and non-dilutive funding from government and nongovernment
funding entities, as well as other sources to further the research, development, manufacturing, testing, and regulatory approval of vaccine
product candidates. While we may continue to apply for contracts or grants from academic institutions, nonprofit organizations and governmental
entities, we may not be successful. Adequate additional funding may not be available to us on acceptable terms, if at all. If we cannot
raise the additional funds required for our anticipated operations or to support our development efforts, we may be required to delay
significantly, reduce the scope of or eliminate one or more of our research or development programs, downsize our organization, or seek
alternative measures to avoid insolvency, including arrangements with collaborative partners or others that may require us to relinquish
rights to certain of our technologies or our vaccine candidate. If we raise additional funds through future offerings of shares of our
common stock or other debt or equity securities, such offerings would cause dilution of current stockholders’ percentage ownership
in the Company, which could be substantial. Additionally, future offerings also could have a material and adverse effect on the price
of our common stock.
Our
vaccine product candidate is at the pre-clinical stage and has not been approved for sale. We have not conducted substantial research
and development for a vaccine product candidate, and we may be unable to produce a vaccine that successfully prevents the virus in a
timely and economical manner, if at all.
Our
NT-CoV2-1 vaccine development program is in the early stages of research and development, and currently includes only one product candidate,
which is in the pre-clinical stage. Limited data exist regarding the safety and efficacy of our vaccine product candidate, and we must
conduct a substantial amount of additional research, development and clinical testing before any regulatory authority will approve our
vaccine product candidate. The success of our efforts to develop and commercialize our product candidates could fail for a number of
reasons. For example, we could experience delays in product development and clinical trials or unsatisfactory clinical trial results.
In
addition, adverse events, or the perception of adverse events, relating to a vaccine product candidate administered intranasally and
delivery technologies may negatively impact our ability to develop commercially successful products. For example, pharmaceutical companies
have been subject to claims that the use of some pediatric vaccines has caused personal injuries, including brain damage, central nervous
system damage and other ailments. Regardless of the veracity of or the data supporting these claims, these and other claims may influence
public perception of the use of vaccine product candidates and could result in greater governmental regulation, stricter labeling requirements
and potential regulatory delays in the testing or approval of our potential vaccine product candidate. Such greater government regulation
could have a material effect on our ability to develop and market our NT-CoV2-1 vaccine product candidate.
We
have not conducted substantial research on the NT-CoV2-1 vaccine product candidate and we lack experience in the research, development,
manufacture, regulatory approval, marketing, commercialization and implementation of a vaccine product candidate. Also, uncertainties
exist surrounding the longevity and severity of COVID-19 as a global health concern. The success of our efforts to develop and commercialize
our product candidates could fail for a number of reasons. Accordingly, we may be unable to produce a vaccine that successfully targets
SARS-CoV-2 in a timely and economical manner, if at all.
For
example, we expect to commit significant financial resources and personnel to the development of our NT-CoV2-1 vaccine product candidate,
which may cause delays in or otherwise negatively impact our other product candidate development program. The outcome of any research
and development program is highly uncertain. Only a small fraction of biotechnology and vaccine development programs ultimately result
in commercial products or even product candidates and a number of events could delay our development efforts and negatively impact our
ability to obtain regulatory approval for, and to manufacture, market and sell, a nasally administered vaccine. Additionally, our ability
to develop an effective vaccine will depend on our ability to work on an accelerated timeline, with uncertain access to financial resources
beyond those that we currently possess, and in competition with a significant number of better-funded and more experienced vaccine-development
companies. Moreover, if the COVID-19 pandemic is effectively contained or the risk of further spread is diminished or eliminated before
we can successfully develop, manufacture and commercialize NT-CoV2-1, we may be unable to identify strategic partners willing to work
with and support us in our development efforts and, even if we obtain regulatory approval, the market that we anticipate for this product
candidate may not exist or may be much smaller than we previously anticipated. Alternatively, even if a market exists, our vaccine product
candidate could be found to be ineffective or unsafe, or otherwise fail to receive necessary regulatory clearances. Our vaccine product
candidate, even if safe and effective, could be difficult to manufacture on a large scale or uneconomical to market, or our competitors
could develop superior products more quickly and efficiently or more effectively market their competing products. Accordingly, our inability
to develop a commercially-successful vaccine product will materially harm our business. In addition, other parties are currently producing
and administering approved vaccines for the treatment for SARS-CoV-2 or under the FDA’s Emergency Use Authorization and other competitive
vaccines are expected to seek such authorization as well. Such competitive vaccines already in the market may also lead to the diversion
of governmental and nongovernmental resources away from us and toward our competitors.
The
market opportunities for our vaccine product candidate may be smaller than we believe them to be. Moreover, any pandemic threat may abate,
or alternative vaccines or technologies may be adopted, before our vaccines achieve regulatory approval.
The
primary area of focus for our future research and product development activities is the development of a nasally administered vaccine
candidate to prevent SARS-CoV-2 and the disease it principally causes, COVID-19. Our current projections of both the number of people
who are or will be affected by this disease, as well as the subset of people who may be affected by this disease and who have the potential
to benefit from immunity through our NT-CoV2-1 vaccine product candidate, are based on estimates. These estimates have been derived from
a variety of sources, including scientific literature, surveys of clinics, patient foundations, or market research, and may prove to
be incorrect. Further, because coronaviruses have evolved in recent decades and research on SARS-CoV-2 and COVID-19 are continuously
changing due to the complicated nature of the virus, new studies may change the estimated incidence or prevalence of COVID-19. The number
of clinical trial participants in the United States, Europe, and elsewhere may turn out to be lower than expected, potential clinical
trial participants may not be otherwise amenable to treatment with our products, or new clinical trial participants may become increasingly
difficult to identify or gain access to, all of which would adversely affect our ability to conduct the research and development necessary
to complete the vaccine product candidate.
Moreover,
the threat of the COVID-19 pandemic outbreak may subside before we are able to complete research and development for our NT-CoV2-1 vaccine
product candidate, obtain regulatory approval for the vaccine product candidate and realize any return on our investment in the research
and development. Other organizations some of which are currently broadly administering vaccines under the FDA approval, or Emergency
Use Authorization authority, may obtain licenses for their own pandemic vaccines, or government health organizations may acquire adequate
stockpiles of pandemic vaccines or adopt other technologies or strategies to prevent or limit outbreaks before our NT-CoV2-1 vaccine
product candidate reaches the marketplace. We may not achieve a return on our investment before the threat of the COVID-19 pandemic subsides
or a competing product is adopted.
If
we are unable to successfully develop our product candidates, our operating results and competitive position could be harmed. Research
and development involves a lengthy and complex process, and we may not be successful in our efforts to develop and commercialize our
product candidates. The further development and ultimate commercialization of product candidates for SARS-CoV-2 and COVID-19, as well
as our other product candidates, are keys to our strategy.
A
key element of our business strategy is to discover, develop, validate and commercialize a vaccine product candidate to provide immunity
from SARS-CoV-2, which we aim to market globally to both public and private payers. Additionally, our focus concerns the development
of a portfolio of additional antibiotic product candidates to combat multi drug resistant organism, or MDRO, outbreaks and the associated
costs to patients, inpatient facilities and the health care industry. We cannot assure you that we will be able to successfully complete
development of, or commercialize any or all of our planned future product candidates, or that they will be clinically usable. The product
development process involves a high degree of risk and may take up to several years or more. Our new product development efforts may
fail for many reasons, including:
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our
recent entry into the vaccine research and development industry; |
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failure
of future tests at the research or development stages; |
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lack
of clinical validation data to support effectiveness; |
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delays
resulting from the failure of third-party suppliers or contractors to meet their obligations in a timely and cost-effective manner; |
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regulatory
delays at the FDA or from other independent oversight authorities, particularly in light of the demands placed on public health resources
during and following the COVID-19 pandemic; |
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failure
to obtain or maintain necessary certifications, licenses, clearances or approvals to market or perform the test; or |
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lack
of commercial acceptance by the health care marketplace. |
Few
research and development projects result in commercial products, and success in early clinical trials often is not replicated in later
trials. At any point, we may abandon development of products in favor of the development or acquisition of new products, or we may be
required to expend considerable resources repeating clinical studies or trials, which would adversely impact the timing for generating
potential revenues from those new products. In addition, as we advance the development of new products through to the commercialization
stage, we will have to make additional investments in our sales and marketing operations, which may be prematurely or unnecessarily incurred
if the commercial launch of a product is abandoned or delayed.
If
we are successful in producing a vaccine against SARS-CoV-2, we may need to devote significant resources to its scale-up and development,
including for use by the U.S. government or other foreign authorities. Moreover, government involvement may limit the commercial success
of our vaccine product candidate.
Because
the COVID-19 outbreak has been classified as a pandemic by public health authorities, it is possible that one or more government entities
may take actions that directly or indirectly have the effect of abrogating some of our rights or opportunities with respect to the research,
development and commercialization of our NT-CoV2-1 vaccine product candidate. We have not manufactured a pandemic vaccine to date, but
if we were to do so, the economic value of such a vaccine to us could be limited by such government action or inaction. Various government
entities, including the U.S. government, are offering, but may not continue to offer, incentives, grants and contracts to encourage additional
investment by commercial organizations into preventative and therapeutic agents against SARS-CoV-2 and/or COVID-19, which may have the
effect of increasing the number of competitors and/or providing advantages to known competitors. Accordingly, there can be no assurance
that we will be able to successfully establish a competitive market share for our NT-CoV2-1 vaccine product candidate.
In
the event that any of the pre-clinical research or, if an IND is accepted by the FDA, the Phase 1 clinical trials for our SARS-CoV-2
vaccine product candidate are perceived to be successful, we may need to work toward the large-scale technical development, manufacturing
scale-up and larger scale deployment of this potential vaccine through a variety of U.S. government-sponsored mechanisms, such as an
Expanded Access Program or an Emergency Use Authorization program. In this case we may need to divert significant resources to this program,
which would require diversion of resources from our other existing product candidate programs. In addition, since the path to licensure
of any vaccine against SARS-CoV-2 is unclear, and widely-used vaccines in circulation in the United States and other countries could
impact our receipt of marketing approval. Unexpected safety issues in these circumstances could lead to significant reputational damage
for us and our technology platform going forward and other issues, including delays in our other programs, the need for re-design of
our clinical trials and the need for significant additional financial resources.
Our
product candidates, if approved, will face significant competition and our failure to compete effectively may prevent us from achieving
significant market penetration.
The
pharmaceutical industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on developing proprietary
therapeutics. Numerous companies are engaged in the development, patenting, manufacturing and marketing of healthcare products competitive
with those that we are developing. We face competition from a number of sources, such as pharmaceutical companies, including generic
drug companies, biotechnology companies and academic and research institutions, many of which have greater financial resources, marketing
capabilities, sales forces, manufacturing capabilities, research and development capabilities, clinical trial expertise, intellectual
property portfolios, experience in obtaining patents and regulatory approvals for product candidates and other resources than us. Some
of the companies that offer competing products also have a broad range of other product offerings, large direct sales forces and long-term
customer relationships with our target physicians, which could inhibit our market penetration efforts. In addition, certain of our product
candidates, if approved, may compete with other products, for a share of some patients’ discretionary budgets and for physicians’
attention within their clinical practices.
We
anticipate that, if we obtain regulatory approval of our product candidates, we will face significant competition from other approved
therapies and may need to compete with unregulated, unapproved and off-label treatments. Certain of our product candidates, if approved,
will present novel therapeutic approaches for the approved indications and will have to compete with existing therapies, some of which
are widely known and accepted by physicians and patients. To compete successfully in this market, we will have to demonstrate that the
relative cost, safety and efficacy of our approved products, if any, provide an attractive alternative to existing and other new therapies.
Such competition could lead to reduced market share for our product candidates and contribute to downward pressure on the pricing of
our product candidates, which could harm our business, financial condition, operating results and prospects.
Due
to less stringent regulatory requirements in certain foreign countries, there are many more products and procedures available for use
in those international markets than are approved for use in the United States. In certain international markets, there are also fewer
limitations on the claims that our competitors can make about the effectiveness of their products and the manner in which they can market
them. As a result, we expect to face more competition in these markets than in the United States.
Because
our vaccine product development efforts depend on new and rapidly evolving technologies, we cannot be certain that our efforts will be
successful.
Currently,
the FDA has given full approval to Moderna and Pfizer for their vaccines and Janssen has an EUA. A number of other vaccine manufacturers,
academic institutions and other organizations currently have programs to develop such a vaccine. The WHO currently lists 10 COVID-19
vaccines approved for use and 65 COVID-19 vaccine candidates in Phase 3 evaluation. These companies have greater experience and expertise
in securing government contracts and grants to support their research and development efforts, conducting testing and clinical trials,
obtaining regulatory approvals to market products, manufacturing such products on a broad scale and marketing approved products. These
companies may also partner or collaborate with large and established companies, such as Merck & Co., Inc., GlaxoSmithKline plc, CSL
Ltd, Pfizer Inc. and AstraZeneca, among others, or they may partner or collaborate with or obtain funding from governments, academic
institutions or other nongovernmental organizations. In order to effectively compete, we will have to make substantial investments in
development, testing, manufacturing and sales and marketing or partner with one or more established companies.
Moreover,
our new vaccine development efforts depend on new, rapidly evolving technologies. Our development efforts and, if those are successful,
commercialization of our NT-CoV2-1 vaccine product candidate could fail for a variety of reasons, and include the possibility that:
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Our
SARS-CoV-2 vaccine product candidate or technologies, any or all of the products based on such technologies or any manufacturing
process will be ineffective or unsafe, or otherwise fail to receive necessary regulatory approvals or achieve commercial viability; |
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third-party
supplier or manufacturer facilities will be unable or unwilling to provide necessary supplies or scale-up manufacturing capabilities
for our products in a cost-effective manner or at all; |
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the
products, if safe and effective, may be difficult to manufacture on a large-scale or uneconomical to market; |
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third-party
manufacturing facilities will fail to continue to pass regulatory inspections; |
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proprietary
rights of third-parties will prevent us or our collaborators from exploiting technologies, and manufacturing or marketing products;
and |
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third-party
competitors with approval or Emergency Use Authorization from the FDA and use of vaccines will gain greater market share and limit
or impair development efforts. |
We
may be unable to refine a method to produce MU1140 homologs in large-scale commercial quantities. If we cannot, we will be unable to
generate significant revenues from sales of an MU1140 homolog product candidate.
Our
antibiotic product candidates, all homologs of MU1140, are produced by our strain of S. mutans and variants thereof. We have successfully
developed a methodology for producing MU1140 in quantities sufficient to undertake its nonclinical testing. If we are not able to further
adequately scale up fermentation and purification methodologies for large-scale manufacture, we will be unable to partner and generate
revenues from this product candidate and our business, financial condition and results of operations will be materially adversely affected.
The manufacturing of MU1140 homologs or any other possible antibiotic product candidates based on lantibiotics, is a highly exacting
and complex process. Manufacturing MU1140 homologs or any other antibiotic candidates derived from lantibiotics on a commercial scale
has not yet been achieved to our knowledge, so there are additional risks that such efforts will not be successful. Third-party manufacturers
must have additional technical skills and must take multiple steps to attempt to control the manufacturing processes. If we are unable
to identify and produce MU1140 homologs in large-scale commercial quantities, we will be unable to generate significant revenues from
sales of our MU1140 product candidate and our financial condition and results of operations will be materially adversely affected.
Our
success will depend on our ability to obtain regulatory approval of our product candidate under our Lantibiotics Program and its successful
commercialization.
We
have not received regulatory approval in any jurisdiction for lantibiotic product candidate and we may never receive approval or, if
approvals are obtained, may never be commercialized successfully. We have incurred and will continue to incur significant costs relating
to the nonclinical development of our antibiotic product candidates (including MU1140 homologs we may develop). We have performed extensive
nonclinical testing using native MU1140 and continue to seek to identify homologs as potential product candidates which would require
additional nonclinical testing. This work will be done solely by us through the use of outside contractors. If our nonclinical work is
successful, we would expect the IND for a first-in-human clinical trial of a lantibiotic compound to be filed with the FDA based on our
ability to complete the requisite studies, contingent on sufficient funding.
Even
if we are able to conduct successful clinical trials or the required regulatory approvals are obtained, we may never be able to generate
significant revenues from our product candidates. If our product candidates are unsuccessful, we may be unable to generate sufficient
revenues to sustain and grow our business, and our business, financial condition and results of operations will be materially adversely
affected.
We
may choose not to continue developing or commercializing any of our product candidates at any time during development or after approval,
which would reduce or eliminate our potential return on investment for those product candidates.
At
any time, we may decide to discontinue the development or commercialization of any of our products or product candidates for a variety
of reasons, including inadequate financial resources the appearance of new technologies that render our product obsolete, competition
from a competing product or changes in or failure to comply with applicable regulatory requirements. If we terminate a program in which
we have invested significant resources, we will not receive any return on our investment and we will have missed the opportunity to allocate
those resources to potentially more productive uses. For example, we mutually agreed to terminate our Exclusive Channel Collaboration
Agreement with Eleszto Genetika, Inc. in September 2021 and in connection therewith ceased future development of our lead lantibiotic
homolog candidate.
We
have limited experience in the conduct of clinical trials. We have never initiated a vaccine-related clinical trial. We have never obtained
approval of any product candidates. We may be unable to undertake any of those actions successfully.
As
a company, we have limited experience and capacity for the conduct of pre-clinical research and clinical trials, as well as the progression
of a product candidate through to regulatory approval. Because we are in the early stages of development for NT-CoV2-1 and because the
SARS-CoV-2 vaccine landscape continues to evolve, our clinical trials may require more time and incur greater costs than we anticipate.
We cannot be certain that planned clinical trials will begin or conclude on time, if at all. Large-scale trials would require significant
additional financial and management resources, and reliance on third-party clinical investigators, CROs and/or consultants. Any performance
failure on the part of such third parties could delay clinical development or delay or prevent us from obtaining regulatory approval
or commercializing our current or future product candidates, depriving us of potential product revenue and resulting in additional losses.
By contrast, larger pharmaceutical and biopharmaceutical companies often have substantial staff or departments with extensive experience
in conducting clinical trials with multiple product candidates across multiple indications and obtaining regulatory approval in various
countries. In addition, these companies may have greater financial resources to compete for the same clinical investigators, sites and
patients that we may attempt to recruit or retain for our pre-clinical research and clinical trials. As a result, we may be at a competitive
disadvantage that could delay the initiation, recruitment, timing and completion of our pre-clinical research and clinical trials and
obtaining regulatory, marketing and related approvals, if achieved at all, for our NT-CoV2-1 vaccine product candidate.
We
cannot assure you that the market and consumers will accept our products or product candidates. If they do not, we will be unable to
generate significant revenues from our products or product candidates and our business, financial condition and results of operations
will be materially adversely affected.
The
commercial success of our NT-CoV2-1 vaccine product candidate, our MU1140 homologs antibiotic product candidates, and any of our other
product candidates and technologies, will depend in part on market acceptance by consumers. Biopharmaceutical companies have received
substantial support from the scientific community, regulatory agencies and many governmental officials in the United States and internationally.
Future scientific developments, media coverage and political events may diminish such support. Public attitudes may be influenced by
claims that health products are unsafe for consumption or pose unknown risks to the environment or to traditional social or economic
practices. Securing governmental approvals for, and consumer confidence in, such products pose numerous challenges, particularly outside
the United States. The market success of product candidates developed by biopharmaceutical companies could be delayed or impaired in
certain geographical areas as a result. Products based on our product candidates may compete with a number of traditional therapies and
drugs manufactured and marketed by major pharmaceutical companies and biotechnology companies. Market acceptance of products based on
our product candidates will depend on a number of factors including potential advantage over alternative treatment methods. We can offer
you no assurance that physicians, patients or the medical communities in general will accept and utilize products developed from our
product candidates. If they do not, we may be unable to generate significant revenues from our product candidates and our business, financial
condition and results of operations will be materially adversely affected.
Failure
to obtain marketing approval in international jurisdictions would prevent our product candidates from being marketed abroad.
In
order to market and sell our products in the European Union and many other jurisdictions, we or our third-party collaborators must obtain
separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries
and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval.
The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval.
In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product
can be approved for sale in that country. We or these third parties may not obtain approvals from regulatory authorities outside the
United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries
or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities
in other countries or jurisdictions or by the FDA. We may not be able to file for marketing approvals and may not receive necessary approvals
to commercialize our products in any market.
We
will need to further increase the size and complexity of our organization in the future, and we may experience difficulties in executing
our growth strategy and managing our growth.
Our
current management, personnel, systems and facilities are not adequate to support our future growth plans. We will need to further expand
our scientific, sales and marketing, operational, financial and other resources to support our planned research, development, clinical
trial work, and commercialization activities.
To
manage our operations, growth and various projects effectively, we must:
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to improve our operational, financial, management and regulatory compliance controls and reporting systems and procedures; |
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and retain sufficient numbers of talented employees; |
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develop
a plan for marketing, sales, and distribution capability; |
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manage
our commercialization activities for our product candidates effectively; |
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establish
and maintain relationships with development and commercialization partners; |
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manage
our pre-clinical and clinical trials effectively; |
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manage
our third-party supply and manufacturing operations effectively and in a cost-effective manner, while increasing production capabilities
for our current product candidates to commercial levels; and |
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manage
our development efforts effectively while carrying out our contractual obligations to partners and other third parties. |
In
addition, we have utilized and continue to utilize the services of part-time outside consultants to perform a number of tasks for us,
including tasks related to pre-clinical and clinical testing. Our growth strategy may also entail expanding our use of consultants to
implement these and other tasks going forward. We rely on consultants for certain functions of our business and will need to effectively
manage these consultants to ensure that they successfully carry out their contractual obligations and meet expected deadlines. There
can be no assurance that we will be able to manage our existing consultants or find other competent outside consultants, as needed, on
economically reasonable terms, or at all. If we are not able to manage our growth effectively and expand our organization by hiring new
employees and expanding our use of consultants, we might be unable to implement successfully the tasks necessary to execute effectively
on our planned research, development and commercialization activities and, accordingly, might fail to achieve our research, development
and commercialization goals.
If
we, or our manufacturers and suppliers in general, fail to meet contractual obligations, requirements and the requirements of regulatory
authorities, our research and development may be materially adversely affected.
We
do not have the internal capability to manufacture our SARS-CoV-2 vaccine, MU1140 homologs, or any other product candidates and all of
their constituent parts under GMPs, as required by the FDA and other regulatory agencies. In order to continue to develop and commercialize
our product candidates and to apply for regulatory approvals for our product candidates, we will need to contract with third parties
that have, or otherwise develop, the necessary manufacturing capabilities in full compliance with applicable regulatory requirements.
We
enter into agreements with these third-party suppliers as part of, and in connection with, our product development plans and timing.
In order to have sufficient product available for anticipated future clinical trials we need to enter into agreements with GMP certified
manufactures that have the capability and capacity to meet our expected product needs and timing in advance of when our actual needs
will arise in order for us to be positioned to continue development without delays due to the manufacturing process and capabilities
of qualified manufacturers. These agreements may obligate us to make certain payments in connection with the manufacture of our vaccine
product candidate based upon our current expected timing. If the timing of our current development plans changes, we could be required
to make additional payments to associated with such delays and/or associated with the cancellation of the agreement without achieving
the benefits anticipated from the agreement.
There
are a limited number of manufacturers that operate under GMPs that are capable of manufacturing our product candidates. Due to the early-stage
development of our SARS-CoV-2 vaccine product candidate, we cannot at this time accurately predict the numbers and capabilities of manufacturers
that will be required and capable of manufacturing the vaccine product candidate and any of its components. Manufacturing on a commercial
scale has not yet been undertaken and there are additional technical skills needed for the manufacture of MU1140 homologs that will further
limit the number of potential manufacturers. As such, if we are unable to enter into supply and processing contracts with any of these
manufacturers or processors for our NT-CoV2-1 vaccine product candidate, our MU1140 product candidates, or our other product candidates
for the conduct of clinical trials on such product candidate we may incur additional costs and delays in development and commercialization.
Problems
with these manufacturing processes such as equipment malfunctions, facility contamination, labor problems, raw material shortages or
contamination, natural disasters, power outages, terrorist activities, or disruptions in the operations of our suppliers and even minor
deviations from normal procedures, could result in product defects or manufacturing failures that result in lot failures, product recalls,
product liability claims and insufficient inventory or supply of product for the conduct of clinical trials. For example, the COVID-19
pandemic and government shutdowns in response have interrupted supply chains, the manufacture and transmission of goods and the regularity
with which manufacturers ordinarily operate. Such interruptions, unless remedied entirely, can disrupt our research and development efforts
and our clinical trials, and even if remedied, could create delays that materially impact our business.
If
we are required to find an additional or alternative source of supply, there may be additional costs and delays in the development, clinical
trial timing, or commercialization of our product candidates. Additionally, the FDA and other regulatory agencies routinely inspect manufacturing
facilities before approving a New Drug Application, or NDA, or Biologic License Application, or BLA, for a drug or biologic manufactured
at those sites. If any of our manufacturers or processors fails to satisfy regulatory requirements, the approval and eventual commercialization
of our commercial products and product candidates may be delayed.
All
of our contract manufacturers must comply with the applicable GMPs, which include quality control and quality assurance requirements
as well as the corresponding maintenance of records and documentation. If our contract manufacturers do not comply with the applicable
GMPs and other FDA regulatory requirements, we may be subject to product liability claims, the availability of marketed products for
sale could be reduced, our product commercialization could be delayed or subject to restrictions, we may be unable to meet demand for
our products and may lose potential revenues and we could suffer delays in the progress of nonclinical testing and clinical trials for
products under development. We do not have control over our third-party manufacturers’ compliance with these regulations and standards.
Moreover, while we may choose to manufacture our products ourselves in the future, we have no experience in the manufacture of pharmaceutical
or biological products for clinical trials or commercial purposes. If we decide to manufacture products, we would be subject to the regulatory
requirements described above. In addition, we would require substantial additional capital and would be subject to delays or difficulties
encountered in manufacturing pharmaceutical or biological products. Regardless of the manufacturer of our products, we will be subject
to continuing obligations regarding the submission of safety reports and other post-market information.
In
March 2022 we entered into an agreement with KBI Biopharma, Inc. for the process transfer, process optimization and cGMP manufacturing
of our vaccine candidate in anticipation of a future Phase 2 clinical trial. This agreement obligates us to make certain payments to
KBI in connection with the manufacture of our vaccine product candidate based upon our current expected timing. If the timing of our
current development plans changes, we could be required to make additional payments to KBI associated with such delays and/or associated
with the cancellation of the agreement without achieving the benefits anticipated from the agreement. Additionally, a fill/finish, packaging
and labeling company has been identified to support the Phase 1 program and is schedule for GMP manufacturing of clinical material in
2Q22.
We
rely on the significant experience and specialized expertise of our senior management and scientific team and the loss of any of our
key personnel or our inability to successfully hire their successors could harm our business.
Our
performance is substantially dependent on the continued services and on the performance of our senior management and scientific team,
who have extensive experience and specialized expertise in our business. Our performance also depends on our ability to retain and motivate
our other key employees. In February 2012 we hired Mr. Michael Sullivan, Certified Public Accountant as our Chief Financial Officer,
Mr. Sullivan also served as our Interim Principal Executive Officer from October of 2014 through June of 2016 and is currently serving
again as our Interim Principal Executive Officer as a result of the resignation of our former CEO and President in May 2021. The loss
of the services of senior management or any key employees could harm our ability to develop and commercialize our product candidates.
We have no key man life insurance policies.
In
connection with our acquisition of Noachis Terra, we added vaccine consultants and advisors, who were engaged in various capacities related
to the research and development of a SARS-CoV-2 vaccine product candidate. Our ability to successfully continue the vaccine development
depends in large part on our ability to retain certain consultants. Despite our efforts to retain these consultants, one or more may
terminate their engagement with us on short notice. The loss of the services of any of these consultants could have substantial negative
effects on our research and development efforts, which are necessary to further development of our NT-CoV2-1 vaccine product candidate.
We
need to hire and retain additional qualified scientists and other highly skilled personnel to maintain and grow our business.
Our
future success depends on our ability to identify, attract, hire, train, retain and motivate highly skilled technical, managerial and
research personnel in all areas within our organization. We plan to continue to execute on our business strategy and expect to hire additional
personnel to support our product development efforts. We believe that there are only a limited number of individuals with the requisite
skills to serve in many of our key positions, and we compete for key personnel with other more established biotechnology companies, as
well as universities and research institutions. It is often difficult to hire and retain these persons, and we may be unable to replace
key persons if they leave or be unable to fill new positions requiring key persons with appropriate experience. If we fail to attract,
integrate and retain the necessary personnel, our ability to maintain and grow our business could suffer significantly.
If
any of our product candidates are shown to be ineffective or harmful in humans, we will be unable to generate revenues from these product
candidates.
Before
obtaining regulatory approvals for the commercial sale of our product candidates, we must demonstrate through nonclinical testing and
clinical trials that our products are safe and effective for use in humans. To date the testing of the antibiotic substance MU1140 homologs
has been undertaken solely in the laboratory and in animals. We have not yet conducted human trials with any MU1140 homolog nor have
we initiated clinical trials for our NT-CoV2-1 vaccine product candidate. It is possible that when and if future lantibiotic trials and/or
our NT-CoV2-1 vaccine product candidate trials are conducted in humans, they will show that our antibiotic or vaccine candidates are
ineffective or harmful in humans. If MU1140 homologs or our vaccine product candidate are shown to be ineffective or harmful in humans,
we will be unable to commercialize and generate revenues from sales of such product candidates. If we are unable to generate revenues
from the first generation of MU1140 and homologs, or any other product candidates, our business, financial condition and results of operations
will be materially adversely affected.
Because
we are new to vaccine development, we must identify vaccines for development with our technologies and establish successful third-party
relationships.
Because
we are new to vaccine development and lack substantial experience in the research and development of vaccines, the near and long-term
viability of our SARS-CoV-2 vaccine product candidate will depend in part on our ability to successfully establish new strategic collaborations
with biotechnology companies, non-profit organizations. government agencies and other vaccine industry entities. Establishing and maintaining
strategic collaborations and obtaining government funding is difficult and time-consuming. Potential collaborators may reject collaborations
based upon their assessment of our financial, regulatory or intellectual property position or based on their internal pipeline; government
agencies may reject contract or grant applications based on their assessment of public need, the public interest, our products’
ability to address these areas, or other reasons beyond our expectations or control. If we fail to establish a strategic collaborations
or government relationships on acceptable terms, we may not be able to develop and commercialize our NT-CoV2-1 vaccine product candidate
or generate sufficient revenue to fund further research and development efforts.
Additionally,
we do not have our own clinical research and development facilities dedicated to vaccine development and manufacture. We have in the
past and may in the future engage consultants and independent contract research organizations, subject to regulatory considerations,
to design and conduct our clinical trials in connection with the development of our SARS-CoV-2 vaccine product candidate. As a result,
these important aspects of a product’s development will be outside of our direct control. Even if we establish new collaborations
or obtain government funding, these relationships may never result in the successful development or commercialization of our vaccine
product candidate for several reasons, including the fact that:
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we
may not have the ability to control the activities of our partners and cannot provide assurance that they will fulfill their obligations
to us, including with respect to the license, development and commercialization of our vaccine product candidate, in a timely manner
or at all; |
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such
partners may not devote sufficient resources to our vaccine product candidate or properly maintain or defend our intellectual property
rights; |
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any
failure on the part of our partners to perform or satisfy their obligations to us could lead to delays in the development or commercialization
of our vaccine product candidate and affect our ability to realize product revenue; and |
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disagreements,
including disputes over the ownership of technology developed with such collaborators, could result in litigation, which would be
time consuming and expensive, and may delay or terminate research and development efforts, regulatory approvals and commercialization
activities. |
Our
collaborators will be subject to the same regulatory approval of their manufacturing facility and process as us. Before we could begin
commercial manufacturing of any of our vaccine candidates, we and our collaborators must pass a pre-approval inspection before FDA approval
and comply with the FDA’s GMP regulations. If our collaborators fail to comply with these requirements, our vaccine candidate may
not be approved. If our collaborators fail to comply with these requirements after approval, we could be subject to possible regulatory
action and may be limited in the jurisdictions in which we are permitted to sell our products. If we or our collaborators fail to establish
agreements as necessary, we could be required to undertake research, development, manufacturing and commercialization activities solely
at our own expense. These activities would significantly increase our capital requirements and, given our lack of sales, marketing and
distribution capabilities, significantly delay the commercialization of our vaccine product candidate.
We
intend to seek licensing partners to cover a portion of the costs associated with obtaining regulatory approval for, and manufacturing
and marketing of, our product candidates. If we are unable to obtain agreements with third parties to fund these costs, we will have
to fund such costs ourselves or we may be unable to extract any value from these technologies.
As
we continue our development of product candidates, we intend to either license these product candidates to, or partner with, one or more
major pharmaceutical companies at the earliest possible time in their product development. If we do so, we intend for these licensees
or partners to pay the costs associated with any remaining development work, regulatory submissions, clinical trials and the manufacturing
and marketing of our product candidates. If we are unable to license our product candidates or otherwise partner with third parties,
we will have to fund the costs of our clinical trials ourselves or we will be unable to extract any value from these technologies. We
may also have to establish our own manufacturing facilities and find our own distribution channels. This would greatly increase our future
capital requirements and we cannot assure you that we would be able to obtain the necessary financing to pay these costs. If we are unable
to cover the associated costs or we cannot obtain financing on acceptable terms or at all, our business, financial condition and results
of operations will be materially adversely affected.
Our
dependence on collaborative arrangements with third parties subjects us to a number of risks. These collaborative arrangements may not
be on terms favorable to us. Agreements with collaborative partners typically allow partners significant discretion in electing whether
or not to pursue any of the planned activities. We cannot control the amount and timing of resources our collaborative partners may devote
to products based on the collaboration, and our partners may choose to pursue alternative products. Our partners may not perform their
obligations as expected. Business combinations or significant changes in a collaborative partner’s business strategy may adversely
affect a partner’s willingness or ability to complete its obligations under the arrangement. Moreover, we could become involved
in disputes with our partners, which could lead to delays or termination of the collaborations and time-consuming and expensive litigation
or arbitration. Even if we fulfill our obligations under a collaborative agreement, our partner may be able to terminate the agreement
under certain circumstances. If any collaborative partner were to terminate or breach our agreement with it, or otherwise fail to complete
its obligations in a timely manner, our chances of successfully commercializing our product candidates would be materially and adversely
affected.
We
might not be successful at acquiring, investing in or integrating businesses, entering into joint ventures or divesting businesses.
We
expect to continue pursuing strategic acquisitions, investments and joint ventures to enhance or add to our skills and capabilities or
offerings of services and solutions, or to enable us to expand in certain geographic and other markets. Depending on the opportunities
available, we may increase the amount of capital invested in such opportunities. We may not succeed in completing targeted transactions,
including as a result of the market becoming increasingly competitive, or achieve desired results of operations. Furthermore, we face
risks in successfully integrating any businesses we might acquire or create through a joint venture. Ongoing business may be disrupted,
and our management’s attention may be diverted by acquisition, investment, transition or integration activities. In addition, we
might need to dedicate additional management and other resources, and our organizational structure could make it difficult for us to
efficiently integrate acquired businesses into our ongoing operations and assimilate and retain employees of those businesses into our
culture and operations. The loss of key executives, employees, customers, suppliers, vendors and other business partners of businesses
we acquire may adversely impact the value of the assets, operations or businesses. Furthermore, acquisitions or joint ventures may result
in significant costs and expenses, including those related to retention payments, equity compensation, severance pay, early retirement
costs, intangible asset amortization and asset impairment charges, assumed litigation and other liabilities, and legal, accounting and
financial advisory fees, which could negatively affect our profitability. We may have difficulties as a result of entering into new markets
where we have limited or no direct prior experience or where competitors may have stronger market positions. We might fail to realize
the expected benefits or strategic objectives of any acquisition, investment or joint venture we undertake. We might not achieve our
expected return on investment or may lose money. We may be adversely impacted by liabilities that we assume from a company we acquire
or in which we invest, including from that company’s known and unknown obligations, intellectual property or other assets, terminated
employees, current or former clients or other third parties. In addition, we may fail to identify or adequately assess the magnitude
of certain liabilities, shortcomings or other circumstances prior to acquiring, investing in or partnering with a company, including
potential exposure to regulatory sanctions or liabilities resulting from an acquisition target’s previous activities, internal
controls and security environment. If any of these circumstances occurs, they could result in unexpected legal or regulatory exposure,
unfavorable accounting treatment, unexpected increases in taxes or other adverse effects on our business. In addition, we have a lesser
degree of control over the business operations of the joint ventures and businesses in which we have made minority investments or in
which we have acquired less than 100% of the equity. This lesser degree of control may expose us to additional reputational, financial,
legal, compliance or operational risks. Litigation, indemnification claims and other unforeseen claims and liabilities may arise from
the acquisition or operation of acquired businesses. For example, we may face litigation or other claims as a result of certain terms
and conditions of the acquisition agreement, such as earnout payments or closing net asset adjustments. Alternatively, shareholder litigation
may arise as a result of proposed acquisitions. If we are unable to complete the number and kind of investments for which we plan, or
if we are inefficient or unsuccessful at integrating any acquired businesses into our operations, we may not be able to achieve our planned
rates of growth or improve our market share, profitability or competitive position in specific markets or services. We also periodically
evaluate, and have engaged in, the disposition of assets and businesses. Divestitures could involve difficulties in the separation of
operations, services, products and personnel, the diversion of management’s attention, the disruption of our business and the potential
loss of key employees. After reaching an agreement with a buyer for the disposition of a business, the transaction may be subject to
the satisfaction of pre-closing conditions, including obtaining necessary regulatory and government approvals, which, if not satisfied
or obtained, may prevent us from completing the transaction. Divestitures may also involve continued financial involvement in or liability
with respect to the divested assets and businesses, such as indemnities or other financial obligations, in which the performance of the
divested assets or businesses could impact our results of operations. Any divestiture we undertake could adversely affect our results
of operations.
We
may face product liability exposure, and if successful claims are brought against us, we may incur substantial liability if our insurance
coverage for those claims is inadequate.
We
face an inherent risk of product liability as a result of the clinical testing of our product candidates and will face an even greater
risk if we commercialize any products. This risk exists even if a product is approved for commercial sale by the FDA and manufactured
in facilities regulated by the FDA or an applicable foreign regulatory authority. Our products and product candidates are designed to
affect bodily functions and processes. Any side effects, manufacturing defects, misuse or abuse associated with our product candidates
could result in injury and possibly death to a patient. An inability to obtain sufficient insurance coverage on commercially reasonable
terms or otherwise to protect against potential product liability claims could inhibit our business.
In
addition, a liability claim may be brought against us even if our product candidates merely appear to have caused an injury. Product
liability claims may be brought against us by consumers, healthcare providers, pharmaceutical companies or others selling or otherwise
coming into contact with our product candidates, among others. If we cannot successfully defend ourselves against product liability claims
we will incur substantial liabilities and reputational harm. In addition, regardless of merit or eventual outcome, product liability
claims may result in:
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of clinical trial participants; |
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termination
of clinical trial sites or entire trial programs; |
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inability to commercialize our product candidates; |
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decreased
demand for our product candidates; |
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impairment
of our brand and/or reputation; |
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product
recall or withdrawal from the market or labeling, marketing or promotional restrictions; |
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substantial
costs of any related litigation or similar disputes; |
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distraction
of management’s attention and other resources from our primary business; |
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substantial
monetary awards to patients or other claimants against us that may not be covered by insurance; or |
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loss
of potential revenue. |
Although
we may maintain product liability insurance coverage for clinical trials, our insurance coverage may not be sufficient to cover all of
our product liability-related expenses or losses and may not cover us for any expenses or losses we suffer. Moreover, insurance coverage
is becoming increasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost, in sufficient
amounts or upon adequate terms to protect us against losses due to product liability, particularly if any of our product candidates receive
regulatory approval. Further, a successful product liability claim or series of claims brought against us could cause our stock price
to decline and, if judgments exceed our insurance coverage, could decrease our cash and harm our business, financial condition, operating
results and prospects.
We
may be adversely affected by natural disasters, pandemics and other catastrophic events, and by man-made problems such as terrorism,
that could disrupt our business operations and our business continuity and disaster recovery plans may not adequately protect us from
a serious disaster.
Our
corporate headquarters is located in Tampa, Florida, a hurricane zone. If a disaster, power outage or other event occurred that prevented
us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as enterprise financial systems,
manufacturing resource planning or enterprise quality systems, or that otherwise disrupted operations, it may be difficult or, in certain
cases, impossible for us to continue our business for a substantial period of time. Our contract manufacturers’ and suppliers’
facilities are located in multiple locations, where other natural disasters or similar events, such as blizzards, tornadoes, fires, explosions
or large-scale accidents or power outages, and other public health emergencies could severely disrupt our operations and have a material
adverse effect on our business, financial condition, operating results and prospects. For example, the recent COVID-19 pandemic may cause
significant disruption to our business operations, the operations of our third-party contractors and suppliers and the operations of
our clinical trials, including as a result of significant restrictions or bans on travel into and within the geographic areas in which
our manufacturers product our product candidates or where we conduct our clinical trials. A public health emergency could also affect
the operations of the FDA and other regulatory or public health authorities, resulting in delays to meetings related to planned or completed
clinical trials and ultimately of reviews and approvals of our product candidates. Such disruption could impede, delay, limit or prevent
our employees and third-party contractors from beginning or continuing research and development or clinical trial-related activities,
which may impede, delay, limit or prevent initiation or completion of our ongoing clinical trials and pre-clinical research and ultimately
lead to the delay or denial of regulatory approval of our product candidates, which could seriously harm our operations and financial
condition.
In
addition, acts of terrorism and other geo-political unrest could cause disruptions in our business or the businesses of our partners,
manufacturers or the economy as a whole. All of the aforementioned risks may be further increased if we do not implement a disaster recovery
plan or our partners’ or manufacturers’ disaster recovery plans prove to be inadequate. To the extent that any of the above
should result in delays in the regulatory approval, manufacture, distribution or commercialization of our product candidates, our business,
financial condition, operating results and prospects would suffer.
Our
ability to use our net operating loss carryforwards and certain other tax attributes may be limited, each of which could harm our business.
As
of December 31, 2021, we had U.S. federal and state net operating loss carryforwards of approximately $145,260,000. We also accumulated
U.S. federal and state research tax credits of approximately $4,027,000 as of December 31, 2021 Under Sections 382 and 383 of the Internal
Revenue Code (the “Code”), if a corporation undergoes an “ownership change,” the corporation’s ability
to use its pre-ownership change net operating loss carryforwards and other pre-ownership change tax attributes, such as research tax
credits, to offset its post-ownership change income and taxes may be limited. In general, an ownership change will occur when the percentage
of the Corporation’s ownership (by value) of one or more “5-percent shareholders” (as defined in the Code) has increased
by more than 50 percent over the lowest percentage owned by such shareholders at any time during the prior three years (calculated on
a rolling basis). Similar rules may apply under state tax laws. An entity that experiences an ownership change generally will be subject
to an annual limitation on its pre-ownership change tax loss and credit carryforwards equal to the equity value of the corporation immediately
before the ownership change, multiplied by the long-term, tax-exempt rate posted monthly by the IRS (subject to certain adjustments).
The annual limitation would be increased each year to the extent that there is an unused limitation in a prior year. In the event that
it is determined that we have in the past experienced an ownership change as a result of transactions in our stock, or if we experience
one or more ownership changes as a result of future transactions in our stock, then we may be limited in our ability to use our net operating
loss carryforwards and other tax assets to reduce taxes owed on the net taxable income that we earn. Any limitations on the ability to
use our net operating loss carryforwards and other tax assets could harm our business.
Our
auditor has expressed substantial doubt about our ability to continue as a going concern and absent additional financing we may be unable
to remain a going concern.
In
light of our recurring losses, accumulated deficit and negative cash flow as described in our notes to our audited consolidated financial
statements, the report of our independent registered public accounting firm on our consolidated financial statements for the year ended
December 31, 2021 contained an explanatory paragraph raising substantial doubt about our ability to continue as a going concern. Our
financial statements did not include any adjustments that may have been necessary in the event we were unable to continue as a going
concern. If we are unable to establish to the satisfaction of our independent registered public accounting firm that the net proceeds
from our financing efforts will be sufficient to allow for the removal of this going concern qualification, we may need to significantly
modify our operational plans for us to continue as a going concern. We believe we can continue our current level of operations with the
cash we have on hand without additional financing through the fourth quarter of 2022. Absent sufficient additional financing, we may
be unable to remain a going concern.
Risks
Related to Our Intellectual Property and Data Security and Privacy
Our
vaccine research and development efforts are to a large extent dependent upon our intellectual property and biologicals materials license
with the Licensors.
An
important element of our intellectual property portfolio are our License Agreements. Pursuant to the NIH Patent License and Biological
Materials License Agreement, we hold a nonexclusive, worldwide license to certain specified patent rights (including patent applications,
provisional patent applications and PCT patent applications) and biological materials relating to the use of prefusion coronavirus spike
proteins for the purpose of developing and commercializing a vaccine product candidate for SARS-CoV-2. This intellectual property and
biological materials license are essential to our operations and our ability to research and develop our NT-CoV2-1 vaccine product candidate.
The terms of the license agreement will terminate upon the earlier of (a) twenty (20) years from the first commercial sale where no licensed
patent rights exist or have ceased to exist or (b) the expiration of the last to expire of any licensed patent rights. Additionally,
we must use reasonable commercial efforts to develop, manufacture, and commercialize our vaccine product candidate, to manufacture our
vaccine product candidate substantially within the United States and provide the United States public with reasonable access to our vaccine,
if approved for commercialization by the FDA. If we breach the terms of the license agreement, including any failure to make minimum
royalty payments required thereunder or failure to reach certain developmental milestones, using best efforts to introduce a licensed
product or practice a licensed process in certain territories by certain dates, the NIAID has the right to terminate the license.
If
we were to lose or otherwise be unable to maintain the License Agreements on acceptable terms, or find that it is necessary or appropriate
to secure new licenses from other third parties, it would halt our ability to continue to develop our NT-CoV2-1 vaccine product candidate,
which would have an immediate material adverse effect on our business, operating results and financial condition. Thus, our inability
to retain the rights and technologies identified by the licenses, or those that we may in the future identify, could have a material
adverse impact on our ability to complete the development of our vaccine product candidate. No assurance can be given that we will be
successful in licensing any additional rights or technologies from the Licensors or others. If we fail to retain the License Agreements
or if we fail to obtain additional rights and licenses necessary to further the development and commercialization of our vaccine product
candidate, our planned development for our vaccine product candidate may be materially impacted and the costs associated with the development
may increase significantly, and we may be entirely unable to complete development of a SARS-CoV-2 vaccine product candidate.
We
may incur additional expenses and obligations in connection with our License Agreements.
We
must use reasonable commercial efforts to bring to market a vaccine product candidate covered by our licenses, which means we must adhere
to an existing commercial development plan and existing performance benchmarks. Additionally, we are obliged to pay to the Licensors
certain minimum annual royalties, certain benchmark-related royalties and royalties based upon a share of any net sales of our vaccine
product candidate, following regulatory approval and the first commercial sale. Additionally, among other obligations, we must provide
regular written reports to the Licensors on the development status of our vaccine product candidate and pay for our pro rata share of
the NIH’s patent prosecution-related expenses and fees. Moreover, we must use reasonable commercial efforts to develop, manufacture,
and commercialize the vaccine product candidate, to manufacture the vaccine product candidate substantially within the United States
and or Canada and provide the United States and Canadian public with reasonable access to the vaccine, if approved for commercialization
by the FDA and Canadian regulatory agencies. All of these additional obligations beyond ordinary research and development and regulatory
compliance related to the approval of our vaccine product candidate may impose delays or greater costs upon our ability to timely develop
our vaccine product candidate.
Although
our forecasts for expenses and the sufficiency of our capital resources will take into account the funds available for the research and
development of our vaccine product candidate development, our actual cash requirements may vary materially from our current expectations
for a number of other factors that may include, but are not limited to, changes in the focus and direction of our development programs,
competitive and technical advances, costs associated with the development of our product candidates and our share of the costs of filing,
prosecuting, defending and enforcing the intellectual property rights covered by the NIH license. If we exhaust the funds available for
the development of NT-CoV2-1 more quickly than anticipated, regardless of the reason, and we are unable to obtain additional financing
on terms acceptable to us or at all, we may be unable to meet our obligations under the License Agreements, which may be terminated,
and we will be unable to proceed with development of our product candidates on expected timelines and will be forced to prioritize among
them.
The
intellectual property covered by our License Agreements concerns patent applications and provisional applications. We cannot assure investors
that any of the currently pending or future patent applications will result in granted patents, nor can we predict how long it will take
for such patents to be granted.
The
intellectual property covered by the License Agreements concerns certain, specified patent rights (including patent applications, provisional
patent applications and PCT patent applications). Although the Licensors have agreed to assume responsibility for the preparation, filing,
prosecution and maintenance of all patent applications covered by the licensed patent rights, we cannot be certain as to when or if final
patents will be issued for those patent applications covered by the licensed patent rights. However, the Licensors may not successfully
prosecute certain patent applications, the prosecution of which they control, under which we are only a licensee and on which our business
substantially depends. Even if patents issue from these applications, the Licensors may fail to maintain these patents, may decide not
to pursue litigation against third-party infringers, may fail to prove infringement or may fail to defend against counterclaims of patent
invalidity or unenforceability.
Moreover,
it is possible that the licensed pending patent applications will not result in granted patents, and even if such pending patent applications
grant as patents, they may not provide a basis for intellectual property protection of commercially viable vaccine products or may not
provide us with any competitive advantages. Further, it is possible that, for any of the patents that may be granted in the future, others
will design around the Licensors’ patent rights or identify methods for preventing or treating SARS-CoV-2 that do not concern the
rights covered by our licenses. Further, we cannot assure investors that other parties will not challenge any patents granted to the
Licensors or that courts or regulatory agencies will hold Licensors’ patents to be valid or enforceable. We cannot guarantee investors
that, if required to defend the covered patents, we will be successful in defending challenges made against the Licensors’ patents
and patent applications. Any successful third-party challenge to the NIH patents could result in the unenforceability or invalidity of
such patents, or to such patents being interpreted narrowly or otherwise in a manner adverse to our interests. Our ability to establish
or maintain a technological or competitive advantage over our competitors may be diminished because of these uncertainties.
Risks
with respect to the Licensors and our License Agreements may also arise out of circumstances beyond our control. In spite of our best
efforts, the Licensors may conclude that we have materially breached the license agreement and may therefore terminate the agreement,
thereby removing our ability to market vaccine product candidates covered by the agreement. If the License Agreement are terminated,
or if the underlying patents fail to provide the intended market protection, competitors would have the freedom to seek regulatory approval
of, and to market, products similar or identical to ours. Moreover, if the License Agreements are terminated, the Licensors may be able
to prevent us from utilizing the technology covered by the licensed patent rights. This could have a material adverse effect on our competitive
business position and our financial condition, results of operations and our business prospects.
We
cannot prevent the Licensors or other companies, including our competitors, from licensing the same intellectual property and biological
materials that we have licensed or from otherwise duplicating our business model and operations.
Our
License Agreements are nonexclusive licenses and we are not permitted to sublicense the intellectual property or biological materials
covered by the license. Therefore, we cannot be certain that the Licensors have not previously licensed, or that the Licensors will not,
in the future, license the intellectual property or biological materials to other biotechnology companies, including those who intend
to develop a vaccine product candidate for SARS-CoV-2, some or all of the nonexclusive intellectual property and biological materials
available to us under the License Agreements. Moreover, we do not currently own any exclusive rights or licenses necessary to fully develop
our NT-CoV2-1 vaccine product candidate, and such rights or licenses, if in existence, could be held by our competitors or used by other
third parties to otherwise directly compete against us. If our competitors or others have or acquire exclusive rights or licenses that
they could enforce against us, then we may be required to alter our products, pay licensing fees or cease activities. If our products
conflict with rights or licenses of others, third parties could bring legal actions against us or our collaborators, licensees, suppliers
or customers, claiming damages and seeking to enjoin manufacturing and marketing of the affected products. If these legal actions are
successful, in addition to any potential liability for damages, we could be required to obtain a license in order to continue to manufacture
or market the affected products. We may not prevail in any legal action and a required license under the patent may not be available
on acceptable terms or at all. Accordingly, while we may develop, acquire or license the additional technologies necessary to the development
of our vaccine candidate we cannot assure you that we will be able to develop, acquire or license such technologies or that alternatives
will be sufficient to enable development of our NT-CoV2-1 vaccine product candidate or to prevent others from competing with us and developing
substantially-similar products.
We
may be subject to claims challenging the inventorship of our patents and other intellectual property.
We
or the Licensors may be subject to claims that former employees, collaborators or other third parties have an interest in the licensed
patents or other intellectual property as an inventor or co-inventor. For example, we or the Licensors may have inventorship disputes
arise from conflicting obligations of employees, consultants or others who are involved in developing the intellectual property covered
by the License Agreements or our product candidates. Litigation may be necessary to defend against these and other claims challenging
inventorship or our license or the Licensors’ ownership, as applicable, of the licensed patents, trade secrets or other intellectual
property. If we or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual
property rights, such as our right to use intellectual property that is important to our NT-CoV2-1 vaccine product candidate. Even if
we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and
other employees. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations
and prospects.
Changes
in patent law or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect our product
candidates.
The
United States has recently enacted and is currently implementing wide-ranging patent reform legislation. Further, recent United States
Supreme Court rulings have either narrowed the scope of patent protection available in certain circumstances or weakened the rights of
patent owners in certain situations. Moreover, patent law and protection in foreign countries, particularly developing countries, may
be insufficient or otherwise unclear in its efficacy to protect our intellectual property. In addition to increasing uncertainty with
regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the scope and
value of patents, once obtained.
For
our U.S. patent applications containing a priority claim after March 16, 2013, there is a greater level of uncertainty in the patent
law. In September 2011, the Leahy-Smith America Invents Act, also known as the America Invents Act, or AIA, was signed into law. The
AIA includes a number of significant changes to U.S. patent law, including provisions that affect the way patent applications will be
prosecuted and may also affect patent litigation. The USPTO is currently developing regulations and procedures to govern administration
of the AIA, and many of the substantive changes to patent law associated with the AIA. It is not clear what other, if any, impact(s)
the AIA will have on the operation of our business. Moreover, the AIA and its implementation could increase the uncertainties and costs
surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have
an adverse effect on our business. One important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned
to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are
filed by different parties claiming the same invention. A third party who files a patent application with the USPTO after such date but
prior to us may therefore be awarded a patent covering an invention of ours even if we were the first to invent. This “first-inventor-to-file”
system will require us both to remain cognizant, going forward, of the timing between invention and filing of a patent application.
Among
some of the other changes introduced by the AIA are those that (i) limit where a patentee may file a patent infringement suit and (ii)
provide opportunities for third parties to challenge any issued patent in the USPTO. Such changes apply to all of our U.S. patents, even
those issued prior to March 16, 2013. Because of a lower evidentiary standard in USPTO proceedings, as compared to the evidentiary standard
applied in U.S. federal courts, necessary to invalidate a patent claim, a third party could potentially present evidence in a USPTO proceeding
sufficient for the USPTO to find a claim invalid, notwithstanding that the same evidence would be insufficient to invalidate a claim
first presented in a district court action. Accordingly, a third party may attempt opportunistically to use USPTO procedures to invalidate
our patent claims.
Depending
on decisions by the United States Congress, the U.S. federal courts, the USPTO or similar authorities in foreign jurisdictions, the laws
and regulations governing patents could change in unpredictable ways that may weaken our and our licensors’ abilities to obtain
new patents or to enforce existing patents we and our licensors or partners may obtain in the future.
If
we are unable to protect our trademarks or other intellectual property from infringement, our business prospects may be harmed.
We
have applied for trademark protection for trademarks in the United States, the European Union and China. Although we take steps to monitor
the possible infringement or misuse of our trademarks, it is possible that third parties may infringe, dilute or otherwise violate our
trademark rights. Any unauthorized use of our trademarks or other intellectual property rights could harm our reputation or commercial
interests. Moreover, our License Agreements do not commit to defend any declaratory judgment action alleging the invalidity of any of
the licensed patent rights covered by the license, nor does the NIAID commit to commence legal actions against third parties alleged
to infringe upon those licensed patent rights. Our enforcement against third-party infringers or violators may be unduly expensive and
time-consuming, and any remedy obtained may constitute insufficient redress relative to the damages we may suffer.
We
may not be able to protect our intellectual property rights throughout the world.
Filing,
prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive. The
requirements for patentability may differ in certain countries, particularly developing countries. In addition, the laws of some foreign
countries do not protect intellectual property rights to the same extent as laws in the United States. Consequently, we may not be able
to prevent third parties from practicing our inventions in all countries outside the United States. Competitors may use our technologies
in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing
products to territories where we have patent protection insufficient to guard against such infringement. These products may compete with
our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
The
legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual
property protection, particularly those relating to pharmaceuticals. In such instances, we may be unable to enjoin or otherwise prevent
infringement of our patents or marketing of competing products in violation of our proprietary rights, generally. Proceedings to enforce
our patent rights in foreign jurisdictions could (i) result in substantial costs and divert our efforts and attention from other aspects
of our business, (ii) put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not
issuing and (iii) provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages
or other remedies awarded, if any, may not be commercially meaningful. In addition, certain countries in Europe and certain developing
countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In those countries,
we may be unable to seek adequate remedies to address infringement and/or material diminishment of the value of our patents, which could
limit our potential revenue opportunities in such jurisdictions. Accordingly, our efforts to establish or enforce our intellectual property
rights around the world may be inadequate to obtain a significant commercial advantage from our intellectual property. Finally, our ability
to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property
laws.
If
we fail to comply with our obligations under our intellectual property license agreements, we could lose our license rights that are
important to our business and development of our product candidates.
The
License Agreements impose various royalty and other obligations on us as well as development plans. If we fail to comply with these obligations,
our licensors may have the right to terminate the license, in which event we may not be able to develop or market the affected product
candidate. The License Agreements may be terminated in the event of a breach. The loss of such rights could materially adversely affect
our business, financial condition, operating results and prospects.
If
we are sued for infringing intellectual property rights of third parties, it will be costly and time-consuming and an unfavorable outcome
in that litigation could have a material adverse effect on our business.
Our
commercial success depends upon our ability to develop, manufacture, market, and sell our product candidates and use our proprietary
technologies without infringing the proprietary rights of third parties. We cannot guarantee that marketing and selling such candidates
and using such technologies will not infringe existing or future patents. Numerous U.S. and foreign issued patents and pending patent
applications owned by third parties exist in the fields relating to our product candidates. As the biotechnology and pharmaceutical industries
expand and more patents issue, the risk increases that others may assert that our product candidates, technologies or methods of delivery
or use infringe their patent rights. Moreover, it is not always clear to industry participants, including us, which patents cover various
drugs, biologics, drug delivery systems or their methods of use, and which of these patents may be valid and enforceable. Thus, due to
the large number of patents issued and patent applications filed in our fields, third parties may allege they have patent rights encompassing
our product candidates, technologies or methods.
In
addition, our product candidates or proprietary technologies may infringe patents owned and/or filed by third parties, or third parties
may allege such infringement. Because (i) some patent applications in the United States may be maintained in secrecy until the patents
are issued, (ii) patent applications in the United States and many foreign jurisdictions are typically not published until 18 months
after filing and (iii) publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others
have not filed patent applications for technology covered by our own and in-licensed issued patents or our pending applications. Our
competitors may have filed, and may in the future file, patent applications covering our product candidates or technology similar to
ours. Any such patent application may have priority over our own and in-licensed patent applications or patents, which could further
require us to obtain rights to issued patents covering such technologies. If another party has filed a U.S. patent application on inventions
similar to those owned or in-licensed to us, we or, in the case of in-licensed technology, the licensor may have to participate, in the
United States, in an interference proceeding to determine priority of invention.
We
may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging
that our product candidates or proprietary technologies infringe such third parties’ intellectual property rights, including litigation
resulting from filing under Paragraph IV of the Hatch-Waxman Act. Such lawsuits can be costly and could adversely affect our operating
results and divert the attention of managerial and technical personnel, even if we do not infringe such patents or the patents asserted
against us are later invalidated. A court may, however, decide that we are infringing the third party’s patents and order us to
cease the activities covered by the patents. In addition, there is a risk that a court will order us to pay to such third-party damages
for having violated the other party’s patents.
As
a result of patent infringement claims, or to avoid potential claims, we may choose or be required to seek licenses from third parties.
These licenses may not be available on commercially acceptable terms, or at all. Even if we are able to obtain a license, the license
would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, which could result
in our competitors gaining access to the same intellectual property, or such rights might be restrictive and limit our present and future
activities. Ultimately, we or a licensee could be prevented from commercializing a product, or forced to cease some aspect of our business
operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.
In
addition to possible infringement claims against us, we may become a party to other patent litigation and other proceedings, including
interference, derivation, re-examination or other post-grant proceedings declared or granted by the USPTO, and similar proceedings in
foreign countries, regarding intellectual property rights with respect to our current or future products.
There
is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and pharmaceutical
industries, generally. To date, no litigation asserting infringement claims has ever been brought against us. If a third-party claims
that we infringe its intellectual property rights, we may face a number of issues, including:
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infringement
and other intellectual property claims which, regardless of merit, may be expensive and time-consuming to litigate and may divert
our management’s attention from our core business; |
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substantial
damages for infringement, which we may have to pay if a court decides that the product or technology at issue infringes or violates
the third party’s rights, and if the court finds that the infringement was willful, we could be ordered to pay treble damages
and the patent owner’s attorneys’ fees; |
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a
court prohibiting us from selling or licensing the product or using the technology unless the third party licenses its intellectual
property rights to us, which it is not required to do; |
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if
a license is available from a third party, we may have to pay substantial royalties or upfront fees or grant cross-licenses to intellectual
property rights for our products or technologies; and |
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redesigning
our products or processes so they do not infringe, which may not be possible or may require substantial monetary expenditures and
time. |
Some
of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially
greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could harm our ability
to raise additional funds or otherwise adversely affect our business, financial condition, operating results and prospects.
Because
we rely on certain third-party licensors and partners, and will continue to do so in the future, if one of our licensors or partners
is sued for infringing a third party’s intellectual property rights, our business, financial condition, operating results and prospects
could suffer in the same manner as if we were sued directly. In addition to facing litigation risks, we have agreed to indemnify certain
third-party licensors and partners against claims of infringement caused by our proprietary technologies, and we have entered or may
enter into cost-sharing agreements with some our licensors and partners that could require us to pay some of the costs of patent litigation
brought against those third parties whether or not the alleged infringement is caused by our proprietary technologies. In certain instances,
these cost-sharing agreements could also require us to assume greater responsibility for infringement damages than our technology alone
would otherwise suggest.
We
may become involved in lawsuits to protect or enforce our patents or other intellectual property or the patents of our licensors, which
could be expensive and time-consuming.
Competitors
may infringe our intellectual property, including our patent applications or the patents of our licensors. As a result, we may be required
to file infringement claims to stop third-party infringement or unauthorized use. Such proceedings and/or litigation can be expensive
– particularly for a company of our size – and time-consuming. In addition, in an infringement proceeding, a court may decide
that a patent of ours is not valid or is unenforceable, or may refuse to enjoin the other party from using the technology at issue on
the grounds that our patent claims do not cover its technology or that the factors necessary to grant an injunction are not satisfied.
An adverse determination in such case could put one or more of our patents at risk of being invalidated, interpreted narrowly or amended
such that they fail to cover or otherwise protect our product candidates. Moreover, such adverse determinations could subject our patent
applications to the risk that they will not issue, or issue with limited and potentially inadequate scope to cover our product candidates.
Interference,
derivation or other proceedings brought at the USPTO may be necessary to determine the priority or patentability of inventions with respect
to our patent applications or those of our licensors or potential partners. Litigation or USPTO proceedings brought by us may fail or
may be invoked against us by third parties. Even if we are successful, domestic or foreign litigation, or USPTO or foreign patent office
proceedings may result in substantial costs and distraction to our management. We may not be able, alone or with our licensors or potential
partners, to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights
as fully as in the United States.
Furthermore,
because of the substantial amount of discovery required in connection with intellectual property litigation or other proceedings, there
is a risk that we may, intentionally or incidentally, disclose some of our confidential results of hearings, motions or other interim
proceedings or developments or public access to related documents. If investors perceive these results to be negative, the market price
for our common stock could be significantly harmed.
Our
success will depend on our ability to partner or sub-license our product candidates and their subsequent successful commercialization.
Our
MU1140 homologs product candidate is in early-stage development and is expected to require partners with substantial financial resources
to continue the development of the product to commercialization. In addition, the product candidate has not received regulatory approval
in any jurisdiction and it may never receive approval or, if approvals are obtained, may never be commercialized successfully. In addition,
we do not know whether any of our clinical trials will be successful or can be completed within our current expected budget. For our
MU1140 homologs and other antibiotic product candidates, we have performed nonclinical testing using native MU1140 and expect to continue
to pursue the nonclinical testing of our MU1140 homologs and other antibiotic product candidates during 2022. We would expect the IND
for a first-in-human clinical trial of a lantibiotic compound to be filed with the FDA based on our ability to identify a new lead compound
and complete the requisite pre-clinical studies, contingent on sufficient funding. Even if we are able to partner and conduct successful
clinical trials or the required regulatory approvals are obtained, we may never be able to generate significant revenues from our MU1140
homologs or other antibiotic product candidates or other product candidates. If our MU1140 homologs product candidate or our other product
candidates under the Lantibiotics Program are unsuccessful, we may be unable to generate sufficient revenues to sustain and grow our
business, and our business, financial condition and results of operations will be materially adversely affected.
If
our intellectual property rights do not adequately protect our products or product candidates, or if third parties claim we are infringing
their intellectual property rights, others could compete against us more directly or we could be subject to significant litigation. Such
results could prevent us from marketing our products or product candidates and hurt our profitability.
Our
product and product candidates are protected by patents and patent applications. Our success depends in part on our ability to obtain
patents or rights to patents, protect trade secrets, operate without infringing upon the proprietary rights of others, and prevent others
from infringing on our patents, trademarks and other intellectual property rights. We will be able to protect our intellectual property
from unauthorized use by third parties only to the extent that it is covered by valid and enforceable patents, trademarks and licenses.
Patent protection generally involves complex legal and factual questions and, therefore, enforceability of patent rights cannot be predicted
with certainty. Patents, if issued, may be challenged, invalidated or circumvented. Thus, any patents that we own or license from others
may not provide adequate protection against competitors. In addition, any future patent applications may fail to result in patents being
issued. Also, those patents that are issued may not provide us with adequate proprietary protection or competitive advantages against
competitors with similar product candidates. Moreover, the laws of certain foreign countries do not protect intellectual property rights
to the same extent as do the laws of the United States.
In
addition to patents and trademarks, we rely on trade secrets and proprietary know-how. We seek protection of these rights, in part, through
confidentiality and proprietary information agreements. These agreements may not provide meaningful protection or adequate remedies for
violation of our rights in the event of unauthorized use or disclosure of confidential and proprietary information. Failure to protect
our proprietary rights could seriously impair our competitive position.
In
the event of an infringement or violation, we may face litigation and may be prevented from pursuing product development or commercialization.
We may receive in the future, notice of claims of infringement of other parties’ proprietary rights. We may not have the financial
resources to defend against claims of infringement by other parties or to prosecute third parties for infringement of our intellectual
property. Infringement or other claims could be asserted or prosecuted against us in the future and it is possible that past or future
assertions or prosecutions could harm our business.
Our
business and operations would suffer in the event of cybersecurity/information systems risk.
Despite
the implementation of security measures, our internal computer systems, and those of our manufacturers and other third parties on which
we rely, are vulnerable to damage from computer viruses, malware, ransomware, unauthorized access, natural disasters, fire, explosions
or large-scale accidents, power outages or surges, terrorism, successful breaches, employee malfeasance, or human or technological error,
war and telecommunication and electrical failures. In addition, our systems safeguard important confidential personal data regarding
our subjects. If a disruption event were to occur and cause interruptions in our operations, it could result in a material disruption
of our drug development programs. For example, the loss of clinical trial data from completed, ongoing or planned clinical trials could
result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent
that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential
or proprietary information, we could incur liability and the further development of our product candidates could be delayed.
We
may incur costs of addressing a cybersecurity incident.
Cybersecurity
incidents have increased in number and severity recently and it is expected that these trends will continue. Should we be affected by
such an incident, we may incur substantial costs and suffer other negative consequences, which may include:
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investigation
costs and costs to engage specialized consultants or costs of ransom demands; |
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remediation
costs, such as liability for stolen assets or information, repairs of system damage, and incentives to customers or business partners
in an effort to maintain relationships after an attack; and |
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litigation
and legal risks, including regulatory actions by state and federal regulators. |
Our
business and operations would suffer in the event of failures in our internal computer systems or those of our collaborators.
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 computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication
and electrical failures. While we have not experienced any such material system failure, accident or security breach to date, if such
an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs
and our business operations. For example, the loss of clinical development or manufacturing records or clinical trial data from completed
or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or
reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications,
or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our product
candidates could be delayed.
Risks
Related to Government Regulations
Our
product candidates are subject to substantial government regulation, including the regulation of nonclinical testing and clinical trials.
If we are unable to obtain regulatory approval for our product candidates, we will be unable to generate revenues.
The
production and marketing of products which may be developed from our NT-CoV2-1 vaccine product candidate, and our MU1140 homologs, or
otherwise and our research and development, nonclinical testing and clinical trial activities are subject to extensive regulation and
review by numerous governmental authorities. Most of the product candidates we are developing must undergo rigorous nonclinical testing
and clinical trials and an extensive regulatory approval process before they can be marketed in the United States or internationally.
If
we fail to obtain regulatory approval for our product candidates, we may have to cease further development. Clinical trials on our product
candidates are expected to take several years to fully complete. The commencement or completion of nonclinical studies or clinical trials
can be delayed or prevented for a number of reasons, including:
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limitations
directly caused by, or restrictions imposed in response to, the COVID-19 pandemic, including our ability to conduct research and
development and clinical trials, to engage or continue to engage with third-party contractors and suppliers or to comply with regulatory
obligations relating to our business; |
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an
inability to raise sufficient capital to commence, conduct, or complete pre-clinical testing and clinical trials; |
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difficulties
in finding a partner with the resources to support large and expensive clinical development and commercialization costs; |
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findings
in nonclinical trials; |
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difficulties
obtaining regulatory approval to commence a clinical trial or complying with conditions imposed by a regulatory authority regarding
the scope or term of a clinical trial; |
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delays
in reaching or failing to reach agreement on acceptable terms with prospective contract research organizations, or CROs, and trial
sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; |
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insufficient
or inadequate supply or quality of a product candidate or other materials necessary to conduct our clinical trials; |
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difficulties
obtaining institutional review board, or IRB, approval to conduct a clinical trial at a prospective site; |
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challenges
recruiting and enrolling patients to participate in clinical trials for a variety of reasons, including the size and nature of patient
population, proximity of patients to clinical sites, eligibility criteria for the trial, nature of the trial protocol, the availability
of approved effective treatments for the relevant condition and competition from other clinical trial programs for similar indications; |
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severe
or unexpected drug or biologic-related side effects experienced by patients in a clinical trial; and |
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difficulties
retaining patients who have enrolled in a clinical trial but may be prone to withdraw due to rigors of the trial, lack of efficacy,
side effects, or personal issues, or who are lost to further follow up. |
Clinical
trials also may be delayed or terminated as a result of ambiguous or negative interim results. In addition, a clinical trial may be suspended
or terminated by us, the FDA, the IRBs at the sites where the IRBs are overseeing a trial, or a data safety monitoring board, or DSMB,
overseeing the clinical trial at issue, or other regulatory authorities due to a number of factors, including:
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failure
to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols; |
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inspection
of the clinical trial operations or trial sites by the FDA or other regulatory authorities; |
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inspection
of manufacturing and drug packaging operations by regulatory authorities; |
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unforeseen
safety issues or lack of effectiveness; and |
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lack
of adequate funding to continue the clinical trial. |
We
cannot assure you that clinical trials will demonstrate the safety or effectiveness of any of our product candidates, or will otherwise
satisfy regulatory requirements. Our nonclinical studies or clinical trials may produce negative or inconclusive results, there may be
inconsistencies between early clinical trial results and results obtained in later clinical trials, and we may decide, or regulators
may require us, to conduct additional nonclinical studies or clinical trials. Moreover, nonclinical and clinical data are often susceptible
to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in nonclinical
studies and clinical trials have nonetheless failed to obtain FDA approval for their products. If we are unable to resolve the FDA’s
concerns, we will not be able to obtain regulatory approval for these product candidates.
The
pre-marketing approval process can be particularly expensive, uncertain and lengthy, and a number of products for which FDA or other
governmental regulatory approval has been sought by other companies have never been approved for marketing. In addition to testing and
approval procedures, extensive regulations also govern marketing, manufacturing, distribution, labeling, and record-keeping procedures.
If we do not comply with applicable regulatory requirements, such violations could result in warning letters, non-approval, suspensions
of regulatory approvals or ongoing clinical trials, civil penalties and criminal fines, product seizures and recalls, operating restrictions,
injunctions, and criminal prosecution.
We
may encounter such delays and rejection of our product candidates by the FDA or other regulatory authority may also adversely affect
our business. Such delays or rejection may be encountered due to, among other reasons, government or regulatory delays, lack of efficacy
during clinical trials, unforeseen safety issues, or changes in regulatory policy during the period of product development. More stringent
regulatory approval processes in product clearance and enforcement activities could result in our experiencing longer approval cycles,
more uncertainty, greater risk, and higher expenses. Even if regulatory approval of a product is granted, this approval may entail limitations
on uses for which the product may be labeled and promoted. It is possible, for example, that we may not receive FDA approval to market
products based on our licensed, patented product candidates for different indications or to market updated products that represent extensions
of our basic product candidates. In addition, we may not receive FDA approval to export our products based on our licensed, patented
product candidates in the future, and countries to which products are to be exported may not approve them for import.
From
time to time, legislative or regulatory proposals are introduced that could alter the review and approval process relating to our product
candidates. It is possible that the applicable regulatory authority will issue additional regulations further restricting the sale of
our product candidates. Any change in legislation or regulations that govern the review and approval process relating to our future product
candidates could make it more difficult and costlier to obtain approval for new products based on our product candidates, or to produce,
market, and distribute such products if approved.
We
may be unable to obtain regulatory approval for our SARS-CoV-2 vaccine product candidate, or other early-stage product candidates under
applicable regulatory requirements. The FDA and foreign regulatory bodies have substantial discretion in the approval process, including
the ability to delay, limit or deny approval of product candidates. The delay, limitation or denial of any regulatory approval would
adversely impact commercialization, our potential to generate revenue, our business and our operating results.
We
are not permitted to market any of our current product candidates in the United States until we receive approval of an NDA or BLA from
the FDA. We are also not permitted to market any of our current product candidates in any foreign countries until we receive the requisite
approval from the applicable regulatory authorities of such countries. Failure to obtain such regulatory approvals will delay or prevent
us from commercializing any of our current or future product candidates.
To
gain approval to market a new drug such as a lantibiotic compound, or a new biological product such as our SARS-CoV-2 vaccine product
candidate or a lantibiotic product candidate, we must provide the FDA and/or foreign regulatory authorities with, among other things,
extensive pre-clinical and clinical data that adequately demonstrates the safety and efficacy of the drug in its intended indication
and information to demonstrate the adequacy of the manufacturing methods to assure the drug’s identity, strength, quality and purity.
The development and approval of new drug product candidates involves a long, expensive and uncertain process, and delay or failure can
occur at any stage. A number of companies in the pharmaceutical and biopharmaceutical industries have suffered significant setbacks in
clinical trials, including in Phase 3 clinical development, even after promising results in earlier pre-clinical studies or clinical
trials. These setbacks have been caused by, among other things, observations during clinical trials regarding safety or efficacy, such
as previously unreported adverse events. Success in pre-clinical testing and early clinical trials does not ensure success in later clinical
trials, and the results of clinical trials by other parties may not be indicative of the results in trials we may conduct. Further, different
results may be achieved depending upon whether the “per protocol”, or PP, analysis is used to report data results or whether
the “modified intent-to-treat,” or MITT, approach is used. Accordingly, regardless of the outcome of any Phase 2 trials,
any Phase 3 trials we may conduct may not be successful.
The
FDA and foreign regulatory bodies have substantial discretion in the drug approval process, including the ability to delay, limit or
deny approval of product candidates for many reasons. The FDA or the applicable foreign regulatory body may:
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disagree
with the design or implementation of one or more clinical trials; |
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decline
to deem a product candidate safe and effective for its proposed indication, or deem a product candidate’s safety or other perceived
risks to outweigh its clinical or other benefits; |
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find
the data from pre-clinical studies and clinical trials does not sufficiently support approval, or the results of clinical trials
may not meet the level of statistical or clinical significance required for approval; |
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disagree
with our interpretation of data from pre-clinical studies or clinical trials performed by us or third parties; |
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determine
the data collected from clinical trials are insufficient to support the submission or approval of an NDA or other applicable regulatory
filing; |
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require
additional pre-clinical studies or clinical trials; |
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identify
deficiencies in the formulation, quality control, labeling or specifications of our current or future product candidates; |
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grant
approval contingent on the performance of costly additional post-approval clinical trials; |
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approve
our current or any future product candidates for a more limited indication or a narrower patient population than we originally requested
or with strong warnings that may affect marketability; |
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decline
to approve the labeling that we believe is necessary or desirable for the successful commercialization of our product candidates; |
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require
a Risk Evaluation and Mitigation Strategy, or REMS, with monitoring requirements or distribution limitations. For example, it is
possible that the FDA could require distribution controls in the approval, if any, of our product candidates to prevent inadvertent
exposure to pregnant women; |
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decline
to approve of the manufacturing processes, controls or facilities of third-party manufacturers or testing labs with whom we contract;
or |
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change
its approval policies or adopt new regulations in a manner rendering our clinical data or regulatory filings insufficient for approval. |
Any
delay, limitation or denial of any regulatory approval would adversely impact commercialization, our potential to generate revenue, our
business and our operating results.
Delays
or difficulties in the enrollment of patients in clinical trials may result in additional costs and delays in our ability to generate
significant revenues, and may delay or prevent our receipt of any regulatory approvals necessary to commercialize our planned and future
products.
We
may not be able to initiate or continue, or complete in a timely fashion clinical trials for NT-CoV2-1 or our other product candidates
if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA
or similar regulatory authorities outside the United States. Many companies are currently or will soon be researching, developing and
testing therapeutic and vaccine product candidates specifically for or with potential application to SARS-CoV-2 or COVID-19, which may
reduce our ability to conduct clinical trials for our SARS-CoV-2 vaccine product candidate. For example, even if we are able to identify
potential patients or eligibility criteria for a NT-CoV2-1 clinical trial, patients who are otherwise eligible for such clinical trials
may instead enroll in the clinical trials of our competitors’ SARS-CoV-2 product candidates or opt not to enroll due to other competitive
vaccines being administered by competitors based upon emergency use authorization.
Patient
enrollment is affected by other factors including:
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the
severity of the disease under investigation; |
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the
eligibility criteria for the study in question; |
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the
perceived risks and benefits of the product candidate under study; |
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the
efforts to facilitate timely enrollment in clinical trials; |
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the
patient referral practices of physicians; |
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the
ability to monitor patients adequately during and after treatment; and |
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the
proximity and availability of clinical trial sites for prospective patients. |
Our
inability to enroll a sufficient number of patients for our clinical trials would result in significant delays, could require us to abandon
one or more clinical trials altogether and could delay or prevent our receipt of necessary regulatory approvals. Enrollment delays in
our clinical trials may result in increased development costs for our product candidates, which would cause the value of our company
to decline and impede our ability to obtain additional financing.
Any
product candidates that we commercialize will be subject to ongoing and continued regulatory review.
Even
after we achieve U.S. regulatory approval for a product candidate, if any, we will be subject to continued regulatory review and compliance
obligations. For example, the FDA may impose significant restrictions on the approved indicated uses for which our product candidates
may be marketed or on the conditions of approval. A product candidate’s approval may contain requirements for potentially costly
post-approval studies and surveillance, including Phase 4 clinical trials or a REMS to monitor the safety and efficacy of the product.
We will also be subject to ongoing FDA obligations and continued regulatory review with respect to, among other things, the manufacturing,
processing, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for our product
candidates. These requirements include submissions of safety and other post-marketing information and reports, registration, continued
compliance with the FDA’s good clinical practice, or GCP, requirements and good laboratory practice requirements, which are regulations
and guidelines the FDA would apply to all of our product candidates in clinical and pre-clinical development, along with any clinical
trials that we conduct post-approval, and continued compliance with the FDA’s cGMP requirements pursuant to which manufacturing
facilities are subject to continual review and periodic inspections by the FDA. To the extent that a product candidate is approved for
sale in other countries, we may be subject to similar restrictions and requirements imposed by laws and government regulators in those
countries.
If
we, our product candidates or the manufacturing facilities for our product candidates fail to comply with applicable regulatory requirements,
a regulatory agency may:
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impose
restrictions on the marketing or manufacturing of the product, suspend or withdraw product approvals or revoke necessary licenses; |
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issue
warning letters, show cause notices or untitled letters describing alleged violations, which may be publicly available; |
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mandate
modifications to promotional materials or require us to provide corrective information to healthcare practitioners; |
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require
us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due
dates for specific actions and penalties for noncompliance; commence criminal investigations and prosecutions; |
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impose
injunctions; |
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impose
other civil or criminal penalties; |
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suspend
any ongoing clinical trials; |
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delay
or refuse to approve pending applications or supplements to approved applications filed by us; |
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refuse
to permit drugs or active ingredients to be imported or exported to or from the United States; |
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suspend
or impose restrictions on operations, including costly new manufacturing requirements; or |
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seize
or detain products or require us to initiate a product recall. |
The
regulations, policies or guidance of the FDA and other applicable government agencies may change and new or additional statutes or government
regulations may prevent or delay regulatory approval of our product candidates or further restrict or regulate post-approval activities.
We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative
action, either in the United States or abroad. If we are not able to achieve and maintain regulatory compliance, we may not be permitted
to market our product candidates, which would materially and adversely affect our ability to generate revenue and achieve or maintain
profitability.
Our
product candidates may cause serious or undesirable side effects or possess other unexpected properties that could delay or prevent their
regulatory approval, limit the commercial profile of approved labeling or result in post-approval regulatory action.
Unforeseen
side effects from any of our product candidates could arise either during clinical development or, if approved, after marketing such
product. Undesirable side effects caused by product candidates could cause us or regulatory authorities to interrupt, modify, delay or
halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or comparable
foreign authorities. Results of clinical trials could reveal a high and unacceptable severity and prevalence of side effects. In such
an event, trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further
development of or deny approval of product candidates for any or all targeted indications. The drug-related side effects could affect
patient recruitment or the ability of enrolled patients to complete the trial or result in product liability claims. Any of these occurrences
may harm our business, financial condition, operating results and prospects.
Additionally,
if we or others identify undesirable side effects, or other previously unknown problems, caused by our product candidates after obtaining
U.S. or foreign regulatory approval or other products with the same or related active ingredients, a number of potentially negative consequences
could result, including:
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regulatory
authorities may withdraw their approval of the product; |
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regulatory
authorities may require a recall of the product or we may voluntarily recall a product; |
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regulatory
authorities may require the addition of warnings or contraindications in the product labeling, narrowing of the indication in the
product label or issuance of field alerts to physicians and pharmacies; |
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we
may be required to create a medication guide outlining the risks of such side effects for distribution to patients or institute a
REMS; |
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we
may be subject to limitations as to how we promote the product; |
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we
may be required to change the way the product is administered or modify the product in some other way; |
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the
FDA or applicable foreign regulatory authority may require additional clinical trials or costly post-marketing testing and surveillance
to monitor the safety or efficacy of the product; |
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sales
of the product may decrease significantly; |
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we
could be sued and held liable for harm caused to patients; and |
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our
brand and reputation may suffer. |
Any
of the above events could prevent us from achieving or maintaining market acceptance of the affected product candidate and could substantially
increase the costs of commercializing our product candidates.
If
any of our product candidates are approved for marketing and we are found to have improperly promoted off-label uses, or if physicians
misuse our products or use our products off-label, we may become subject to prohibitions on the sale or marketing of our products, product
liability claims and significant fines, penalties and sanctions, and our brand and reputation could be harmed.
The
FDA and other regulatory agencies strictly regulate the marketing and promotional claims that are made about drug products. In particular,
a product may not be promoted for uses or indications that are not approved by the FDA or such other regulatory agencies as reflected
in the product’s approved labeling. If we are found to have promoted off-label uses of any of our product candidates, we may receive
warning or untitled letters and become subject to significant liability, which would materially harm our business. Both federal and state
governments have levied large civil and criminal fines against companies for alleged improper promotion and have enjoined several companies
from engaging in off-label promotion. If we become the target of such an investigation or prosecution based on our marketing and promotional
practices, we could face similar sanctions, which would materially harm our business. In addition, management’s attention could
be diverted from our business operations, significant legal expenses could be incurred and our brand and reputation could be damaged.
The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct
is changed or curtailed. If we are deemed by the FDA to have engaged in the promotion of our products for off-label use, we could be
subject to FDA regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure,
civil fine or criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action
if they determine our business activities constitute promotion of an off-label use, which could result in significant penalties, including
criminal, civil or administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs
and the curtailment or restructuring of our operations.
We
cannot, however, prevent a physician from using our product candidates in ways that fall outside the scope of the approved indications,
as he or she may deem appropriate in his or her medical judgment. Physicians may also misuse our product candidates or use improper techniques,
which may lead to adverse results, side effects or injury and, potentially, subsequent product liability claims. Furthermore, the use
of our product candidates for indications other than those cleared by the FDA and/or other regulatory agencies may not effectively treat
such conditions, which could harm our brand and reputation among both physicians and patients.
We
may also be subject to healthcare laws, regulation and enforcement and our failure to comply with those laws could adversely affect our
business, operations and financial condition.
Certain
federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable
to our business. We are subject to regulation by both the federal government and the states in which we conduct our business. The laws
and regulations that may affect our ability to operate include:
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the
federal healthcare program anti-kickback statute, which prohibits, among other things, any person or entity from knowingly and willfully
offering, soliciting, receiving or providing any remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind, to induce either the referral of an individual or in return for the purchase, lease, or
order of any good, facility item or service, for which payment may be made, in whole or in part, under federal healthcare programs
such as the Medicare and Medicaid programs; |
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federal
civil and criminal false claims laws and civil monetary penalty laws, including, for example, the United States False Claims Act,
which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for,
among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid
programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation
to pay money to the federal government; |
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the
federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic
and Clinical Health Act, or HIPAA, which prohibits knowingly and willfully executing, or attempting to execute, a scheme to defraud
any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money
or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (i.e., public or
private), knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation
of a health care offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact
or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services
relating to healthcare matters; |
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HIPAA
and related implementing regulations, which impose obligations on covered entities, including healthcare providers, health plans,
and healthcare clearinghouses, as well as their respective business associates that create, receive, maintain or transmit individually
identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission
of individually identifiable health information; |
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the
federal physician sunshine requirements under the Patient Protection and Affordable Care Act, or ACA, which require manufacturers
of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services information
related to payments and other transfers of value provided to physicians and teaching hospitals, and ownership and investment interests
held by physicians and their immediate family members, with such information published on a searchable website on an annual basis;
and |
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state
law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services
reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with
the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal
government, or otherwise restrict payments that may be provided to healthcare providers and other potential referral sources; state
laws that require drug manufacturers to report information related to payments and other transfers of value to healthcare providers
or marketing expenditures; 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 have the same effect, thus complicating compliance efforts. |
Because
of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our
business activities could be subject to challenge under one or more of such laws. In addition, recent health care reform legislation
has strengthened these laws. For example, the recently enacted ACA, among other things, amended the intent requirement of the federal
anti-kickback statute and certain criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of
the statute or specific intent to violate it. In addition, the ACA provides that the government may assert that a claim including items
or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the
federal civil False Claims Act.
Achieving
and sustaining compliance with these laws may prove costly. In addition, 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 our management’s attention from the
operation of our business. If our operations are found to be in violation of any of the laws described above or any other governmental
laws or regulations that apply to us, we may be subject to penalties, including administrative, civil and criminal penalties, damages,
fines, disgorgement, the exclusion from participation in federal and state healthcare programs, individual imprisonment or the curtailment
or restructuring of our operations, any of which could materially and adversely affect our ability to operate our business and our financial
results.
Our
employees, independent contractors, principal investigators, consultants, vendors and CROs may engage in misconduct or other improper
activities, including noncompliance with regulatory standards and requirements.
We
are exposed to the risk that our employees, independent contractors, principal investigators, consultants, vendors and CROs may engage
in fraudulent or other illegal activity. Misconduct by these persons could include intentional, reckless or negligent conduct or unauthorized
activity that violates: laws or regulations, including those laws requiring the reporting of true, complete and accurate information
to the FDA or foreign regulatory authorities; manufacturing standards; federal, state and foreign healthcare fraud and abuse laws and
data privacy; or laws that require the true, complete and accurate reporting of financial information or data. In particular, sales,
marketing and other business arrangements in the healthcare industry are subject to extensive laws intended to prevent fraud, kickbacks,
self-dealing and other abusive practices. These laws may restrict or prohibit a wide range of business activities, including research,
manufacturing, distribution, pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business
arrangements. Activities subject to these laws also involve the improper use of information obtained in the course of clinical trials,
or illegal misappropriation of drug product, which could result in regulatory sanctions or other actions or lawsuits stemming from a
failure to comply with such laws or regulations, and serious harm to our reputation. In addition, federal procurement laws impose substantial
penalties for misconduct in connection with government contracts and require certain contractors to maintain a code of business ethics
and conduct. If any such actions are instituted against us, we may have to terminate employees or others involved and the impact of such
termination can result in our experiencing delays and additional costs associated with replacing the services being provided. If we are
not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including
the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare,
Medicaid and other federal healthcare programs, FDA debarment, contractual damages, reputational harm, diminished profits and future
earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our operating
results.
Even
if our current product candidates or any future product candidates obtain regulatory approval, they may fail to achieve the broad degree
of health care payers, physician and patient adoption and use necessary for commercial success.
The
commercial success of any of our current or future product candidates, if approved, will depend significantly on the broad adoption and
use of the resulting product by health care payers, physicians and patients for approved indications, and may not be commercially successful.
The degree and rate of physician and patient adoption of our current or future product candidates, if approved, will depend on a number
of factors, including:
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the
clinical indications for which the product is approved and patient demand for approved products that treat those indications; |
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the
effectiveness of our product as compared to other available therapies; |
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the
availability of coverage and adequate reimbursement from managed care plans and other healthcare payors for any of our product candidates
that may be approved; |
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the
cost of treatment with our product candidates in relation to alternative treatments and willingness to pay for the product, if approved,
on the part of patients; |
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acceptance
by physicians, major operators of clinics and patients of the product as a safe and effective treatment; |
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physician
and patient willingness to adopt a new therapy over other available therapies to treat approved indications; |
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overcoming
any biases physicians or patients may have toward particular therapies for the treatment of approved indications; |
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proper
training and administration of our product candidates by physicians and medical staff; |
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patient
satisfaction with the results and administration of our product candidates and overall treatment experience; |
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the
willingness of patients to pay for certain of our product candidates relative to other discretionary items, especially during economically
challenging times; |
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the
revenue and profitability that our product candidate may offer a physician as compared to alternative therapies; |
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the
prevalence and severity of side effects; |
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limitations
or warnings contained in the FDA-approved labeling for our product candidates; |
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any
FDA requirement to undertake a REMS; |
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the
effectiveness of our sales, marketing and distribution efforts; |
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adverse
publicity about our product candidates or favorable publicity about competitive products; and |
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potential
product liability claims. |
If
any of our current or future product candidates are approved for use but fail to achieve the broad degree of physician and patient adoption
necessary for commercial success, our operating results and financial condition will be adversely affected, which may delay, prevent
or limit our ability to generate revenue and continue our operations.
If
we are unable to achieve and maintain coverage and adequate levels of reimbursement for any of our product candidates for which we receive
regulatory approval, or any future products we may seek to commercialize, their commercial success may be severely hindered.
As
to any of our product candidates that become available by prescription only, our success will depend on the availability of coverage
and adequate reimbursement for our product from third-party payors. Patients who are prescribed medicine for the treatment of their conditions
generally rely on third-party payors to reimburse all or part of the costs associated with their prescription drugs. The availability
of coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and private third-party
payors is critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new drug
products when more established or lower cost therapeutic alternatives are already available or subsequently become available. If any
of our product candidates fail to demonstrate attractive efficacy profiles, they may not qualify for coverage and reimbursement. Even
if we obtain coverage for a given product, the resulting reimbursement payment rates might not be adequate or may require co-payments
that patients find unacceptably high. Patients are unlikely to use our prescription-only products unless coverage is provided and reimbursement
is adequate to cover a significant portion of the cost of our products.
In
addition, the market for certain of our product candidates will depend significantly on access to third-party payors’ drug formularies,
or lists of medications for which third-party payors provide coverage and reimbursement. The industry competition to be included in such
formularies often leads to downward pricing pressures on pharmaceutical companies. Also, third-party payors may refuse to include a particular
branded drug in their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or another
alternative is available.
Moreover,
third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of
controlling healthcare costs. In addition, in the United States, although private third-party payors tend to follow Medicare, no uniform
policy of coverage and reimbursement for drug products exists among third-party payors. Therefore, coverage and reimbursement for drug
products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and
costly process that will require us to provide scientific and clinical support for the use of our product candidates to each payor separately,
with no assurance that coverage and adequate reimbursement will be obtained.
Further,
we believe that future coverage and reimbursement will likely be subject to increased restrictions in both the United States and in international
markets. Third-party coverage and reimbursement for any of our product candidates for which we may receive regulatory approval may not
be available or adequate in either the United States or international markets, which could harm our business, financial condition, operating
results and prospects.
If
our products do not receive favorable third-party reimbursement, or if new restrictive legislation is adopted, market acceptance of our
products may be limited and we may not generate significant revenues.
Our
ability to commercialize our products will depend in part on the extent to which appropriate reimbursement levels for the cost of our
proposed formulations and products and related treatments are obtained by governmental authorities, private health insurers and other
organizations, such as Health Maintenance Organizations, or HMOs. Reimbursement from third parties depends greatly on our ability to
present data which demonstrate positive outcomes and reduced utilization of other products or services as well as cost data which show
that treatment costs using the new product are equal to or less than what is currently covered for other products. If our products do
not receive favorable third-party reimbursement and patients are unwilling or unable to pay for our products out-of-pocket, it could
limit our revenues and harm our business.
The
continuing efforts of government and insurance companies, health maintenance organizations and other payers of healthcare costs to contain
or reduce costs of health care may affect our future revenues and profitability, and the future revenues and profitability of our potential
customers, suppliers and collaborative partners and the availability of capital. For example, in certain foreign markets, pricing or
profitability of prescription pharmaceuticals is subject to government control. In the United States, recent federal and state government
initiatives have been directed at lowering the total cost of health care. In March 2010, President Obama signed into law the Patient
Protection and Affordable Care Act, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of
healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance
industries, impose new taxes and fees on the health industry and impose additional health policy reforms. Federal and state legislatures
will likely continue to focus on health care reform, controlling the cost of prescription pharmaceuticals and on the reform of the Medicare
and Medicaid systems. While we cannot predict whether any such legislative or regulatory proposals will be adopted, the announcement
or adoption of such proposals could materially harm our business, financial condition and results of operations.
Risks
Related to Coronavirus Disease (COVID-19)
Our
business is subject to risks arising from public health crises, epidemic or pandemic diseases, such as the recent global outbreak of
the coronavirus disease (COVID-19).
Our
business operations expose us to risks associated with public health crises, epidemics and pandemics. An epidemic or pandemic disease
outbreak, including the recent COVID-19 outbreak, could cause significant disruption to our business operations or the operations of
our third-party manufacturers and CROs upon whom we rely, as well as to our clinical trials, including as a result of significant restrictions
or bans on travel into and within the countries in which our manufacturers produce our product candidates or where we conduct our pre-clinical
testing or our future clinical trials. Such disruption could impede, delay, limit or prevent our employees and CROs from continuing research
and development activities, the production, delivery or release of our product candidates to our clinical trial sites, as well as clinical
trial investigators, patients or other critical staff from traveling to or otherwise continuing to participate in our clinical trials,
and delay data collection and analysis and other related activities, any of which could impede, delay, limit or prevent completion of
our ongoing pre-clinical testing or our future clinical trials pre-clinical or commencement of new clinical trials, and ultimately lead
to the delay or denial of regulatory approval of our product candidates, which would seriously harm our operations and financial condition
and increase our costs and expenses.
The
COVID-19 outbreak could also potentially affect the business of the FDA, EMA or other health authorities, which could result in delays
in meetings related to planned or completed clinical trials and ultimately of reviews and approvals of our product candidates. The COVID-19
outbreak and mitigation measures also have had and may continue to have an adverse impact on global economic conditions which could have
an adverse effect on our business and financial condition, including impairing our ability to raise capital when needed. The extent to
which the COVID-19 outbreak impacts our results will depend on future developments that are highly uncertain and cannot be predicted,
including new information that may emerge concerning the severity of the virus and the actions to contain its impact. The severity of
the coronavirus disease could also make access to our existing supply chain difficult or impossible and could materially impact our business.
Any one or a combination of the aforementioned events could have an adverse effect on our business.
Our
ability to conduct clinical trials may be impeded, delayed, limited or prevented entirely due to the spread of COVID-19, the imposition
of government restrictions and the concurrent disruptions to ordinary business activities globally.
As
the U.S. and foreign governments and nongovernmental organizations continue to respond to the COVID-19 public health crisis, our ability
to conduct clinical trials may impeded, delayed, limited or prevented entirely by a number of factors, including, but not limited to,
the following:
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delays
or difficulties in enrolling patients in our clinical trials; |
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delays
or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; |
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diversion
of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial
sites and hospital staff supporting the conduct of our clinical trials; |
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interruption
of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by
federal or state governments, employers and others; |
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limitations
in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees
or their families or the desire of employees to avoid contact with large groups of people; |
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delays
in receiving approval from local regulatory authorities to initiate our planned clinical trials; |
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delays
in clinical sites receiving the supplies and materials needed to conduct our clinical trials; |
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interruption
in global shipping that may affect the transport of clinical trial materials; |
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changes
in local regulations as part of a response to the COVID-19 coronavirus outbreak which may require us to change the ways in which
our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether; |
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delays
in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations
in employee resources or forced furlough of government employees; and |
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refusal
of the FDA to accept data from clinical trials in affected geographies outside the United States. |
The
global outbreak of the COVID-19 coronavirus continues to rapidly evolve. The extent to which the COVID-19 coronavirus may impact our
business and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence,
such as the ultimate geographic spread and density of the disease, the duration of the outbreak, travel restrictions and social distancing
in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United
States and other countries to contain and treat the disease.
Our
business involves international components, and we are exposed to various global and local risks related to the coronavirus disease 2019
(COVID-19) that could have a material adverse effect on our financial condition and results of operations.
Our
business may involve international components such as clinical trial enrollment. Consequently, we may be exposed to, or our third-party
contractors, suppliers or manufacturers may be exposed to, certain global events beyond our control, including war, public health crises,
epidemics, pandemics, trade disputes, geopolitical conflicts and other international events, including, for example, the global impact
of COVID-19 and the various responses taken by foreign authorities, such as government-imposed quarantines and other public health safety
measures.
The
extent to which the coronavirus impacts our results will depend on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat
its impact, among others. Moreover, the coronavirus outbreak has indeterminable adverse effects on general commercial activity and the
world economy, and our business and results of operations could be adversely affected to the extent that this coronavirus or any other
epidemic harms the global economy generally. The international components of our business may be directly subject to, and the domestic
components may be indirectly impacted by, a variety of risks, including:
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foreign
currency exchange rate fluctuations; |
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greater
difficulty in staffing and managing foreign operations; |
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greater
risk of uncollectible accounts; |
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longer
collection cycles; |
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logistical
and communications challenges; |
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potential
adverse changes in laws and regulatory practices, including export license requirements, trade barriers, tariffs and tax laws; |
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changes
in labor conditions; |
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burdens
and costs of compliance with a variety of foreign laws; |
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political
and economic instability; |
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increases
in duties and taxation; |
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foreign
tax laws and potential increased costs associated with overlapping tax structures; |
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greater
difficulty in protecting intellectual property; |
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the
risk of third-party disputes over ownership of intellectual property and infringement of third-party intellectual property by our
products; and |
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general
economic and political conditions in these foreign markets. |
International
markets are also affected by economic pressure to contain reimbursement levels and healthcare costs. Profitability from international
operations may be limited by risks and uncertainties related to regional economic conditions, regulatory and reimbursement approvals,
competing products, infrastructure development, intellectual property rights protection and our ability to implement our overall business
strategy. We expect these risks will increase as we seek to expand operations into new geographic markets. We may not succeed in developing
and implementing effective policies and strategies in each location where we conduct business. Any failure to do so may harm our business,
results of operations and financial condition.
Macroeconomic
pressures in the markets in which we operate, including, but not limited to, the effectives of the coronavirus disease (COVID-19) may
alter the ways in which we conduct our business operations and manage our financial capacities.
To
varying degrees, the ways in which we conduct our business operations and manage our financial capacities are influenced by macroeconomic
conditions that affect companies directly involved in or providing services related to the drug and biological product development. For
example, real GDP growth, business and investor confidence, the COVID-19 pandemic, inflation, employment levels, oil prices, interest
rates, tax rates, availability of consumer and business financing, housing market conditions, foreign currency exchange rate fluctuations,
costs for items such as fuel and food and other macroeconomic trends can adversely affect not only our decisions and ability to engage
in research and development and clinical trials, but also those of our management, employees, third-party contractors, manufacturers
and suppliers, competitors, shareholders and regulatory authorities. In addition, geopolitical issues around the world and how our markets
are positioned can also impact the macroeconomic conditions and could have a material adverse impact on our financial results.
Economic
uncertainty may adversely affect our access to capital, cost of capital and ability to execute our business plan as scheduled.
Generally,
worldwide economic conditions remain uncertain. Access to capital markets is critical to our ability to operate. Traditionally, biotechnology
companies have funded their research and development expenditures through raising capital in the equity markets. Declines and uncertainties
in these markets in the past have severely restricted raising new capital and have affected companies’ ability to continue to expand
or fund existing research and development efforts. We require significant capital for research and development for our vaccine candidates
and clinical trials. The general economic and capital market conditions, both in the U.S. and worldwide, have been volatile in the past
and at times have adversely affected our access to capital and increased the cost of capital. There is no certainty that the capital
and credit markets will be available to raise additional capital on favorable terms. If economic conditions become worse, our future
cost of equity or debt capital and access to the capital markets could be adversely affected. In addition, if we are unable to access
the capital markets on favorable terms, our ability to execute our business plan as scheduled would be compromised. Moreover, we rely
and intend to rely on third-parties, including clinical research organizations, contract manufacturing organizations and other important
vendors and consultants. Global economic conditions may result in a disruption or delay in the performance of our third-party contractors
and suppliers. If such third-parties are unable to adequately satisfy their contractual commitments to us in a timely manner, our business
could be adversely affected.
Inadequate
funding for the FDA, the SEC and other government agencies in light of the coronavirus pandemic could hinder their ability to hire and
retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner
or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which
could negatively impact our business.
The
ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding
levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average
review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government
agencies on which our operations may rely, including those that fund research and development activities, is subject to the political
process, which is inherently fluid and unpredictable.
Disruptions
at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies,
which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times
and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and
stop critical activities. Moreover, at this time, we cannot predict the extent to which the COVID-19 pandemic outbreak will impact the
resources of such government agencies, including, in particular, the public health resources available to the FDA. If a prolonged government
shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which
could have a material adverse effect on our business. Further, in our operations as a public company, future government shutdowns could
impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
Risks
Related to Our Common Stock
The
issuance of additional equity securities by us in the future would result in dilution to our existing common shareholders.
Our
board of directors has authority, without action or vote of our shareholders, to issue all or a part of our authorized but unissued shares,
except where shareholder approval is required by law. Any issuance of additional equity securities by us in the future could result in
dilution to our existing common shareholders. Such issuances could be made at a price that reflects a discount or a premium to the then-current
trading price of our common stock. In addition, our business strategy may include expansion through internal growth by acquiring complementary
businesses, acquiring or licensing additional products or brands, or establishing strategic relationships with targeted customers and
suppliers. In order to do so, or to finance the cost of our other activities, we may issue additional equity securities that could result
in further dilution to our existing common shareholders. These issuances would dilute the percentage ownership interest of our existing
common shareholders, which would have the effect of reducing their influence on matters on which our shareholders vote, and might dilute
the book value of our common stock. For example, we issued 16,666,668 shares of common stock, short-term
warrants to purchase up to 9,583,334 shares of common stock, and long-term warrants to purchase up to 9,583,334 shares of common stock,
as part of our March 25, 2019 underwritten public offering. In November and December of 2020, we issued 16,317,567 and 14,444,444
shares of common stock, respectively, in connection with an underwritten public offering and a registered direct offering. In connection
with an at-the-market sale of shares of our common stock during first quarter of 2021 we issued an additional 21,398,765 shares of our
common stock and issued 2,472,573 shares pursuant to warrant exercises. During the second quarter of 2021, we issued an additional 556,540
shares of our common stock pursuant to option exercises. During the third quarter of 2021, we issued an additional 200,000 shares of
our common stock pursuant to option exercises. As a result, our outstanding shares of common stock has increased significantly from 29,433,135
shares as of December 31, 2018 to 116,394,806 as of December 31, 2021.
Our
financial results could vary significantly from quarter to quarter and are difficult to predict.
Our
operating results could vary significantly from quarter to quarter due to a variety of factors, many of which are outside of our control.
As a result, comparing our operating results on a period-to-period basis may not be meaningful. In addition, we may not be able to predict
our future revenues or results of operations. We base our current and future expense levels on our internal research and development
plans and forecasts, and our operating costs vary to the extent of our research and development and the planning for and conduct of clinical
trials. As a result, we may incur significant or unanticipated expenses associated with our research and development efforts of our product
candidates under development. In addition to other risk factors discussed in this section, factors that may contribute to the variability
of our quarterly results include:
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Our
use of available cash resources; |
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the
timing of release of pre-clinical and clinical trial results and new products and services by our competitors, particularly those
that may represent a significant portion of revenues in any given period; |
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the
popularity of new products, and products released in prior periods; |
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changes
by our competitors; |
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our
success in entering new geographic markets; |
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decisions
by us to incur additional expenses, such as commencing a clinical trial or increases in research and development; |
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the
level of expenses associated with our regulatory applications or compliance and clinical trials; and |
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the
timing of compensation expense associated with equity compensation grants. |
As
a result of these and other factors, our quarterly and annual operating results could be materially adversely affected. Moreover, our
operating results may not meet the expectations of research analysts or investors, in which case the price of our common stock could
decrease significantly.
Our
Series A and Series B preferred stock, if not converted into common stock, has a distribution and liquidation preference senior to our
common stock in liquidation which could negatively affect the value of our common stock and impair our ability to raise additional capital.
On
November 8, 2017, we issued $3.3 million of Series B Non-Voting, Convertible Preferred Stock (the “Series B Preferred Stock”)
pursuant to which upon Liquidation each holder of shares of Series B Preferred Stock shall be entitled to receive on par with Series
A Convertible Preferred Stock and in preference to the holders of Common Stock, an amount of cash equal to the greater of (i) the product
of the number of shares of Series B Preferred Stock then held by such holder, multiplied by the Series B Original Issue Price; and (ii)
the amount that would be payable to such holder in the Liquidation in respect of Common Stock issuable upon conversion of such shares
of Series B Preferred Stock if all outstanding shares of Series B Preferred Stock were converted into Common Stock immediately prior
to the Liquidation.
In
May and July of 2017, we issued an aggregate of $3.0 million of Series A Non-Voting, Convertible Preferred Stock (the “Series A
Preferred Stock”) pursuant to which upon Liquidation each holder of shares of Series A Preferred Stock shall be entitled to receive
on par with Series B Convertible Preferred Stock and in preference to the holders of Common Stock, an amount of cash equal to the greater
of (i) the product of the number of shares of Series A Preferred Stock then held by such holder, multiplied by the Series B Original
Issue Price; and (ii) the amount that would be payable to such holder in the Liquidation in respect of Common Stock issuable upon conversion
of such shares of Series A Preferred Stock if all outstanding shares of Series A Preferred Stock were converted into Common Stock immediately
prior to the Liquidation.
Our
Series A and Series B preferred stock, if not converted into common stock, will also be senior to our common stock in distribution and
liquidation if such shares are not converted into common stock, which could negatively affect the value of our common stock and impair
our ability to raise additional capital.
The
conversion of our Series A Preferred Stock, and Series B Preferred Stock and the exercise of currently outstanding warrants could result
in significant dilution to the holders of our common stock.
The
holders of our Series A Preferred Stock and Series B Preferred Stock may convert their shares of preferred stock into shares of common
stock. As of December 31, 2021, we had outstanding: (i) 9,417,000 shares of Series A Preferred Stock outstanding, which are convertible
into 941,701 shares of common stock and (ii) 6,600,000 shares of Series B Preferred Stock, which are convertible into 1,320,002 shares
of common stock. In addition to our outstanding shares of preferred stock, as of December 31, 2021, there were currently outstanding
warrants to purchase 18,040,572 shares of our common stock. The conversion of our Series A Preferred Stock and Series B Preferred Stock,
as well as the exercise of our outstanding warrants could result in significant dilution to existing common shareholders, adversely affect
the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.
Certain
provisions of our articles of incorporation, bylaws, executive employment agreements and stock option plan may prevent a change of control
of our company that a shareholder may consider favorable.
Provisions
of our articles of incorporation, bylaws, executive employment agreements and stock option plan may discourage, delay or prevent a change
of control of our company that a shareholder may consider favorable. These provisions include:
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authorization
of the issuance of “blank check” preferred stock that could be issued by our Board of Directors without shareholder approval
and that may be substantially dilutive or contain preferences or rights objectionable to an acquirer; |
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the
ability of our Board of Directors to amend the bylaws without shareholder approval; |
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vacancies
on our Board may only be filled by the remaining directors and not our shareholders; |
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requirements
that only our Board, our President or holders of more than 10% of our shares can call a special meeting of shareholders; |
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obligations
to make certain payments under executive employment agreements in the event of a change of control and termination of employment;
and |
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immediate
vesting of all outstanding stock options. |
As
a result, these provisions could discourage bids for our common stock at a premium and limit the price that investors are willing to
pay in the future for shares of our common stock. However, in our articles of incorporation we expressly elected not to be governed by
Sections 607.0901 and 607.0902 of the Florida Business Corporation Act, which are statutory anti-takeover provisions relating to affiliated
transactions and control share acquisitions, respectively. As such, we do not have the protection of these statutes in connection with
any unwanted takeover attempts which could have the effect of encouraging an attempted change of control without first negotiating with
our Board of Directors.
The
price and volume of our common stock has been volatile and fluctuates substantially, which could result in substantial losses for shareholders.
The
trading price of our common stock has historically been, and may in the future be, subject to wide fluctuations in response to a number
of factors, many of which are beyond our control. These factors include:
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announcements
of the results of our pending COVID-19 vaccine development program or the competitors vaccine products or product candidates; |
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our
level of, and expected future use of, working capital; |
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the
additional sale of common stock by us in capital raising transactions; |
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quarter-to-quarter
variations in our operating results; |
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our
perceived funding needs; |
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the
results of testing, technological innovations, or new commercial products by us or our competitors; |
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governmental
regulations, rules, and orders; |
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general
conditions in the health care, biotechnology or biopharmaceutical industries; |
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changes
in market or trading conditions in light of economic uncertainty due to the COVID-19 pandemic; |
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comments,
research reports and/or earnings estimates by securities analysts; |
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developments
concerning patents or other intellectual property rights; |
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litigation
or public concern about the safety of our products; |
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announcements
by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; |
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additions
or departures of directors, officers and key personnel; |
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release
of transfer restrictions on our outstanding shares of common stock or sales of additional shares of common stock; and |
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potential
litigation initiated against us. |
Our
stock price has been, and in the future may be, subject to substantial volatility. For example, our stock traded within a range of a
high volume of 234,000,400 and a low volume of 441,700 per share for the period of January 1, 2021, through December 31, 2021. As a result
of this volatility, our stockholders could incur substantial losses.
The
stock market in general, and the market for biopharmaceutical companies in particular, has experienced extreme volatility that has often
been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your
common stock at or above your initial purchase price. Broad market factors may seriously harm the market price of our common stock, regardless
of our operating performance.
If
our quarterly or annual results fall below the expectations of investors or securities analysts, the price of our common stock could
decline substantially. Furthermore, any quarterly or annual fluctuations in our results may, in turn, cause the price of our stock to
fluctuate substantially. We believe that period-to-period comparisons of our results are not necessarily meaningful and should not be
relied upon as an indication of our future performance.
In
addition, public statements by us, government agencies, the media or others relating to the coronavirus outbreak (including regarding
efforts to develop a coronavirus vaccine or existing vaccines in the market) have in the past resulted, and may in the future result,
in significant fluctuations in our stock price. Given the global focus on the coronavirus outbreak, any information in the public arena
on this topic, whether or not accurate, could have an outsized impact (either positive or negative) on our stock price. Information related
to our development, manufacturing and distribution efforts with respect to NT-CoV2-1, or information regarding such efforts by competitors
with respect to their vaccines, may also impact our stock price.
Our
stock price is likely to continue to be volatile and subject to significant volume fluctuations in response to market and other factors,
including the other factors discussed in n future periodic reports; variations in our quarterly operating results from our expectations
or those of securities analysts or investors; downward revisions in securities analysts’ estimates; and announcement by us or our
competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments.
We
may be subject to securities litigation, which is expensive and could divert management attention.
The
market price of our common stock has been in the past and may continue to be volatile. In the past, other publicly-traded companies that
have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the
target of securities law-related litigation in the future, and such litigation against us could result in substantial costs and divert
management’s attention from other business concerns, which could seriously harm our business, financial condition and results of
operations and prospects.
Future
sales or issuances of our common stock in the public markets, or the perception of such sales, could depress the trading price of our
common stock.
The
market price of our common stock could decline as a result of sales of substantial amounts of our common stock in the public market,
or the perception that these sales could occur in the future based on our expected need to raise additional capital to conduct our business.
In addition, these factors could make it more difficult for us to raise funds through future offerings of common stock. We may sell large
quantities of our common stock at any time pursuant to our existing sales agency agreement for at-the-market offerings or in one or more
separate offerings. We cannot predict the effect that future sales of common stock or other equity-related securities would have on the
market price of our common stock. We have recently issued a significant number of shares of common stock and the number of outstanding
shares has increased from 29,433,135 shares as of December 31, 2018 to 116,394,806, shares
as of December 31, 2021. In addition, there were 16,017,000 shares of our Preferred stock outstanding which are convertible into 2,261,703
shares of our common stock and, as of December 31, 2021, warrants to purchase an additional 18,040,572 shares of our common stock issuable
upon exercise of warrants to investors, inclusive of the warrants to purchase 9,200,000 shares of our common stock issued in connection
with our acquisition of Noachis Terra which are currently. There were also 6,724,402 shares issuable upon exercise of options outstanding
and an additional 10,532,808 shares available for option grants under our new 2021 Equity Incentive Plan which includes shares from our
prior plan.
The
issuance of shares of our common stock under our 2021 Equity Incentive Plan is expected to be covered by Form S-8 registration statements
we expect to file with the Securities and Exchange Commission, or SEC, and upon exercise of the options, such shares may be resold into
the market. We have also issued shares of common stock and warrants in connection with previous private placements. Such shares are available
for resale as well as certain of the shares of common stock issuable upon exercise of the warrants. We have also issued shares of our
common stock in the private placement and financing transaction, which are deemed to be “restricted securities,” as that
term is defined in Rule 144 promulgated under the Securities Act of 1933, as amended, or Securities Act, and such shares may be resold
pursuant to the provisions of Rule 144. In general, pursuant to Rule 144, after satisfying a six-month holding period: (i) affiliated
shareholders, or shareholders whose shares are aggregated, may, under certain circumstances, sell within any three-month period a number
of securities which does not exceed the greater of 1% of the then-outstanding shares of common stock or the average weekly trading volume
of the class during the four calendar weeks prior to such sale and (ii) non-affiliated shareholders may sell without such limitations,
in each case provided we are current in our public reporting obligations. Rule 144 also permits the sale of securities by non-affiliates
that have satisfied a one-year holding period without any limitation or restriction. We are unable to estimate the number of shares that
may be sold because this will depend on the market price for our common stock, the personal or business circumstances of sellers and
other factors.
The
requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract
and retain qualified members for our Board of Directors.
As
a public company, we are already subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange
Act, and the Sarbanes-Oxley Act. The requirements of these rules and regulations may increase our legal, accounting and financial compliance
costs; may make some activities more difficult, time-consuming and costly; and may also place undue strain on our personnel, systems
and resources. Our management and other personnel need to devote a substantial amount of time to comply with these requirements. Moreover,
these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costlier.
These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of
Directors and Board committees or as executive officers.
As
a public company we are also required to assess our internal control over financial reporting under Section 404 of the Sarbanes-Oxley
Act and file periodic reports with the SEC. If we are unable to comply with these requirements in a timely manner, or if material weaknesses
or significant deficiencies persist, the market price of our stock could decline and we could be subject to sanctions or regulatory investigations,
which could harm our business. We must perform an assessment of our internal control over financial reporting to allow management to
report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our
compliance with Section 404 of the Sarbanes-Oxley Act requires that we incur substantial accounting expense and expend significant management
efforts. If we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act or the SEC reporting requirements
in a timely manner, or if we note or identify deficiencies in our internal control over financial reporting that are deemed to be material
weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory
authorities, which would require additional financial and management resources. As a smaller reporting company, we do not have to have
our independent registered public accounting firm report on the effectiveness of our internal control over financial reporting. If in
the future we no longer meet the requirements of a smaller reporting company, our independent registered public accounting firm will
have to report on our internal controls over financial reporting. There can be no assurance that our independent registered public accounting
firm will not identify material weaknesses which could have an adverse effect on our stock price.
If
we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent
fraud which could subject us to regulatory sanctions, harm our business and operating results and cause the trading price of our stock
to decline.
Effective
internal controls required under Section 404 of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, are necessary for us to provide
reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our business,
reputation and operating results could be harmed. We have discovered, and may in the future discover, areas of our internal controls
that need improvement. We cannot be certain that the measures we have taken or intend to take will ensure that we maintain adequate controls
over our financial processes and reporting in the future. Any failure to implement required new or improved controls or difficulties
encountered in their implementation could subject us to regulatory sanctions, harm our business and operating results or cause us to
fail to meet our reporting obligations. Inferior internal controls could also harm our reputation and cause investors to lose confidence
in our reported financial information, which could have a negative impact on the trading price of our stock.
We
cannot assure you that we will continue to be listed on the NYSE American.
Our
common stock commenced trading on the NYSE American (formerly the NYSE MKT) on April 10, 2013, and we are subject to certain NYSE American
continued listing requirements and standards. We may also incur costs that we have not previously incurred for expenses for compliance
with the rules and requirements of the NYSE American. We cannot provide any assurance that we will be able to continue to satisfy the
requirements of the NYSE American’s continued listing standards. A delisting of our common stock could negatively affect the price
and liquidity of our common stock and could impair our ability to raise capital in the future.
We
will continue to incur significant costs as a result of and devote substantial management time to operating as a public company listed
on the NYSE American.
As
a public company listed on the NYSE American, we incurred and will continue to incur significant legal, accounting and other expenses
that we did not incur before when trading on the OTCQB Marketplace. For example, we are subject to the rules and regulations required
by the NYSE American, including changes in corporate governance practices and minimum listing requirements. These requirements have increased
our legal and financial compliance costs and have and will continue to render some activities more time-consuming and costlier. In addition,
our management and other personnel have diverted and will continue to divert attention from operational and other business matters to
devote substantial time to these listing requirements and failure to meet these requirements could lead to an adverse effect on the listing
of our common stock on the NYSE American.
If
securities or industry analysts publish research or publish inaccurate or unfavorable research about our business, our stock price and
trading volume could decline.
The
trading market for our common stock depends in part upon the research and reports that securities or industry analysts publish about
us or our business from time to time. If one or more of the analysts who seek to cover us downgrades our stock or publishes inaccurate
or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage, once
commenced, or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading
volume to decline.
We
may issue debt or debt securities convertible into equity securities, any of which may be senior to our common stock as to distributions
and in liquidation, which could negatively affect the value of our common stock.
In
the future, we may attempt to increase our capital resources by entering into debt or debt-like financing that is unsecured or secured
by up to all of our assets, or by issuing additional debt or equity securities, which could include issuances of secured or unsecured
commercial paper, medium-term notes, senior notes, subordinated notes, guarantees, preferred stock, hybrid securities, or securities
convertible into or exchangeable for equity securities. In the event of our liquidation, our lenders and holders of our debt and securities
would receive distributions of our available assets before distributions to the holders of our common stock. Because our decision to
incur debt and issue securities in future offerings may be influenced by market conditions and other factors beyond our control, we cannot
predict or estimate the amount, timing or nature of our future offerings or debt financings. Further, market conditions could require
us to accept less favorable terms for the issuance of our securities in the future.
We
are a “smaller reporting company” and, as a result of the reduced disclosure and governance requirements applicable to smaller
reporting companies, our common stock may be less attractive to investors.
We
are a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned
subsidiary of a parent company that is not a “smaller reporting company,” have a public float of less than $250 million and
have annual revenues of less than $100 million during the most recently completed fiscal year. As a “smaller reporting company,”
we are subject to lesser disclosure obligations in our SEC filings compared to other issuers. Specifically, “smaller reporting
companies” are able to provide simplified executive compensation disclosures in their filings, are exempt from the provisions of
Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report
on the effectiveness of internal control over financial reporting and have certain other decreased disclosure obligations in their SEC
filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased
disclosures in our SEC filings due to our status a “smaller reporting company” may make it harder for investors to analyze
our operating results and financial prospects.
We
have never paid cash dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.
We
have never paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion
of our business, and we do not expect to declare or pay any cash dividends in the foreseeable future. Consequently, stockholders must
rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their
investment.