Filed
Pursuant to Rule 424(b)(5)
Registration
File No. 333-238172
Prospectus Supplement
(To prospectus dated
June 12, 2020)
46,875,000 Shares of Common Stock
We
are offering up to 46,875,000 shares of our common stock, par value $0.0001 per share, at a public offering price of $1.60 per
share, in a firm commitment underwritten public offering (the “Offering”).
Our common stock is
listed on the Nasdaq Capital Market under the symbol “AIKI”. On February 16, 2021, the last reported sale price as
reported on the Nasdaq Capital Market was $2.13 per share.
The offering is being
underwritten on a firm commitment basis. The underwriter may offer the shares of common stock from time to time to purchasers directly
or through agents, or through brokers in brokerage transactions on the Nasdaq Capital Market, or to dealers in negotiated transactions
or in a combination of such methods of sale, or otherwise, at fixed price or prices, which may be changed, or at market prices
prevailing at the time of sale, at prices related to such prevailing market prices.
Investing in our
common stock involves a high degree of risk. See “Risk Factors” beginning on page S-4 of this prospectus
supplement.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
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Per Share
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Total No Exercise of Over-Allotment
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Total
Exercise of
Over-Allotment
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Public offering price
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$
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1.60
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$
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75,000,000
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$
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86,250,000
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Underwriting discounts and commissions (1)
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$
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0.128
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$
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6,000,000
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$
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6,900,000
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Proceeds, before expenses, to us
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$
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1.472
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$
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69,000,000
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$
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79,350,000
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(1)
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We estimate the total expenses of this offering payable by us, excluding the representative’s fees, will be approximately $325,000.
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We have granted a
30-day option to H.C. Wainwright & Co. as representative of the underwriters (the “Representative”) to purchase
up to 7,031,250 additional shares of common stock from us solely to cover over-allotments, if any, at the public offering
price, less underwriting discounts and commissions. See “Underwriting.”
We anticipate that
delivery of the shares of common stock against payment will be made on or about February 19, 2021, subject to satisfaction
of customary closing conditions.
H.C. Wainwright
& Co.
The date of this prospectus supplement
is February 16, 2021
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
You should rely
only on the information we have provided or incorporated by reference in this prospectus supplement and the accompanying prospectus.
We have not authorized anyone to provide you with information different from that contained or incorporated by reference in this
prospectus supplement or the accompanying prospectus.
This prospectus
supplement, the accompanying prospectus, and any later prospectus supplement is an offer to sell only the securities offered hereby,
but only under circumstances and in jurisdictions where it is lawful to do so.
You should assume
that the information contained in this prospectus supplement, the accompanying prospectus, and in any other prospectus supplement
is accurate only as of their respective dates and that any information we have incorporated by reference is accurate only as of
the date of the document incorporated by reference, regardless of the time of delivery of this prospectus supplement, the accompanying
prospectus, or any other prospective supplement for any sale of securities.
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement
and the accompanying prospectus relate to the sale of shares of our common stock registered for sale under our Registration Statement
on Form S-3 (File No. 333-238172) (the “Registration Statement”), which the Securities Exchange Commission
(the “Commission” or the “SEC”) declared effective on June 18, 2020. This document is in two parts.
The first part is this prospectus supplement, which describes the specific terms of this common stock offering and also adds to
and updates information contained in the accompanying prospectus and the documents incorporated by reference herein and therein.
The second part, the accompanying prospectus, provides more general information. Generally, when we refer to this prospectus, we
are referring to both parts of this document combined. To the extent there is a conflict between the information contained in this
prospectus supplement and the information contained in the accompanying prospectus or any document incorporated by reference therein
filed prior to the date of this prospectus supplement, you should rely on the information in this prospectus supplement; provided
that if any statement in one of these documents is inconsistent with a statement in another document having a later date —
for example, a document incorporated by reference in the accompanying prospectus — the statement in the document
having the later date modifies or supersedes the earlier statement.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference herein were made solely for the benefit of the parties to such agreement, including,
in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation,
warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made.
Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state
of our affairs.
Neither
we nor H.C. Wainwright & Co., LLC (the “Representative”) have authorized anyone to provide information different
from that contained in this prospectus supplement and the accompanying prospectus, including any free writing prospectus that we
have authorized for use in this offering. When you make a decision about whether to invest in our common stock, you should not
rely upon any information other than the information in this prospectus supplement or the accompanying prospectus, including any
free writing prospectus that we have authorized for use in this offering. Neither the delivery of this prospectus supplement or
the accompanying prospectus, including any free writing prospectus that we have authorized for use in this offering, nor the sale
of our common stock means that information contained in this prospectus supplement and the accompanying prospectus, including any
free writing prospectus that we have authorized for use in this offering, is correct after their respective dates. It is important
for you to read and consider all information contained in this prospectus supplement and the accompanying prospectus, including
the information incorporated by reference into this prospectus supplement and the accompanying prospectus, and any free writing
prospectus that we have authorized for use in connection with this offering in making your investment decision. You should also
read and consider the information in the documents to which we have referred you in the sections entitled “Where You Can
Find More Information” and “Incorporation of Certain Information by Reference” in this prospectus supplement.
We are offering to
sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The distribution
of this prospectus supplement and the accompanying prospectus and the offering of the common stock in certain jurisdictions may
be restricted by law. Persons outside the United States who come into possession of this prospectus supplement and the accompanying
prospectus must inform themselves about, and observe any restrictions relating to, the offering of the common stock and the distribution
of this prospectus supplement and the accompanying prospectus outside the United States. This prospectus supplement and the accompanying
prospectus do not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any
securities offered by this prospectus supplement and the accompanying prospectus by any person in any jurisdiction in which it
is unlawful for such person to make such an offer or solicitation.
Unless otherwise stated,
all references to “us,” “our,” “AIKI,” “we,” the “Company” and similar
designations refer to AIkido Pharma Inc. Our logo, trademarks and service marks are the property of AIkido Pharma Inc. Other trademarks
or service marks appearing in this prospectus supplement are the property of their respective holders.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus supplement,
the accompanying prospectus and the documents incorporated by reference herein and therein may contain forward looking statements
that involve risks and uncertainties. All statements other than statements of historical fact contained in this prospectus
supplement, the accompanying prospectus and the documents incorporated by reference herein and therein, including statements regarding
future events, our future financial performance, business strategy, and plans and objectives of management for future operations,
are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,”
“believes,” “can,” “continue,” “could,” “estimates,” “expects,”
“intends,” “may,” “plans,” “potential,” “predicts,” “should,”
or “will” or the negative of these terms or other comparable terminology. Although we do not make forward looking statements
unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions
and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors”
or elsewhere in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and
therein, which may cause our or our industry’s actual results, levels of activity, performance or achievements expressed
or implied by these forward-looking statements. Moreover, we operate in a highly regulated, very competitive, and rapidly changing
environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the
impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results
to differ materially from those contained in any forward-looking statements. Risks that could affect our business also include
the duration and scope of the COVID-19 pandemic and the impact on the demand for our technology; actions by governments, businesses
and individuals taken in response to the pandemic; the length of time of the COVID-19 pandemic and the possibility of its reoccurrence;
the timing required to develop effective treatments and a vaccine in the event of future outbreaks; the eventual impact of the
pandemic and actions taken in response to the pandemic on global and regional economies; and the pace of recovery when the COVID-19
pandemic subsides.
We have based these
forward-looking statements largely on our current expectations and projections about future events and financial trends that we
believe may affect our financial condition, results of operations, business strategy, short term and long term business operations,
and financial needs. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual
results to differ materially from those reflected in the forward looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed (i) in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, (ii) in this prospectus supplement and the accompanying prospectus, and in particular, the risks discussed below
and under the heading “Risk Factors” and (iii) those discussed in other documents we file with the SEC. The following
discussion should be read in conjunction with the consolidated audited financial statements for the fiscal years ended December
31, 2019 and 2018 and notes incorporated by reference herein. We undertake no obligation to revise or publicly release the results
of any revision to these forward-looking statements, except as required by law. In light of these risks, uncertainties and assumptions,
the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially
and adversely from those anticipated or implied in the forward-looking statement.
You should not place
undue reliance on any forward-looking statement, each of which applies only as of the date of this prospectus supplement. You are
advised to consult any further disclosures we make on related subjects in our reports on Forms 10-Q, 8-K and 10-K filed with the
SEC.
PROSPECTUS SUPPLEMENT
SUMMARY
This summary highlights
certain information about us, this offering and selected information contained elsewhere in this prospectus supplement and in the
documents incorporated by reference. This summary is not complete and does not contain all of the information that you should consider
before deciding whether to invest in our shares of common stock. For a more complete understanding of our company and this offering,
we encourage you to read and consider carefully the more detailed information contained in or incorporated by reference in this
prospectus supplement, including the information contained under the heading “Risk Factors” beginning on page S-4 of
this prospectus supplement, and the information included in any free writing prospectus that we have authorized for use in connection
with this offering.
Throughout this
prospectus supplement, the terms “we,” “us,” “our,” and “our company” refer to
AIkido Pharma Inc., a Delaware corporation, and its consolidated subsidiaries unless the context requires otherwise.
Company Overview
AIkido Pharma Inc.,
formerly known as Spherix Incorporated (the “Company”), was initially formed in 1967 and is currently a biotechnology company
with a diverse portfolio of small-molecule anti-cancer therapeutics in development. The Company’s platform consists of patented technology
from leading universities and researchers and we are currently in the process of developing an innovative therapeutic drug platform through
strong partnerships with world-renowned educational institutions, including the University of Texas at Austin, the University of
Maryland, Baltimore and Wake Forest University. Our diverse pipeline of therapeutics includes therapies for pancreatic cancer,
acute myeloid leukemia (“AML”) and acute lymphoblastic leukemia (“ALL”). The Company is also developing
a broad-spectrum antiviral platform with the University of Maryland Baltimore that may potentially inhibit replication of
multiple viruses including Influenza virus, SARS-CoV (coronavirus), MERS-CoV, Ebolavirus and Marburg virus.
The Company previously
focused its efforts on owning, developing, acquiring and monetizing intellectual property assets. Since May 2016, the Company has
received limited funds from its intellectual property monetization. In addition to its patent monetization efforts, since the fourth
quarter of 2017, the Company has been transitioning to focus its efforts as a technology and biotechnology development company.
These efforts have focused on biotechnology research and blockchain technology research. The Company’s biotechnology research
development includes: (i) an investment in Hoth Therapeutics Inc. (“Hoth”), a development stage biopharmaceutical company
focused on unique targeted therapeutics for patients suffering from indications such as atopic dermatitis, also known as eczema,
(ii) an investment in DatChat, Inc. (“DatChat”), a privately held personal privacy platform focused on encrypted communication,
internet security and digital rights management, and (iii) the acquisition of assets of CBM BioPharma, Inc. (“CBM”),
a pharmaceutical company focusing on the development of cancer treatments.
As a result of the
Company’s biotechnology research development and associated investments and acquisitions, our business portfolio now focuses
on the treatment of three different cancers, including pancreatic cancer, acute myeloid leukemia (AML) and acute lymphoblastic
leukemia (ALL). Our AML and ALL compounds, developed at the Wake Forest University, are targeted therapeutics designed to overcome
multiple resistance mechanisms observed with the current standard of care. DHA-dFdC, our pancreatic drug candidate developed at
the University of Texas at Austin, is a new compound that we hope will become the next generation of chemotherapy treatment for
advanced pancreatic cancer. DHA-dFdC overcomes tumor cell resistance to current chemotherapeutic drugs and is well tolerated in
preclinical toxicity tests. Preclinical studies have also indicated that DHA-dFdC inhibits pancreatic cancer cell growth (up to
100,000-fold more potent that gemcitabine, a current standard therapy), has documented efficacy against pancreatic tumors in a
clinically relevant transgenic mouse model and has demonstrated activities against other cancers, including leukemia, lung and
melanoma. In addition, we are constantly seeking to grow our pipe to treat unmet medical needs in oncology.
Recent Developments
Silo Pharma Agreement
On January 5, 2021,
the Company entered into an exclusive patent license agreement with Silo Pharma Inc., a Delaware corporation, and Silo Pharma Inc.,
a Florida corporation, and their affiliates/subsidiaries (collectively, “Silo Pharma”). Pursuant to the license agreement,
Silo Pharma granted the Company a worldwide exclusive, sublicensable, royalty-bearing license to certain Silo Pharma owned provisional
patent applications directed to the use of psilocybin in cancer treatment, and any patents issuing therefrom, including all continuations,
continuations-in-part, divisions, extensions, substitutions, reissues, re-examinations, and any applications and all patents issuing
from any applications and patents that claim domestic benefit or foreign priority to the provisional patent applications (the “License
Patents”). As consideration for the license of the Licensed Patents, the Company issued Silo Pharma 500 shares of the Company’s
Series M Convertible Preferred Stock and paid a one-time cash payment of $500,000. The Company shall also pay Silo Pharma a running
royalty equal to two percent (2%) of “net sales”.
On January 8, 2021,
the Company filed a Certificate of Designation (the “Certificate of Designation”) of Series M Convertible Preferred
Stock (the “Series M Preferred Stock”) with the Secretary of the State of Delaware.
The license agreement
grants the Company an option to license any Silo Pharma Improvement Patents as specified in the Agreement. On February 12, 2021,
the Company executed a Letter of Intent with Silo Pharma whereby Silo and the Company agreed that the Company would exercise its
option to license additional technology that was recently acquired by Silo, subject to all necessary approvals.
Convergent Investment
On January 29, 2021,
the Company purchased an 8% convertible promissory note (“Convertible Note”) issued by Convergent Therapeutics, Inc.
(“Convergent”) with a principal amount of $2 million pursuant to a Note Purchase Agreement with Convergent. The Company
paid a purchase price for the Convertible Note of $2 million. The Company will receive interest on the Convertible Note at the
rate of 8% per annum payable upon conversion or maturity of the Convertible Note.
Corporate Information
Our principal executive
offices are located at One Rockefeller Plaza, 11th Floor, New York, New York 10020, and our telephone number is 212-745-1374.
Our common stock trades
on the Nasdaq Capital Market under the symbol “AIKI”.
Our principal Internet
address is http://www.aikidopharma.com. Information contained on, or that can be accessed through, our website, is not,
and shall not be deemed to be, incorporated in this prospectus supplement or considered a part thereof. We make available free
of charge on http://www.aikidopharma.com our annual, quarterly and current reports, and amendments to those reports, as soon as
reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains an Internet
site that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov.
THE OFFERING
Common stock outstanding prior to this offering
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34,920,219 shares
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Common stock offered
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46,875,000 shares.
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Common stock to be outstanding after this offering
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81,795,219 shares.
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Over-allotment option
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We have granted a 30-day option to the Representative to purchase up to 7,031,250 additional shares of common stock from us solely to cover over-allotments, if any, at the public offering price per share, less underwriting discounts and commissions.
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Use of proceeds
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We intend to use the net proceeds of this offering for working capital and general corporate purposes. See “Use of Proceeds.”
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Risk factors
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See “Risk Factors” beginning on page S-4 of this prospectus supplement, as well as other information included in this prospectus, for a discussion of factors you should read and consider carefully before investing in our securities.
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Nasdaq Capital Market symbol
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Our common stock is listed on the Nasdaq Capital Market under the symbol “AIKI”.
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The number of shares
of our common stock to be outstanding after this offering as shown above is based on 34,920,219 shares outstanding as of February
16, 2021 and excludes as of that date:
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284,304 shares of our common stock issuable upon exercise of outstanding options at a weighted average exercise price of $54.15 per share;
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515,897 shares of
our common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $1.69 per share (without
giving effect to any of the anti-dilution adjustment provisions thereof);
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688 shares of our common stock issuable upon the conversion of our Series D and D-1 Preferred Stock;
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4,650,494 shares of our common stock to be reserved for potential future issuance pursuant to our 2012, 2013 and 2014 Equity Incentive Plans in the aggregate;
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167,273 shares of our common stock issuable upon exercise of placement agent’s warrants issued as compensation to the Representative for a prior offering, with an exercise price of $3.4375 per share;
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1,120,000 shares of our common stock issuable upon exercise of the placement agent’s warrants to be issued as compensation to the Representative for a prior offering, with an exercise price of $1.25 per share;
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3,750,000 shares of common stock issuable upon exercise of the warrant to be issued to the Representative in connection with this offering; and
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assumes no exercise by the Representative of its over-allotment option.
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RISK FACTORS
Investing
in our shares of common stock involves a high degree of risk and uncertainty. You should carefully consider these risk factors,
together with all of the other information included or incorporated by reference in this prospectus supplement and the accompanying
prospectus, as modified and superseded, before you decide to invest in our securities, including without limitation the risk factors
listed under Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K, as filed with the SEC on February 3, 2020 and in
our Quarterly Reports on Form 10-Q filed with the SEC. The occurrence of any of the following risks could harm our business. In
that case, the trading price of our common stock could decline, and you may lose all or part of your investment. Additional risks
and uncertainties not presently known to us or that we currently deem immaterial may also impair our operations. You should also
refer to the other information contained in this prospectus supplement, the accompanying prospectus and the documents incorporated
by reference into this prospectus supplement and the accompanying prospectus, including our financial statements and the notes
to those statements and the information set forth in the section entitled “Cautionary Note Regarding Forward-Looking Statements.”
Risks Related to Our Business
Because we have a limited operating
history in our current business, the likelihood of our success must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered by an early-stage company.
Since we have a limited
operating history in our current business of technology and biotechnology development, it will make it difficult for investors
and securities analysts to evaluate our business and prospects. You must consider our prospects in light of the risks,
expenses and difficulties we face as an early stage company with a limited operating history. Investors should evaluate
an investment in our securities in light of the uncertainties encountered by early stage companies in an intensely competitive
industry. There can be no assurance that our efforts will be successful or that we will be able to become profitable.
Our cancer
treatment business is pre-revenue, pre-development and subject to the risks of an early stage biotechnology company.
Since
the Company’s primary focus for the foreseeable future will likely be our cancer treatment business, shareholders should
understand that we are primarily an early stage biotechnology company with no history of revenue-generating operations, and our
only assets consist of our proprietary drug and the know-how of our officers. Therefore we are subject to all the risks and uncertainties
inherent in a new business, in particular new businesses engaged in the early detection of certain cancers. DHA-dFdC is
in its early stages of development, and we still must establish and implement many important functions necessary to commercialize
the biotechnology.
Accordingly,
you should consider the Company’s prospects in light of the costs, uncertainties, delays and difficulties frequently encountered
by companies in their pre-revenue and pre-development generating stages, particularly those in the biotechnology field. Shareholders
should carefully consider the risks and uncertainties that a business with no operating history will face. In particular, shareholders
should consider that there is a significant risk that we will not be able to:
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demonstrate the effectiveness of DHA-dFdC;
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implement or execute our current business plan, or that our current business plan is sound;
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raise sufficient funds in the capital markets or otherwise to fully effectuate our business plan;
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maintain our management team, including the members of our scientific advisory board;
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conduct the required clinical studies;
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determine that the processes and technologies that we have developed or will develop are commercially viable; and/or
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attract, enter into or maintain contracts with potential commercial partners such as licensors of technology and suppliers.
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Any of the foregoing
risks may adversely affect the Company and result in the failure of our business. In addition, we expect to encounter unforeseen
expenses, difficulties, complications, delays and other known and unknown factors. At some point, we will need to transition
from a company with a research and development focus to a company capable of supporting commercial activities. We may not be able
to reach such achievements, which would have a material adverse effect on our Company.
We continue to incur operating losses
and may not achieve profitability.
Our loss from operations
for the nine months ended September 30, 2020 and 2019 was $5.2 million and $2.5 million, respectively, and years ended December
31, 2019 and 2018 was $5.7 million and $6.9 million, respectively. Our net loss for the year ended December 31, 2019 was $4.2 million
and our net income for the year ended December 31, 2018 was $2.0 million. Our accumulated deficit was $156.9 million at September
30, 2020. We recognized $0 revenue in the nine months ended September 30, 2020. Our ability to become profitable depends upon our
ability to generate revenue from biotechnology products. We do not know when, or if, we will generate any revenue from such biotechnology
products. Even though our revenue may increase, we expect to incur significant additional losses while we grow and expand our business.
We cannot predict if and when we will achieve profitability. Our failure to achieve and sustain profitability could negatively
impact the market price of our common stock.
If we fail to maintain an effective
system of internal controls over financial reporting, we may not be able to accurately report our financial results or prevent
fraud and our business may be harmed and our stock price may be adversely impacted.
Effective internal
controls over financial reporting are necessary for us to provide reliable financial reports and to effectively prevent fraud. Any
inability to provide reliable financial reports or to prevent fraud could harm our business. The Sarbanes-Oxley Act of 2002
requires management to evaluate and assess the effectiveness of our internal control over financial reporting. In order to
continue to comply with the requirements of the Sarbanes-Oxley Act, we are required to continuously evaluate and, where appropriate,
enhance our policies, procedures and internal controls. If we fail to maintain the adequacy of our internal controls over
financial reporting, we could be subject to litigation or regulatory scrutiny and investors could lose confidence in the accuracy
and completeness of our financial reports. We cannot assure you that in the future we will be able to fully comply with the
requirements of the Sarbanes-Oxley Act or that management will conclude that our internal control over financial reporting is effective. If
we fail to fully comply with the requirements of the Sarbanes-Oxley Act, our business may be harmed and our stock price may decline.
Our assessment, testing
and evaluation of the design and operating effectiveness of our internal control over financial reporting resulted in our conclusion
that, as of December 31, 2019, our internal control over financial reporting was not effective, due to our lack of segregation
of duties, and lack of controls in place to ensure that all material transactions and developments impacting the financial statements
are reflected. We can provide no assurance as to conclusions of management with respect to the effectiveness of our internal
control over financial reporting in the future.
Our independent auditors have expressed substantial doubt
about our ability to continue as a going concern.
Due to our net losses,
negative cash flow and negative working capital, in their report on our audited financial statements for the years ended December
31, 2019 and 2018, our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to
continue as a going concern.
We may seek to internally develop
additional new inventions and intellectual property, which would take time and be costly. Moreover, the failure to obtain
or maintain intellectual property rights for such inventions would lead to the loss of our investments in such activities.
Part of our business
may include the internal development of new inventions or intellectual property that we will seek to monetize. For example,
in December 2019, we acquired substantially all of the assets of CBM, including the acquisition of certain licensing rights with
respect to patents and other intellectual property related to pioneering drug compounds that were developed at the University of
Wake Forest and the University of Texas at Austin, in the areas of acute myeloid leukemia (AML), acute lymphoblastic leukemia (ALL),
acral lentiginous melanoma and pancreatic cancer (collectively, the “University Developments”). Should we choose to
assist in the development of the University Developments and/or internally develop any other inventions or intellectual property,
such aspect of our business will require significant capital and will take time to achieve. Such activities may also
distract our management team from its present business initiatives, which could have a material and adverse effect on our business. There
is also the risk that our initiatives in this regard would not yield any viable new inventions or technology, which would lead
to a loss of our investments in time and resources in such activities.
We may be at risk for delay
in technology development and other economic repercussions as a result of the COVID-19 pandemic.
We may be at risk as
a result of the current COVID-19 pandemic. Risks that could affect our business include the duration and scope of the COVID-19
pandemic and the impact on the demand for our products; actions by governments, businesses and individuals taken in response to
the pandemic; the length of time of the COVID-19 pandemic and the possibility of its reoccurrence; the timing required to develop
effective treatments and a vaccine in the event of future outbreaks; the eventual impact of the pandemic and actions taken in response
to the pandemic on global and regional economies; and the pace of recovery when the COVID-19 pandemic subsides.
Additionally, New York,
where our U.S. operations are based, is currently significantly affected by COVID-19, which led to measures taken by the New York
government trying to contain the spread of COVID-19, such as shelter in place, closure of schools and travel restrictions. Additional
travel and other restrictions may be put in place to further control the outbreak in U.S. Accordingly, our operation and business
have been and will continue to be adversely affected as the results of the COVID-19 pandemic.
The extent to which
COVID-19 negatively impacts our business is highly uncertain and cannot be accurately predicted. We believe that the coronavirus
outbreak and the measures taken to control it may have a significant negative impact on not only our business, but economic activities
globally. The magnitude of this negative effect on the continuity of our business operations in the U.S. remains uncertain. These
uncertainties impede our ability to conduct our daily operations and could materially and adversely affect our business, financial
condition and results of operations, and as a result affect our stock price and create more volatility.
Risks Related to Ownership of Our Common
Stock
We face evolving regulation of corporate
governance and public disclosure that may result in additional expenses and continuing uncertainty.
As a public company,
we incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002, or SOX, the Dodd-Frank Wall Street Reform
and Consumer Protection Act, the listing requirements of the Nasdaq Capital Market and other applicable securities rules and regulations
impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial
controls and corporate governance practices. Our management and other personnel devote a substantial amount of time towards
maintaining compliance with these requirements. These rules, regulations and standards are subject to varying interpretations,
and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This
could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure
and governance practices. We intend to invest the resources necessary to comply with evolving laws, regulations and
standards, and this investment may result in increased general and administrative expenses and a diversion of management time and
attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed
laws, regulations and standards differ from the activities intended by regulatory or governing bodies, regulatory authorities may
initiate legal proceedings against us, which could be costly and time-consuming, and our reputation and business may be harmed.
Our common stock may be delisted from the Nasdaq Capital
Market if we fail to comply with continued listing standards.
Our common stock is
currently traded on the Nasdaq Capital Market under the symbol “AIKI”. If we fail to meet any of the continued
listing standards of the Nasdaq Capital Market, our common stock could be delisted from the Nasdaq Capital Market. These
continued listing standards include specifically enumerated criteria, such as:
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a $1.00 minimum closing bid price;
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|
●
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stockholders’ equity of $2.5 million;
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|
●
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500,000 shares of publicly-held common stock with a market value of at least $1 million;
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300 round-lot stockholders; and
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●
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compliance with Nasdaq’s corporate governance requirements, as well as additional or more stringent criteria that may be applied in the exercise of Nasdaq’s discretionary authority.
|
There can be no assurance
that we will be able to maintain compliance and remain in compliance in the future. In particular, our share price may continue
to decline for a number of reasons, including many that are beyond our control.
If we fail to comply
with Nasdaq’s continued listing standards, we may be delisted and our common stock will trade, if at all, only on the over-the-counter
market, such as the OTC Bulletin Board or OTCQX market, and then only if one or more registered broker-dealer market makers comply
with quotation requirements. In addition, delisting of our common stock could depress our stock price, substantially
limit liquidity of our common stock and materially adversely affect our ability to raise capital on terms acceptable to us, or
at all. Further, delisting of our common stock would likely result in our common stock becoming a “penny stock” under
the Exchange Act.
Our share price may be volatile and
there may not be an active trading market for our common stock.
There can be no assurance
that the market price of our common stock will not decline below its present market price or that there will be an active trading
market for our common stock. The market prices of technology or technology related companies have been and are likely to continue
to be highly volatile. Fluctuations in our operating results and general market conditions for technology or technology related
stocks could have a significant impact on the volatility of our common stock price. We have experienced significant volatility
in the price of our common stock. From January 1, 2020 through December 31, 2020, the share price of our common stock
(on a split-adjusted basis) ranged from a high of $3.18 to a low of $0.19. The reason for the volatility in our stock is not well
understood and may continue. Factors that may have contributed to such volatility include, but are not limited to:
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developments regarding regulatory filings;
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our funding requirements and the terms of our financing arrangements;
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technological innovations;
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introduction of new technologies by us or our competitors;
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material changes in existing litigation;
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changes in the enforceability or other matters surrounding our patent portfolios;
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government regulations and laws;
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public sentiment relating to our industry;
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developments in patent or other proprietary rights;
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the number of shares issued and outstanding;
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the number of shares trading on an average trading day;
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performance of companies in the non-performing entity space generally;
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announcements regarding other participants in the technology and technology related industries, including our competitors;
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block sales of our shares by stockholders to whom we have sold stock in private placements, or the cessation of transfer restrictions with respect to those shares; and
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market speculation regarding any of the foregoing.
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These broad market
and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. Since the
stock price of our common stock has fluctuated in the past, has been recently volatile and may be volatile in the future, investors
in our common stock could incur substantial losses. In the past, following periods of volatility in the market, securities class-action
litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial
costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial
condition, results of operations and growth prospects. There can be no guarantee that our stock price will remain at current
prices or that future sales of our common stock will not be at prices lower than those sold to investors.
We could fail in future financing
efforts or be delisted from the Nasdaq Capital Market if we fail to receive stockholder approval when needed.
We are required under
the Nasdaq rules to obtain stockholder approval for any issuance of additional equity securities that would comprise more than
20% of the total shares of our common stock outstanding before the issuance of such securities sold in an offering that is not
deemed to be a “public offering” by Nasdaq. Funding of our operations and acquisitions of assets may require issuance
of additional equity securities that would comprise more than 20% of the total shares of our common stock outstanding, but we might
not be successful in obtaining the required stockholder approval for such an issuance. If we are unable to obtain financing due
to stockholder approval difficulties, such failure may have a material adverse effect on our ability to continue operations.
Our shares of common stock are thinly
traded and, as a result, stockholders may be unable to sell at or near ask prices, or at all, if they need to sell shares to raise
money or otherwise desire to liquidate their shares.
Our common stock has
been “thinly-traded” meaning that the number of persons interested in purchasing our common stock at or near ask prices
at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the
fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others
in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons,
they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase
of our shares until such time as we become more seasoned and viable. Our trading volumes are further adversely affected by the
1-for-19 reverse stock split that was effective as of March 4, 2016. In addition, we believe that due to the limited number of
shares of our common stock outstanding, an options market has not been established for our common stock, limiting the ability of
market participants to hedge or otherwise undertake trading strategies available for larger companies with broader shareholder
bases which prevents institutions and others from acquiring or trading in our securities. Consequently, there may be periods of
several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has
a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.
We cannot give stockholders any assurance that a broader or more active public trading market for our shares of common stock will
develop or be sustained, or that current trading levels will be sustained.
Because of the Shareholder Rights
Plan and “anti-takeover” provisions in our Certificate of Incorporation and Bylaws, a third party may be discouraged
from making a takeover offer that could be beneficial to our stockholders.
Effective as of January
24, 2013, we adopted a shareholder rights plan which was amended and restated as of June 9, 2017. The effect of this rights plan
and of certain provisions of our Certificate of Incorporation, By-Laws, and the anti-takeover provisions of the Delaware General
Corporation Law, could delay or prevent a third party from acquiring us or replacing members of our Board of Directors, or make
more costly any attempt to acquire control of the Company, even if the acquisition or the Board designees would be beneficial to
our stockholders. These factors could also reduce the price that certain investors might be willing to pay for shares of the common
stock and result in the market price being lower than it would be without these provisions.
Dividends on our common stock are
not likely.
During the last five
years, we have not paid cash dividends on our common stock, and we do not anticipate paying cash dividends on our common stock
in the foreseeable future. Investors must look solely to the potential for appreciation in the market price of the shares
of our common stock to obtain a return on their investment.
It may be difficult to predict our
financial performance because our quarterly operating results may fluctuate.
Our revenues, operating
results and valuations of certain assets and liabilities may vary significantly from quarter to quarter due to a variety of factors,
many of which are beyond our control. You should not rely on period-to-period comparisons of our results of operations as an indication
of our future performance. Our results of operations may fall below the expectations of market analysts and our own forecasts.
If this happens, the market price of our common stock may fall significantly. The factors that may affect our quarterly operating
results include the following:
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fluctuations in results of our enforcement and licensing activities or outcome of cases;
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fluctuations in duration of judicial processes and time to completion of cases;
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the timing and amount of expenses incurred to negotiate with licensees and obtain settlements from infringers;
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the impact of our anticipated need for personnel and expected substantial increase in headcount;
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fluctuations in the receptiveness of courts and juries to significant damages awards in patent infringement cases and speed to trial in the jurisdictions in which our cases may be brought and the accepted royalty rates attributable to damages analysis for patent cases generally, including the royalty rates for industry standard patents which we may own or acquire;
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worsening economic conditions which cause revenues or profits attributable to infringer sales of products or services to decline;
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changes in the regulatory environment, including regulation of NPE activities or patenting practices, that may negatively impact our or infringers practices;
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the timing and amount of expenses associated with litigation, regulatory investigations or restructuring activities, including settlement costs and regulatory penalties assessed related to government enforcement actions;
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Any changes we make in our Critical Accounting Estimates described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our periodic reports;
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the adoption of new accounting pronouncements, or new interpretations of existing accounting pronouncements, that impact the manner in which we account for, measure or disclose our results of operations, financial position or other financial measures; and
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costs related to acquisitions of technologies or businesses.
|
If we fail to retain our key personnel,
we may not be able to achieve our anticipated level of growth and our business could suffer.
Our future depends,
in part, on our ability to attract and retain key personnel and the continued contributions of our executive officers, each of
whom may be difficult to replace. In particular, Anthony Hayes, our Chief Executive Officer, is important to the management of
our business and operations and the development of our strategic direction. The loss of the services of any such individual and
the process to replace any key personnel would involve significant time and expense and may significantly delay or prevent the
achievement of our business objectives.
Because an increasing amount of our
outstanding shares may become freely tradable, sales of these shares could cause the market price of our common stock to drop significantly,
even if our business is performing well.
As of February 16,
2021, we had outstanding 34,454,210 shares of common stock, of which our directors and executive officers owned 466,009 shares
which are subject to the limitations of Rule 144 under the Securities Act.
In general, Rule 144
provides that any non-affiliate of ours, who has held restricted common stock for at least six-months, is entitled to sell their
restricted stock freely, provided that we are then current in our filings with the SEC.
An affiliate of the
Company may sell after six months with the following restrictions:
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we are current in our filings;
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certain manner of sale provisions;
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filing of Form 144; and
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●
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volume limitations limiting the sale of shares within any three-month period to a number of shares that does not exceed the greater of 1% of the total number of outstanding shares or, the average weekly trading volume during the four calendar weeks preceding the filing of a notice of sale.
|
Because almost all
of our outstanding shares are freely tradable (subject to certain restrictions imposed by lockup agreements executed by the holders
thereof) and the shares held by our affiliates may be freely sold (subject to the Rule 144 limitations), sales of these shares
could cause the market price of our common stock to drop significantly, even if our business is performing well.
Risk Related to this Offering
Management will have broad discretion
as to the use of the net proceeds from this offering, and we may not use these proceeds effectively.
We intend to use the
net proceeds from this offering for working capital and general corporate purposes. Our management will have broad discretion in
the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of
operations or enhance the value of our common stock. Accordingly, you will be relying on the judgment of our management with regard
to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether
the proceeds are being used appropriately. Our failure to apply these funds effectively could have a material adverse effect on
our business, delay the development of our product candidates and cause the price of our common stock to decline.
You will experience immediate and
substantial dilution in the net tangible book value per share of the common stock you purchase.
Because the price per
share of our common stock being offered is substantially higher than the net tangible book value per share of our common stock,
you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. If you purchase
shares of common stock in this offering, you will suffer immediate and substantial dilution of approximately $0.40 per share in
the net tangible book value of the common stock. See the section entitled “Dilution” in this prospectus supplement
for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.
In addition, we have
a significant number of stock options, warrants and convertible preferred stock outstanding. To the extent that outstanding stock
options, warrants have been or may be exercised or other shares issued, you may experience further dilution.
Future sales of substantial amounts
of our common stock could adversely affect the market price of our common stock.
We may choose to raise
additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current
or future operating plans. If additional capital is raised through the sale of equity or convertible debt securities, or perceptions
that those sales could occur, the issuance of these securities could result in further dilution to investors purchasing our common
stock in this offering or result in downward pressure on the price of our common stock, and our ability to raise capital in the
future.
A large number of shares issued in
this offering may be sold in the market following this offering, which may depress the market price of our common stock.
A large number of shares
issued in this offering may be sold in the market following this offering, which may depress the market price of our common stock.
Sales of a substantial number of shares of our common stock in the public market following this offering could cause the market
price of our common stock to decline. If there are more shares of our common stock offered for sale than buyers are willing to
purchase, then the market price of our common stock may decline to a market price at which buyers are willing to purchase the offered
shares of our common stock and sellers remain willing to sell the shares. All of the securities issued in the offering will be
freely tradable without restriction or further registration under the Securities Act.
The trading price of our shares of
common stock has recently increased significantly to a level that we do not believe is consistent with any recent change in our
financial condition or results of operations. If the trading price of our shares of common stock decreases rapidly, investors purchasing
our shares of common stock in this offering could lose a significant portion of their investment.
The trading price of
our shares of common stock has recently increased significantly. On December 31, 2020, the last reported sale price of our shares
of common stock on the Nasdaq Capital Market was $0.87 per share. We believe that the sharp increase in the trading price of our
shares of common stock is the result of a number of factors outside our control, including social media posts that have drawn attention
to our company and increased trading in our shares of common stock by retail investors. These social media posts were not sponsored
or endorsed by us. There has been no recent change in our financial condition or results of operations that is consistent with
the increase in the trading price of our shares of common stock. The recent increase in the trading price of our shares of common
stock may not be sustained. In the event of a rapid decrease in the trading price of our shares of common stock, investors purchasing
our shares of common stock in this offering could some a significant portion of their investment.
A possible “short squeeze” due to a sudden
increase in demand of our common stock that largely exceeds supply may lead to further price volatility in our common stock.
Investors may purchase
shares of our common stock to hedge existing exposure in our common stock or to speculate on the price of our common stock. Speculation
on the price of our common stock may involve long and short exposures. To the extent aggregate short exposure exceeds the number
of shares of our common stock available for purchase in the open market, investors with short exposure may have to pay a premium
to repurchase our common stock for delivery to lenders of our common stock. Those repurchases may in turn, dramatically increase
the price of our common stock until investors with short exposure are able to purchase additional shares of common stock to cover
their short position. This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price
movements in shares of our common stock that are not directly correlated to the performance or prospects of our company and once
investors purchase the shares necessary to cover their short position the price of our common stock may decline. While we have
no reason to believe our shares would be the target of a short squeeze, there can be no assurance that they won’t be in the
future, and you may lose a significant portion or all of your investment if you purchase our shares at a rate that is significantly
disconnected from our underlying value.
CAPITALIZATION
The following table
sets forth our actual cash and cash equivalents and capitalization, each as of September 30, 2020, and as adjusted to give effect
to the issuance and sale of 46,875,000 shares of our common stock in this offering at an offering price of $1.60 per share, after
deducting the underwriting discounts and fees and estimated offering expenses payable by us.
You should read this
information together with our consolidated financial statements and related notes incorporated by reference in this prospectus
supplement.
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|
As of September 30, 2019
|
|
|
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Actual
|
|
|
As Adjusted
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
(Dollars in thousands, except per share data)
|
|
Cash and cash equivalents
|
|
$
|
910
|
|
|
$
|
69,810
|
|
Accounts payable and accrued expenses
|
|
|
459
|
|
|
|
459
|
|
Total liabilities
|
|
|
459
|
|
|
|
459
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 50,000,000 shares authorized; 4,725 shares of Series D Preferred Stock issued and outstanding at December 31, 2019; 834 shares of Series D-1 Preferred Stock issued and outstanding at September 30, 2020
|
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|
-
|
|
|
|
-
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|
Common stock, $0.0001 par value, 100,000,000 shares authorized; 34,920,222 shares issued and 34,920,219 outstanding, actual, and 81,795,222 issued and 81,795,219 outstanding, as adjusted, at September 30, 2020
|
|
|
3
|
|
|
|
8
|
|
Additional paid-in-capital
|
|
|
186,398
|
|
|
|
255,293
|
|
Treasury stock, at cost, 3 shares at September 30, 20120
|
|
|
(264
|
)
|
|
|
(264
|
)
|
Accumulated deficit
|
|
|
(156,929
|
)
|
|
|
(156,929
|
)
|
Total stockholders’ equity
|
|
|
29,208
|
|
|
|
98,108
|
|
Total liabilities and stockholders’ equity
|
|
$
|
29,667
|
|
|
$
|
98,567
|
|
The number of shares
of our common stock to be outstanding after this offering is based on 34,920,219 shares of common stock outstanding as of September
30, 2020 and excludes as of that date:
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|
84,304 shares of our common stock issuable upon exercise of outstanding options at a weighted average exercise price of $180.75 per share;
|
|
●
|
801,167 shares of our common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $9.86 per share (without giving effect to any of the anti-dilution adjustment provisions thereof);
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|
●
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688 shares of our common stock issuable upon the conversion of our Series D and D-1 Preferred Stock;
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●
|
193,838 shares of our common stock to be reserved for potential future issuance pursuant to our 2012, 2013 and 2014 Equity Incentive Plans in the aggregate;
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|
|
|
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●
|
167,273 shares of our common stock issuable upon exercise of placement agent’s warrants issued as compensation to the Representative for a prior offering, with an exercise price of $3.4375 per share;
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|
|
|
|
●
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1,120,000 shares of our common stock issuable upon exercise of the placement agent’s warrants to be issued as compensation to the Representative for a prior offering, with an exercise price of $1.25 per share;
|
|
|
|
|
●
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3,750,000 shares of common stock issuable upon exercise of the warrant to be issued to the Representative in connection with this offering; and
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|
|
|
|
●
|
Assumes no exercise by the Representative of its over-allotment option.
|
DILUTION
If you purchase shares
of our common stock in this offering, you will experience dilution to the extent of the difference between the price per share
you pay in this offering and the net tangible book value per share of our common stock immediately after this offering. The net
tangible book value of our common stock on September 30, 2020 was approximately $29.2 million, or approximately $0.84 per share.
Net tangible book value per share is equal to the amount of our total tangible assets, less total liabilities, divided by the aggregate
number of shares of our common stock outstanding.
After giving effect
to the sale by us of 46,875,000 shares of our common stock in this offering at an offering price of $1.60 per share, after deducting
the underwriting discount and fees and the estimated offering expenses payable by us, our as adjusted net tangible book value as
of September 30, 2020 would have been approximately $98.1 million, or approximately $1.20 per share of common stock. This
represents an immediate increase in net tangible book value of approximately $0.36 per share to existing stockholders and an immediate
dilution of approximately $0.40 per share to new investors purchasing shares of our common stock in this offering. The following
table illustrates this per share dilution:
Offering price per share
|
|
$
|
1.60
|
|
Net tangible book value per share as of September 30, 2020
|
|
$
|
0.84
|
|
Increase in net tangible book value per share attributable to new investors in this offering
|
|
$
|
0.36
|
|
|
|
|
|
|
As adjusted net tangible book value per share as of September 30, 2020 after giving effect to this offering
|
|
$
|
1.20
|
|
|
|
|
|
|
Dilution per share to investors participating in this offering
|
|
$
|
0.40
|
|
The number of shares
of our common stock to be outstanding after this offering is based on 34,920,219 shares of common stock outstanding as of September
30, 2020 and excludes as of that date:
|
●
|
84,304 shares of our common stock issuable upon exercise of outstanding options at a weighted average exercise price of $180.75 per share;
|
|
●
|
801,167 shares of our common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $9.86 per share (without giving effect to any of the anti-dilution adjustment provisions thereof);
|
|
●
|
688 shares of our common stock issuable upon the conversion of our Series D and D-1 Preferred Stock;
|
|
●
|
193,838 shares of our common stock to be reserved for potential future issuance pursuant to our 2012, 2013 and 2014 Equity Incentive Plans in the aggregate;
|
|
|
|
|
●
|
167,273 shares of our common stock issuable upon exercise of placement agent’s warrants issued as compensation to the Representative for a prior offering, with an exercise price of $3.4375 per share;
|
|
|
|
|
●
|
1,120,000 shares of our common stock issuable upon exercise of the placement agent’s warrants to be issued as compensation to the Representative for a prior offering, with an exercise price of $1.25 per share;
|
|
|
|
|
●
|
3,750,000 shares of common stock issuable upon exercise of the warrant to be issued to the Representative in connection with this offering; and
|
|
|
|
|
●
|
Assumes no exercise by the Representative of its over-allotment option.
|
USE OF PROCEEDS
Assuming all of the
shares of common stock offered in this offering are sold, we estimate that our net proceeds from this offering will be approximately
$69 million, or $79,350,000 if the Representative’s over-allotment option is exercised in full.
We intend to use the
net proceeds of this offering for working capital and general corporate purposes.
As of the date of this
prospectus supplement, the Company cannot specify with certainty all of the particular uses for the net proceeds to be received
upon the completion of this offering. The amounts and timing of its actual expenditures will depend on numerous factors, including
the status of its product development efforts, sales and marketing activities, technological advances, amount of cash generated
or used by its operations and competition. Accordingly, the Company’s management will have broad discretion in the application
of the net proceeds and investors will be relying on the judgment of its management regarding the application of the proceeds of
this offering.
DESCRIPTION OF OUR COMMON STOCK
The material terms
and provisions of our common stock are described in the section titled “Description of Securities We May Offer” in
the accompanying prospectus.
Securities Exchange Listing
Our common stock is
listed on the Nasdaq Capital Market under the symbol “AIKI”.
Transfer Agent and Registrar
The transfer agent
and registrar for our common stock is VStock Transfer, LLC.
UNDERWRITING
Pursuant to the underwriting
agreement with H.C. Wainwright & Co., LLC, as Representative of the various underwriters, we have agreed to issue and sell,
and the underwriter has agreed to purchase, the number of shares of common stock listed opposite its name below, less the underwriting
discounts and commissions, on the closing date, subject to the terms and conditions contained in the underwriting agreement. The
underwriting agreement provides that the obligations of the underwriter are subject to certain customary conditions precedent,
representations and warranties contained therein.
Underwriter
|
|
Number of Shares
|
|
H.C. Wainwright & Co., LLC
|
|
|
46,875,000
|
|
Pursuant to the underwriting
agreement, the Representative has agreed to purchase all of the shares sold under the underwriting agreement if any of these shares
are purchased. The Representative has advised us that it does not intend to confirm sales to any account over which it exercises
discretionary authority.
Discounts, Commissions, and Expenses
The underwriters may
offer the shares of common stock from time to time to purchasers directly or through agents, or through brokers in brokerage transactions
on the Nasdaq Capital Market, or to dealers in negotiated transactions or in a combination of such methods of sale, or otherwise,
at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices, subject to receipt and acceptance by it and subject to its right to reject any
order in whole or in part. The difference between the price at which the underwriters purchase shares from us and the price at
which the underwriters resells such shares may be deemed underwriting compensation. If the underwriters effect such transactions
by selling shares of common stock to or through dealers, such dealers may receive compensation in the form of discounts, concessions,
or commissions from the underwriters and/or purchasers of shares of common stock for whom they may act as agents or to whom they
may sell as principal.
The Representative
is offering the shares, subject to prior sale, when, as and if issued to and accepted by it, subject to approval of legal matters
and other conditions specified in the underwriting agreement. The Representative reserves the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.
We have granted to
the Representative an option to purchase up to 7,031,250 additional shares of common stock at the public offering price, less the
underwriting discount, to cover over-allotments. The option is exercisable for 30 days from the date of this prospectus supplement.
The following table
shows the public offering price, underwriting discounts and commissions and proceeds, before expenses, to us. These amounts are
shown assuming both no exercise and full exercise of the underwriters option to purchase additional shares.
|
|
Per Share
|
|
|
Total No Exercise of Over-Allotment
|
|
|
Total
Exercise of Over-Allotment
|
|
Public offering price
|
|
$
|
1.60
|
|
|
$
|
75,000,000
|
|
|
$
|
86,250,000
|
|
Underwriting discounts and commissions (1)
|
|
$
|
0.128
|
|
|
$
|
6,000,000
|
|
|
$
|
6,900,000
|
|
Proceeds, before expenses, to us
|
|
$
|
1.472
|
|
|
$
|
69,000,000
|
|
|
$
|
79,350,000
|
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We have also agreed to pay: (i) the Representative’s legal
fees and expenses, in the sum of up to $100,000 in connection with this offering, (ii) a management fee of $750,000 to the Representative
(equal to 1.0% of the gross proceeds raised in this offering), and (iii) $50,000 to the Representative for nonaccountable expenses. We estimate that the total expenses of the offering, excluding underwriting
discounts and commissions, will be approximately $325,000, and are payable by us.
Additionally, we
agreed to grant the Representative (or its designees) warrants to purchase up to 3,750,000 shares of our common stock, which
represents 8% of the aggregate number of shares sold this offering, including any shares of common stock issued upon exercise
of option to purchase additional shares (and warrants to purchase up to an additional 562,500 shares if the Representative
exercises its option to purchase additional shares in full), with an exercise price of $2.00 per share (representing 125% of
the public offering price per share). The Representative warrants will be exercisable immediately and for five years from the
commencement of the sales of this offering. The warrants issued to the Representative and the shares of common stock issuable
upon exercise of the warrants issued to the Representative are registered on the registration statement of which this
prospectus forms a part.
Indemnification
We have agreed to indemnify
the underwriters against certain liabilities, including civil liabilities under the Securities Act, or to contribute to payments
that the underwriters may be required to make in respect of those liabilities.
Lock-Up Agreements
We, our officers, directors
and certain holders of 5% or more of our common stock, have agreed to not sell any shares of our common stock or any securities
convertible into or exercisable or exchangeable into share of common stock, subject to certain exceptions, for a period of 30 days
after the date of closing of the offering pursuant to this prospectus supplement unless we or our officers and directors obtain
prior written consent of the Representative. This consent may be given at any time without public notice, and the Representative
may consent in its sole discretion. The exceptions to the restriction include, among other things, the issuance of any shares of
our capital stock or securities convertible into shares of our capital stock that are issued (i) pursuant to a stock or option
plan, (ii) pursuant to the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible
into shares of common stock issued and outstanding on the date of this prospectus supplement, provided that such securities are
not amended after the date of this prospectus supplement, (iii) as consideration in an acquisition, merger or similar strategic
transaction approved by a majority of the disinterested directors, provided that such securities are issued as “restricted
securities” as defined in Rule 144 and carry no registration rights that require or permit the filing of any registration
statement in connection therewith within 30 days after the date of this prospectus supplement, and provided that any such issuance
shall only be to a person providing us business synergies and additional benefits in addition to the investment of funds, but shall
not include a transaction in which we are issuing securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities. In addition, subject to an exception for an “at the market” offering,
after 30 days following the date of closing of this offering, we have agreed to not issue any securities that are subject to a
price reset based on the trading prices of our common stock or upon a specified or contingent event in the future, or enter into
any agreement to issue securities at a future determined price, for one year following the date of closing of this offering, which
prohibition may be waived at any time without public notice by the Representative.
Price Stabilization, Short Positions,
and Penalty Bids
In connection with
this offering, the underwriters may engage in stabilizing transactions, overallotment transactions, syndicate covering transactions
and penalty bids in connection with our common stock.
Stabilizing transactions
permit bids to purchase shares of common stock so long as the stabilizing bids do not exceed a specified maximum.
Overallotment transactions
involve sales by the underwriters of shares of common stock in excess of the number of shares the underwriters are obligated to
purchase. This creates a syndicate short position which may be either a covered short position or a naked short position. In a
covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that it
may purchase in the overallotment option. In a naked short position, the number of shares involved is greater than the number of
shares in the overallotment option. The underwriters may close out any short position by exercising its overallotment option and/or
purchasing shares in the open market.
Syndicate covering
transactions involve purchases of common stock in the open market after the distribution has been completed in order to cover syndicate
short positions. Such a naked short position would be closed out by buying securities in the open market. A naked short position
is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the securities
in the open market after pricing that could adversely affect investors who purchase in the offering.
Penalty bids permit
the underwriters to reclaim a selling concession from a syndicate member when the securities originally sold by the syndicate member
are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.
These stabilizing transactions,
syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock
or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock in the
open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriters makes
any representation or prediction as to the effect that the transactions described above may have on the price of our common stock.
These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter market or otherwise and, if commenced,
may be discontinued at any time.
In connection with
this offering, the underwriters also may engage in passive market making transactions in our common stock in accordance with Regulation
M during a period before the commencement of offers or sales of shares of our common stock in this offering and extending through
the completion of the distribution. In general, a passive market maker must display its bid at a price not in excess of the highest
independent bid for that security. However, if all independent bids are lowered below the passive market maker’s bid that
bid must then be lowered when specific purchase limits are exceeded. Passive market making may stabilize the market price of the
securities at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any
time.
Electronic Distribution
A prospectus in electronic
format may be made available on the websites maintained by the underwriters, if any, participating in this offering and the underwriters
may distribute prospectuses electronically. Other than the prospectus in electronic format, the information on these websites is
not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed
by us or the underwriters, and should not be relied upon by investors.
Other Relationships
From time to time,
the Representative and its affiliates have provided, and may provide in the future, various advisory, investment and commercial
banking and other services to us in the ordinary course of business, for which it has received and may continue to receive customary
fees and commissions. In particular, the Representative served as our exclusive placement agent in connection with our registered
direct offering that we consummated in March 2020, as the exclusive placement agent for the registered direct offering that we
consummated in March 2020 and as the exclusive placement agent for the public offering that we consummated in April 2020, for which
it received compensation.
Transfer Agent
The transfer agent and registrar for our
common stock is VStock Transfer, LLC.
Listing on the Nasdaq Capital Market Listing
Our common stock is
traded on the Nasdaq Capital Market under the symbol “AIKI.” On February 16, 2021, the last reported sale price of
our common stock was $2.13 per share.
LEGAL MATTERS
The validity of the
shares of common stock offered hereby will be passed upon for us by Ellenoff Grossman & Schole LLP, New York, New York. Sheppard,
Mullin, Richter & Hampton LLP, New York, New York, is acting as counsel to the Representative in connection with this offering.
EXPERTS
Marcum LLP, an independent
registered public accounting firm, has audited our consolidated financial statements included in our Annual Report on Form 10-K
for the year ended December 31, 2019, as set forth in their report, which includes an explanatory paragraph as to the Company’s
ability to continue as a going concern, dated January 31, 2020, which is incorporated by reference in this prospectus supplement
and elsewhere in the registration statement. Our consolidated financial statements are incorporated by reference in reliance on
Marcum LLP’s report, given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and current reports, proxy statements and other information with the SEC, which are available at the SEC’s
website at http://www.sec.gov. In addition, we maintain a website that contains information about us at http://www.aikidopharma.com.
The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this
prospectus supplement, the accompanying prospectus or any other report or document we file with or furnish to the SEC.
We
have filed with the SEC a registration statement on Form S-3 (File No. 333-238172) under the Securities
Act with respect to the shares of common stock offered by this prospectus supplement and accompanying prospectus. When used in
this prospectus supplement and the accompanying prospectus, the term “registration statement” includes amendments to
the registration statement as well as the exhibits, schedules, financial statements and notes filed as part of the registration
statement or incorporated by reference therein. This prospectus supplement, and the accompanying prospectus, which constitutes
a part of the registration statement, omits some information contained in the registration statement in accordance with SEC rules
and regulations. You should review the information and exhibits in the registration statement for further information on us and
our consolidated subsidiaries and the common stock we are offering by this prospectus supplement. Statements herein concerning
any document we filed as an exhibit to the registration statement or that we otherwise filed with the SEC are not intended to be
comprehensive and are qualified by reference to these filings. You should review the complete document to evaluate these statements.
You can obtain a copy of the registration statement from the SEC on the SEC’s website.
INCORPORATION OF DOCUMENTS BY REFERENCE
This prospectus supplement
and the accompanying prospectus are part of the registration statement but the registration statement includes and incorporates
by reference additional information and exhibits. The SEC permits us to “incorporate by reference” the information
contained in documents we file with the SEC, which means that we can disclose important information to you by referring you to
those documents rather than by including them in this prospectus supplement and the accompanying prospectus. Information that is
incorporated by reference is considered to be part of this prospectus supplement and the accompanying prospectus and you should
read it with the same care that you read this prospectus supplement and the accompanying prospectus. Information that we file later
with the SEC will automatically update and supersede the information that is either contained, or incorporated by reference, in
this prospectus supplement, and will be considered to be a part of this prospectus supplement and the accompanying prospectus from
the date those documents are filed. We have filed with the SEC, and incorporate by reference into this prospectus supplement and
accompanying prospectus:
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the Company’s
Current Reports on Form 8-K, filed with the SEC on February
24, 2020, March 9,
2020, March 10,
2020, March 25,
2020, March 26,
2020, (with respect to two reports) March
30, 2020, April
15, 2020, April
20, 2020, May 1,
2020, June 25, 2020, August
31, 2020, September
11, 2020, September
14, 2020, September
29, 2020, November 20,
2020, January 11,
2021, January 19,
2021, January 25,
2021, February 3, 2021 and February 18, 2021;
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the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on January 31, 2020;
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the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, as filed with the SEC on May 14, 2020, the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, as filed with the SEC on August 6, 2020, and the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020, as filed with the SEC on November 13, 2020; and
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the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on October 5, 2020.
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In addition, all documents
subsequently filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, prior
to the termination of the offering (excluding any information furnished rather than filed) shall be deemed to be incorporated by
reference into this prospectus supplement and the accompanying prospectus.
Notwithstanding the
statements in the preceding paragraphs, no document, report or exhibit (or portion of any of the foregoing) or any other information
that we have “furnished” to the SEC pursuant to the Securities Exchange Act of 1934, as amended shall be incorporated
by reference into this prospectus supplement and the accompanying prospectus.
We will furnish without
charge to you, on written or oral request, a copy of any or all of the documents incorporated by reference in this prospectus supplement
and accompanying prospectus, including exhibits to these documents. You should direct any requests for documents to:
AIkido Pharma Inc.
One Rockefeller Plaza, 11th Floor
New York, NY 10020
Phone: 212-745-1374
You also may access
these filings on our website at http://www.aikidopharma.com. We do not incorporate the information on our website into this prospectus
supplement, the accompanying prospectus or any supplement to this prospectus and you should not consider any information on, or
that can be accessed through, our website as part of this prospectus supplement or any supplement to this prospectus (other than
those filings with the SEC that we specifically incorporate by reference into this prospectus supplement or any supplement to this
prospectus).
Any statement contained
in a document incorporated or deemed to be incorporated by reference in this prospectus supplement and the accompanying prospectus
will be deemed modified, superseded or replaced for purposes of this prospectus supplement to the extent that a statement contained
in this prospectus supplement modifies, supersedes or replaces such statement. Any statement contained herein or in any document
incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded for purposes of the registration
statement of which this prospectus supplement forms a part to the extent that a statement contained in any other subsequently filed
document which also is or is deemed to be incorporated by reference modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part of the registration statement of which this prospectus supplement
and the accompanying prospectus form a part, except as so modified or superseded.
AIkido Pharma Inc.
One Rockefeller Plaza, 11th Floor
New York, NY 10020
Phone: 212-745-1374
Prospectus
$100,000,000
COMMON STOCK
PREFERRED STOCK
PURCHASE CONTRACTS
WARRANTS
SUBSCRIPTION RIGHTS
DEPOSITORY SHARES
DEBT SECURITIES
UNITS
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warrants to purchase our securities;
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subscription rights to purchase any of the foregoing securities;
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secured or unsecured debt securities consisting of notes, debentures or other evidences of indebtedness which may be senior debt securities, senior subordinated debt securities or subordinated debt securities, each of which may be convertible into equity securities; or
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units comprised of, or other combinations of, the foregoing securities.
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We may offer and sell
these securities separately or together, in one or more series or classes and in amounts, at prices and on terms described in one
or more offerings. We may offer securities through underwriting syndicates managed or co-managed by one or more underwriters
or dealers, through agents or directly to purchasers. The prospectus supplement for each offering of securities will describe
in detail the plan of distribution for that offering. For general information about the distribution of securities offered,
please see “Plan of Distribution” in this prospectus.
Each time our securities
are offered, we will provide a prospectus supplement containing more specific information about the particular offering and attach
it to this prospectus. The prospectus supplements may also add, update or change information contained in this prospectus. This
prospectus may not be used to offer or sell securities without a prospectus supplement which includes a description of the method
and terms of this offering.
Our common stock is
quoted on The Nasdaq Capital Market under the symbol “AIKI”. The last reported sale price of our common stock on The
Nasdaq Capital Market on June 11, 2020 was $0.74 per share. The aggregate market value of our outstanding common stock held by
non-affiliates is $25.82 million based on 34,920,219 shares of outstanding common stock, of which 34,891,230 shares are
held by non-affiliates, and a per share price of $0.74 which was the closing sale price of our common stock as quoted on The Nasdaq
Capital Market on June 11, 2020.
If we decide to seek
a listing of any preferred stock, purchase contracts, warrants, subscriptions rights, depository shares, debt securities or units
offered by this prospectus, the related prospectus supplement will disclose the exchange or market on which the securities will
be listed, if any, or where we have made an application for listing, if any.
Investing in our
securities involves certain risks. See “Risk Factors” beginning on page 11 and the risk factors in our most recent
Quarterly Report on Form 10-Q, which is incorporated by reference herein, as well as in any other recently filed annual, quarterly
or current reports and, if any, in the relevant prospectus supplement. We urge you to carefully read this prospectus and
the accompanying prospectus supplement, together with the documents we incorporate by reference, describing the terms of these
securities before investing.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this Prospectus is June 12,
2020
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is
part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or SEC, utilizing
a “shelf” registration process. Under this shelf registration process, we may offer and sell, either individually or
in combination, in one or more offerings, any of the securities described in this prospectus, for total gross proceeds of up to
$100,000,000. This prospectus provides you with a general description of the securities we may offer. Each time we offer securities
under this prospectus, we will provide a prospectus supplement to this prospectus that will contain more specific information about
the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain
material information relating to these offerings. The prospectus supplement and any related free writing prospectus that we may
authorize to be provided to you may also add, update or change any of the information contained in this prospectus or in the documents
that we have incorporated by reference into this prospectus.
We urge you to read
carefully this prospectus, any applicable prospectus supplement and any free writing prospectuses we have authorized for use in
connection with a specific offering, together with the information incorporated herein by reference as described under the heading
“Incorporation of Documents by Reference,” before investing in any of the securities being offered. You should rely
only on the information contained in, or incorporated by reference into, this prospectus and any applicable prospectus supplement,
along with the information contained in any free writing prospectuses we have authorized for use in connection with a specific
offering. We have not authorized anyone to provide you with different or additional information. This prospectus is an offer to
sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.
The
information appearing in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate
only as of the date on the front of the document and any information we have incorporated by reference is accurate only as of the
date of the document incorporated by reference, regardless of the time of delivery of this prospectus, any applicable prospectus
supplement or any related free writing prospectus, or any sale of a security.
This
prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made
to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents.
Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits
to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below
under the section entitled “Where You Can Find Additional Information.”
This prospectus contains,
or incorporates by reference, trademarks, tradenames, service marks and service names of AIkido Pharma Inc.
CAUTIONARY NOTE REGARDING FORWARD LOOKING
STATEMENTS
This prospectus and
any accompanying prospectus supplement and the documents incorporated by reference herein may contain forward looking statements
that involve risks and uncertainties. All statements other than statements of historical fact contained in this prospectus
and any accompanying prospectus supplement and the documents incorporated by reference herein, including statements regarding future
events, our future financial performance, business strategy, and plans and objectives of management for future operations, are
forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,”
“believes,” “can,” “continue,” “could,” “estimates,” “expects,”
“intends,” “may,” “plans,” “potential,” “predicts,” “should,”
or “will” or the negative of these terms or other comparable terminology. Although we do not make forward looking statements
unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions
and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors”
or elsewhere in this prospectus and the documents incorporated by reference herein, which may cause our or our industry’s
actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Moreover,
we operate in a highly regulated, very competitive, and rapidly changing environment. New risks emerge from time to time and it
is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent
to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking
statements.
We have based these
forward-looking statements largely on our current expectations and projections about future events and financial trends that we
believe may affect our financial condition, results of operations, business strategy, short term and long term business operations,
and financial needs. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual
results to differ materially from those reflected in the forward looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in this prospectus, and in particular, the risks discussed below
and under the heading “Risk Factors” and those discussed in other documents we file with the SEC. The following discussion
should be read in conjunction with the consolidated financial statements for the fiscal years ended December 31, 2019 and 2018
and notes incorporated by reference herein. We undertake no obligation to revise or publicly release the results of any revision
to these forward-looking statements, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking
events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from
those anticipated or implied in the forward-looking statement.
You should not place
undue reliance on any forward-looking statement, each of which applies only as of the date of this prospectus. Except as required
by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this prospectus
to conform our statements to actual results or changed expectations.
Any forward-looking
statement you read in this prospectus, any prospectus supplement or any document incorporated by reference reflects our current
views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations,
operating results, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements because
such statements speak only as to the date when made. We assume no obligation to publicly update or revise these forward-looking
statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future, except as otherwise required by applicable law. You are advised,
however, to consult any further disclosures we make on related subjects in our reports on Forms 10-Q, 8-K and 10-K filed with
the SEC. You should understand that it is not possible to predict or identify all risk factors. Consequently, you should not consider
any such list to be a complete set of all potential risks or uncertainties.
PROSPECTUS SUMMARY
This summary highlights
selected information contained elsewhere in this prospectus. This summary does not contain all the information that
you should consider before investing in our Company. You should carefully read the entire prospectus, including all
documents incorporated by reference herein. In particular, attention should be directed to our “Risk Factors”, “Information
With Respect to the Company”, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and the financial statements and related notes thereto contained herein or otherwise incorporated by reference
hereto, before making an investment decision.
As used herein, and
any amendment or supplement hereto, unless otherwise indicated, “we,” “us,” “our,” the
“Company,” “AIKI” or similar terminology means AIkido Pharma Inc.
Business Overview
AIkido Pharma Inc.,
formerly known as Spherix Incorporated, was initially formed in 1967 and is currently a biotechnology company with a diverse portfolio
of small-molecule anti-cancer therapeutics in development. The Company’s platform consists of patented technology from leading
universities and researchers and we are currently in the process of developing an innovative therapeutic drug platform through
strong partnerships with world renowned educational institutions, including the University of Texas at Austin, the University of
Maryland, Baltimore and Wake Forest University. Our diverse pipeline of therapeutics includes therapies for pancreatic cancer,
acute myeloid leukemia (AML) and acute lymphoblastic leukemia (ALL). The Company is also developing a broad spectrum antiviral
platform that may potentially inhibit replication of multiple viruses including Influenza virus, SARS-CoV (coronavirus), MERS-CoV,
Ebolavirus and Marburg virus.
The Company previously
focused its efforts on owning, developing, acquiring and monetizing intellectual property assets. Since May 2016, the Company has
received limited funds from its intellectual property monetization. In addition to its patent monetization efforts, since the fourth
quarter of 2017, the Company has been transitioning to focus its efforts as a technology and biotechnology development company.
These efforts have focused on biotechnology research and blockchain technology research. The Company’s biotechnology research
development includes: (i) an investment in Hoth Therapeutics Inc. (“Hoth”), a development stage biopharmaceutical company
focused on unique targeted therapeutics for patients suffering from indications such as atopic dermatitis, also known as eczema,
(ii) an investment in DatChat, Inc. (“DatChat”), a privately held personal privacy platform focused on encrypted communication,
internet security and digital rights management, and (iii) the acquisition of assets of CBM BioPharma, Inc. (“CBM”),
a pharmaceutical company focusing on the development of cancer treatments.
As a result of the
Company’s biotechnology research development and associated investments and acquisitions, our business portfolio now focuses
on the treatment of three different cancers, including pancreatic cancer, acute myeloid leukemia (AML) and acute lymphoblastic
leukemia (ALL). Our AML and ALL compounds, developed at the Wake Forest University, are targeted therapeutics designed to overcome
multiple resistance mechanisms observed with the current standard of care. DHA-dFdC, our pancreatic drug candidate developed at
the University of Texas at Austin, is a new compound that we hope will become the next generation of chemotherapy treatment for
advanced pancreatic cancer. DHA-dFdC overcomes tumor cell resistance to current chemotherapeutic drugs and is well tolerated in
preclinical toxicity tests. Preclinical studies have also indicated that DHA-dFdC inhibits pancreatic cancer cell growth (up to
100,000-fold more potent that gemcitabine, a current standard therapy), targets pancreatic tumors and has demonstrated activities
against other cancers, including leukemia, lung and melanoma. In addition, we are constantly seeking to grow our pipe to treat
unmet medical needs in oncology.
In addition, the Company
owns an exclusive world-wide license to patented technology from the University of Maryland Baltimore (“UMB”). Our
license is for a broad spectrum antiviral drug platform. The licensed technology is a broadly acting pan-viral inhibitory compound
targeting multiple viral pathogens. The technology works to inhibit replication of multiple viruses including Influenza virus,
SARS-CoV (coronavirus), MERS-CoV, Ebolavirus and Marburg virus. The technology is covered by two patent applications already on
file with the United States Patent and Trademark Office. The UMB inventors are Drs. Matthew Frieman, Alexander MacKerell and Stuart
Watson. The Company has also executed a Sponsored Research Agreement with UMB to support the development of the technology.
Our Products and Services
The acquisition of
the CBM assets has transformed the Company into an innovative pharmaceutical company dedicated to translating fundamental biological
insights into new drugs and treatments that address unmet medical needs. Our drug platform focuses on the treatment of three cancers,
including pancreatic cancer, acute myeloid leukemia (AML) and acute lymphoblastic leukemia (ALL).
Our Drug Platform
DHA-dFdC 4-(N)-Docosahexaenoyl
2´, 2´-Difluorodeoxycytidine, referred to as DHA-dFdC, is patented technology licensed to the Company from the University
of Texas at Austin. DHA-dFdC is a new compound poised to become the next generation of second-line chemotherapy treatment for
advanced pancreatic cancer. DHA-dFdC overcomes tumor cell resistance to current chemotherapeutic drugs and is well tolerated in
preclinical toxicity tests. Preclinical studies have also indicated that DHA-dFdC inhibits pancreatic cancer cell growth (up to
100,000-fold more potent that gemcitabine, a current standard therapy (for example, the IC50 value of DHA-dFdC is more than 100,000-fold
smaller than gemcitabine), targets pancreatic tumors and has demonstrated activities against other cancer cell lines, including
leukemia, lung and melanoma. Our AML and ALL compounds, developed at the Wake Forest University and called KPC34, are next generation
targeted therapeutics designed to overcome multiple resistance mechanisms observed with the current standard of care. Combined,
the Company’s drug platform offers a robust drug pipeline focused on the development and commercialization of drugs to treat
unmet medical needs in oncology. In addition, we are constantly seeking to grow our pipeline to treat unmet medical needs in oncology.
Background*
Pancreatic cancer is
the 3rd leading cause of cancer-related death in the United States, surpassing breast cancer. It is expected to become the 2nd
leading cause of cancer-related death in the United States by the year 2020, surpassing colorectal cancer. In fact, pancreatic
cancer has the highest mortality rate of all major cancers. Approximately 91% of pancreatic cancer patients will die within five
years of diagnosis, only 8% will survive more than five years and 74% of patients die within the first year of diagnosis.
Pancreatic cancer is
one of the few cancers for which survival has not improved substantially over nearly 40 years. Treatment options for pancreatic
cancer include surgery, radiation therapy and chemotherapy, which extend survival or relieve symptoms, but seldom produce a cure.
Surgical removal of the tumor is possible in less than 20% of patients diagnosed with pancreatic cancer because detection is often
in late stages and has spread beyond the pancreas. The current state of the art chemotherapy treatment is gemcitabine, Folfirinox
cocktail or gemcitabine in combination with Abraxane.
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Hirshberg Foundation for Pancreatic Cancer Research
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The University of Texas
at Austin has identified a new drug, DHA-dFdC, that has shown positive results in preclinical studies, inhibiting pancreatic tumor
growth in clinically relevant transgenic mouse models. In preclinical studies, DHA-dFdC has:
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inhibited pancreatic cancer cell growth (up to 100,000-fold more potent that gemcitabine, a current standard therapy);
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targets pancreatic tumors;
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has overcome tumor cell resistance to current chemotherapeutic drugs;
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is well tolerated in preclinical toxicity test;
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has demonstrated activities against other cancers (e.g. leukemia, lung, melanoma); and
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may stimulate immunogenic cell death to activate host antitumor immunity.
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Gem-DHA Technology Summary
Gem-DHA is a conjugate
molecule containing gemcitabine linked to a fatty acid called docosahexaenoic acid (DHA). The structure is:
The DHA structure is
illustrated above the dashed line in the graphic above and the gemcitabine structure is illustrated below the dashed line. The
DHA patent states that Gem-DHA was more effective than gemcitabine alone in killing cancer cells in vitro and in vivo in a certain
mouse model. The patent also states that conjugation of gemcitabine with fatty acids other than DHA did not increase effectiveness
over gemcitabine.
Gem-DHA Published Data
The science behind
Gem-DHA has been published in the following peer-reviewed scientific journals:
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Naguib et al. (2016) Synthesis, characterization, and in vitro and in vivo evaluations of 4-(N)-docosahexaenoyl 2 ́, 2 ́- difluorodeoxycytidine with potent and broad-spectrum antitumor activity, NeoPlasia 18: 33-48.
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Valdes et al. (2017) Preclinical evaluation of the short-term toxicity of 4-(N)-docosahexaenoyl 2 ́, 2 ́- difluorodeoxycytidine (DHA-dFdC), Pharm. Res. 34: 1224-1232.
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Valdes et al. (2019) A solid lipid nanoparticle formulation of 4-(N)-docosahexaenoyl 2 ́, 2 ́- difluorodeoxycytidine with increased solubility, stability, and antitumor activity, Int. J. Pharm. 570:118609
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The portions
of the published data state the following:
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The drug unexpectedly concentrates itself in the pancreas relative to other organs.
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It significantly increases the lifespan of mice with pancreatic cancer in either mice predisposed to develop the cancer, or into which human pancreatic cancer has been injected.
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It significantly decreases the growth of pancreatic tumors in mice, better than gemcitabine, the current standard of care.
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An oral formulation using lipid nanoparticles is highly effective and stable and has outstanding bioavailability.
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Gem-DHA Patent Coverage
Gem-DHA has one issued patent on the drug
itself and one application on the oral formulation, as listed in the following table:
Number
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Priority
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Expiration
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Title
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App. Serial No. 16/576,127, filed 9/19/2019 as continuation of App. Serial No. 15/115,393, filed 1/29/2015
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1/29/2014
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N/A
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Nucleobase Analogue Derivatives and Their Applications
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U.S. Patent No. 10,463,684, issued 11/5/2019 from App. Serial No. 15/115,393, filed 1/29/2015
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1/29/2014
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10/7/2035
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Nucleobase Analogue Derivatives and Their Applications
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Provisional App. Serial No. 62/858,114, filed 6/6/2019
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6/6/2019
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N/A
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Lipid Nanoparticles Containing Pharmaceutical and/or Nutraceutical agents and methods thereof
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All of this technology has been exclusively
licensed to the Company for commercial development.
AML & ALL Cancer
Our AML and ALL compounds,
developed at the Wake Forest University and called KPC34, are next generation targeted therapeutics designed to overcome multiple
resistance mechanisms observed with the current standard of care.
Background
Approximately 70% of
all AML patients are over the age of 60 and only 6.6% of patients are still alive 5 years after diagnosis. Gemcitabine and Cytarabine
are the backbone of AML and ALL therapy, but life expectancy is poor and relapses are much harder to treat.
Cytarabine (Ara-C)
has been a major drug for acute myeloid leukemia (AML) treatment for more than three decades, but KPC34 has shown superior results
when tested against Cytarabine.
KPC34 Technology Summary
KPC34, a conjugate molecule made of a gemcitabine
molecule linked to a phospholipid, has the following structure:
Picture in the illustration
above, to the left of the dashed line is the phospholipid portion and to the right of the dashed line is gemcitabine.
Gemcitabine is a chemotherapy
drug used to treat a wide array of cancers, including breast cancer, ovarian cancer, non-small cell lung cancer, pancreatic cancer
and bladder cancer. The drug interferes with DNA and its function of the phospholipid to which the gemcitabine is linked in KPC34,
is to inhibit protein kinase C-type enzymes, which are involved in multiple signaling pathways in leukemia.
The strategy behind
targeting both DNA synthesis and protein kinase C with one molecule is to double-target different mechanisms of action in leukemia
cells and greatly reduce the possibility of development of resistance to the drug.
KPC34 is intended to
treat the relatively small population of patients with AML and acute ALL. In 2019, an estimated 21,450 people of all ages (11,650
men and boys and 9,800 women and girls) in the United States will be diagnosed with AML. AML is the second most common type of
leukemia diagnosed in adults and children, but most cases occur in adults. AML makes up 32% of all adult leukemia cases (source:
https://www.cancer.net/cancer-types/leukemia-acute-myeloid-aml/statistics). In 2019, an estimated 5,930 people of all ages (3,280
men and boys and 2,650 women and girls) in the United States were diagnosed with ALL (source: https://www.cancer.net/cancer-types/leukemia-acute-lymphocytic-all/statistics).
The drug is intended
for oral application, unlike standard chemotherapy drugs, which are given by injection.
Because of the low
patient population, and the imminent expiration of the patent, FDA orphan drug status will be sought, which provides expedited
review and seven years of exclusivity from approval of the new drug application.
Preliminary data from
preclinical studies at Wake Forest on the drug includes the following results:
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kills leukemia cells in vitro;
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inhibits protein kinase C in biochemical assays;
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targets central nervous system leukemia;
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targets AML exhibiting phosphorylated protein kinase C;
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Wake Forest claims KPC34 targeted gemcitabine alone or cytarabine (another chemo drug) alone; and
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KPC34 also appears to overcome resistance to gemcitabine; it is effective against gemcitabine-resistant cancer.
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The technology licensed
is much broader than KPC34 represents, and includes both anticancer and antiviral conjugates, and could include a much broader
range of indications, but we have no such drug candidates in development other than KPC34.
KPC34 Patent Coverage
The KPC34 license includes
five issued patents, but only one of them covers KPC34. The patent is US7309696, entitled “Compositions and methods for targeting
cancer cells.” It expires on August 11, 2021. All five of the licensed patents will expire by late 2022.
Licenses
On April 12, 2018,
CBM entered into a patent license agreement (the “UT Agreement”) with the University of Texas at Austin on behalf of
the Board of Regents of the University of Texas System. The UT Agreement granted to CBM an exclusive, royalty-bearing license to
certain patent applications related to nucleobase analogue derivatives and their applications, and specifically to the DHA-dFdC
drug candidate. On November 13, 2019, the University of Texas at Austin, the Company and CBM entered into an assignment of agreement,
whereby CBM assigned all of its rights, title and interest to, and obligations under the UT Agreement to the Company.
On April 17, 2018,
CBM entered into a license agreement (the “WF Agreement”) with Wake Forest University Health Sciences (“WF”).
The WF Agreement granted to CBM an exclusive, royalty-bearing license to WF’s and The University of North Carolina at Chapel
Hill’s patents relating to the KPC34 drug candidate. On November 13, 2019, WF, the Company and CBM entered into an assignment
of agreement, whereby CBM assigned all of its rights, title and interest to, and obligations under the WF Agreement to the Company.
On April 13, 2020,
the Company executed a Master License Agreement (the “UMB License Agreement”) with UMB, pursuant to which UMB agreed
to license inventions collectively known as “Broad Spectrum Antiviral Compounds Which Target the SKI Complex” (the
“Inventions”) to the Company. The Inventions, which are covered by two patent applications on file with the United
States Patent and Trademark Office, are currently in the pre-clinical stage and seek to inhibit replication of multiple viruses,
including the Influenza virus, SARS-CoV, MERS-CoV, Ebolavirus and Marburg virus. In addition, the Company entered into a Sponsored
Research Agreement with UMB to support the development of various technologies.
Pursuant to the UMB
License Agreement, UMB grants to the Company the ability to utilize the licensed products (“Licensed Products”) and
patents associated with the Inventions, subject to certain limitations described in the UMB License Agreement. All improvements
to the Inventions are solely owned by the party improving the Inventions, unless jointly made, in which case both parties jointly
own the improvements; however, the Company grants to UMB the royalty-free license to practice the Company’s improvements.
The Company has agreed to deliver to UMB a commercialization plan setting forth the Company’s plan for research and development
required to develop the Licensed Products and the Company’s overall commercialization strategy by December 31, 2022.
The Company is required
to pay UMB (i) a license fee of $100,000, (ii) an annual license maintenance fee of $25,000 on the fourth anniversary of the UMB
License Agreement, (iii) future milestone payments in an aggregate amount equal to $2,875,000, (iv) a royalty on sales of Licensed
Products by the Company, the Company’s affiliates and/or sublicensees at a rate of three percent (3%) until net revenues
from sales of Licensed Products reach a certain dollar amount and six percent (6%) after net revenues from sales of Licensed products
reach a certain dollar amount, provided, however, commencing the year in which the first commercial sale of Licensed Products occurs,
if the royalty payments do not reach the minimum amount of $1,000,000 (which amount shall be increased by twenty percent (20%)
in each subsequent calendar year), the Company shall pay an additional amount with the payment due on the next January 31, so that
the total amount paid for such year reaches the minimum amount (such payment not to exceed $3,000,000 per year), and (v) a percentage
of income received from any sublicensing income.
The UMB License Agreement,
which continues on a Licensed Product-by-Licensed Product and country-by-country basis, will terminate upon the later of (i) the
date of expiration of the last to expire claim of patent rights covering the Licensed Products, (ii) the expiration of data protection,
new chemical entity, orphan drug exclusivity, regulatory exclusivity or other legally enforceable market exclusivity, or (iii)
ten years after the first commercial sale of a Licensed Product. If none of the previously listed items occur, the UMB License
Agreement will expire twenty years after the date of the UMB License Agreement. However, the parties may terminate the UMB License
Agreement under certain conditions described in the UMB License Agreement, including but not limited to, missed payments and failure
to achieve required milestones. The UMB License Agreement also contains various non-compete, non-solicitation and indemnification
provisions as well as representations and warranties made by each party.
Commercialization
Our business success
with our drug portfolio depends not only on the successful development and approval of the products but also on the commercialization.
At present, our plan anticipates us making the investments necessary to build an in-house marketing and sales capability for the
U.S. market for our drug pipeline, or to partner with a larger drug development company to commercialize our drugs as they move
through the FDA approval process. As our drug compounds make their way through clinical development in the U.S., we intend to approach
pharmaceutical and biotechnology companies outside the U.S. to negotiate and enter into strategic partnerships that will enable
development and commercialization of our platform outside the U.S., where we believe the market opportunity is larger than that
of the U.S. albeit far more complex to reach. We have no operations outside the U.S., nor are we planning to have any non-U.S.
operations.
Manufacturing and Supply
We do not have any
manufacturing capabilities and therefore we will have to engage a third party to assist in manufacturing. Such manufacturing will
need to be done in accordance with good manufacturing practice requirements (“cGMP”) regulations, to formulate and
manufacture our product candidates. A list of third party manufacturers is currently being developed.
Government Regulation
Governmental authorities
in the U.S. and other countries extensively regulate the research, development, testing, manufacture, labeling, promotion, advertising,
distribution and marketing of pharmaceutical products such as those being developed by us. In the U.S., the FDA regulates such
products under the FDCA and implements related regulations. Failure to comply with applicable FDA requirements, both before and
after approval, may subject us to administrative and judicial sanctions, such as a delay in approving or refusal by the FDA to
approve pending applications, warning letters, product recalls, product seizures, total or partial suspension of production or
distribution, injunctions and/or criminal prosecution.
U.S. Food and Drug Administration Regulation
United States Drug Development
In the United States,
the FDA regulates drugs, medical devices and combinations of drugs and devices, or combination products, under the FDCA and its
implementing regulations. Drugs are also subject to other federal, state and local statutes and regulations. The process of obtaining
regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations
requires the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at
any time during the product development process, approval process or after approval, may subject an applicant to administrative
or judicial sanctions. These sanctions could include, among other actions, the FDA’s refusal to approve pending applications,
withdrawal of an approval, a clinical hold, untitled or warning letters, requests for voluntary product recalls or withdrawals
from the market, product seizures, total or partial suspension of production or distribution injunctions, fines, refusals of government
contracts, restitution, disgorgement, or civil or criminal penalties. Any agency or judicial enforcement action could have a material
adverse effect on us.
The process required
by the FDA before a drug may be marketed in the United States generally involves the following:
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completion of extensive pre-clinical laboratory tests, animal studies and formulation studies in accordance with applicable regulations, including the FDA’s Good Laboratory Practice regulations;
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submission to the FDA of an IND, which must become effective before human clinical trials may begin;
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performance of adequate and well-controlled human clinical trials in accordance with an applicable IND and other clinical study related regulations, sometimes referred to as good clinical practices, or GCPs, to establish the safety and efficacy of the proposed drug for its proposed indication;
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submission to the FDA of an NDA;
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satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with the FDA’s cGMP requirements;
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potential FDA audit of the clinical trial sites that generated the data in support of the NDA; and
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FDA review and approval of the NDA prior to any commercial marketing or sale.
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Once a pharmaceutical
product candidate is identified for development, it enters the pre-clinical testing stage. Pre-clinical tests include laboratory
evaluations of product chemistry, toxicity, formulation and stability, as well as animal studies. An IND sponsor must submit the
results of the pre-clinical tests, together with manufacturing information, analytical data and any available clinical data or
literature, to the FDA as part of the IND. The sponsor must also include a protocol detailing, among other things, the objectives
of the initial clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated if
the initial clinical trial lends itself to an efficacy evaluation. Some pre-clinical testing may continue even after the IND is
submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions
related to a proposed clinical trial and places the trial on a clinical hold within that 30-day period. In such a case, the IND
sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical holds also may be imposed
by the FDA at any time before or during clinical trials due to safety concerns or non-compliance, and may be imposed on all drug
products within a certain class of drugs. The FDA also can impose partial clinical holds, for example, prohibiting the initiation
of clinical trials of a certain duration or for a certain dose.
All clinical trials
must be conducted under the supervision of one or more qualified investigators in accordance with GCP regulations. These regulations
include the requirement that all research subjects provide informed consent in writing before their participation in any clinical
trial. Further, an IRB must review and approve the plan for any clinical trial before it commences at any institution, and the
IRB must conduct continuing review and reapprove the study at least annually. An IRB considers, among other things, whether the
risks to individuals participating in the clinical trial are minimized and are reasonable in relation to anticipated benefits.
The IRB also approves the information regarding the clinical trial and the consent form that must be provided to each clinical
trial subject or his or her legal representative and must monitor the clinical trial until completed.
Each new clinical protocol
and any amendments to the protocol must be submitted for FDA review, and to the IRBs for approval. Protocols detail, among other
things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to
be used to monitor subject safety.
Human clinical trials
are typically conducted in three sequential phases that may overlap or be combined:
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Phase 1. The product is initially introduced into a small number of healthy human subjects or patients and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain early evidence on effectiveness. In the case of some products for severe or life-threatening diseases, especially when the product is suspected or known to be unavoidably toxic, the initial human testing may be conducted in patients.
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Phase 2. Involves clinical trials in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage and schedule.
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Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit relationship of the product and provide an adequate basis for product labeling.
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Post-approval trials,
sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These studies are used to
gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA
may mandate the performance of Phase 4 trials. Companies that conduct certain clinical trials also are required to register them
and post the results of completed clinical trials on a government-sponsored database, such as ClinicalTrials.gov in the United
States, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.
Progress reports detailing
the results of the clinical trials, among other information, must be submitted at least annually to the FDA, and written IND safety
reports must be submitted to the FDA and the investigators for serious and unexpected adverse events, findings from other studies
that suggest a significant risk to humans exposed to the product, findings from animal or in vitro testing that suggest a significant
risk to human subjects, and any clinically important increase in the rate of a serious suspected adverse reaction over that listed
in the protocol or investigator brochure. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within
any specified period, if at all. The FDA or the clinical trial sponsor may suspend or terminate a clinical trial at any time on
various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly,
an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in
accordance with the IRB’s requirements or if the product has been associated with unexpected serious harm to patients. Additionally,
some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as
a data safety monitoring board or committee. This group provides authorization for whether a trial may move forward at designated
check points based on access to certain data from the study. The clinical trial sponsor may also suspend or terminate a clinical
trial based on evolving business objectives and/or competitive climate.
Concurrent with clinical
trials, companies usually complete additional animal studies and must also develop additional information about the chemistry
and physical characteristics of the product and finalize a process for manufacturing the product in commercial quantities in accordance
with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate
and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final
product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate
that the product candidate does not undergo unacceptable deterioration over its shelf life.
NDA and FDA Review Process
The results of product
development, pre-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted
on the drug, proposed labeling and other relevant information, are submitted to the FDA as part of an NDA for a new drug, requesting
approval to market the product. The submission of an NDA is subject to the payment of a substantial user fee, and the sponsor of
an approved NDA is also subject to an annual program user fee; although a waiver of such fee may be obtained under certain limited
circumstances. For example, the agency will waive the application fee for the first human drug application that a small business
or its affiliate submits for review.
The FDA reviews all
NDAs submitted before it accepts them for filing and may request additional information rather than accepting an NDA for filing.
The FDA typically makes a decision on accepting an NDA for filing within 60 days of receipt. The decision to accept the NDA for
filing means that the FDA has made a threshold determination that the application is sufficiently complete to permit a substantive
review. Under the goals and policies agreed to by the FDA under the Prescription Drug User Fee Act (“PDUFA”), the FDA’s
goal to complete its substantive review of a standard NDA and respond to the applicant is ten months from the receipt of the NDA.
The FDA does not always meet its PDUFA goal dates, and the review process is often significantly extended by FDA requests for additional
information or clarification and may go through multiple review cycles.
After the NDA submission
is accepted for filing, the FDA reviews the NDA to determine, among other things, whether the proposed product is safe and effective
for its intended use, and whether the product is being manufactured in accordance with cGMPs to assure and preserve the product’s
identity, strength, quality and purity. The FDA may refer applications for novel drug products or drug products which 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 and under what conditions. The FDA is not bound
by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. The FDA
will likely re-analyze the clinical trial data, which could result in extensive discussions between the FDA and us during the review
process. The review and evaluation of an NDA by the FDA is extensive and time consuming and may take longer than originally planned
to complete, and we may not receive a timely approval, if at all.
Before approving an
NDA, the FDA will conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether they
comply with cGMPs. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are
in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.
In addition, before approving an NDA, the FDA may also audit data from clinical trials to ensure compliance with GCP requirements.
After the FDA evaluates the application, manufacturing process and manufacturing facilities, it may issue an approval letter or
a Complete Response Letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information
for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the application
will not be approved in its present form. A Complete Response Letter usually describes all the specific deficiencies in the NDA
identified by the FDA. The Complete Response Letter may require additional clinical data and/or an additional pivotal Phase 3 clinical
trial(s), and/or other significant and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing.
If a Complete Response Letter is issued, the applicant may either resubmit the NDA, addressing all the deficiencies identified
in the letter, or withdraw the application. Even if such data and information are submitted, the FDA may ultimately decide that
the NDA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive, and the FDA may
interpret data differently than we interpret the same data.
There is no assurance
that the FDA will ultimately approve a product for marketing in the United States, and we may encounter significant difficulties
or costs during the review process. If a product receives marketing approval, the approval may be significantly limited to specific
diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product.
Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling or may
condition the approval of the NDA on other changes to the proposed labeling, development of adequate controls and specifications,
or a commitment to conduct post-market testing or clinical trials and surveillance to monitor the effects of approved products.
For example, the FDA may require Phase 4 clinical trials to further assess drug safety and effectiveness and may require testing
and surveillance programs to monitor the safety of approved products that have been commercialized. The FDA may also place other
conditions on approvals, including the requirement for a risk evaluation and mitigation strategy (“REMS”), to assure
the safe use of the drug. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS; the FDA will
not approve the NDA without an approved REMS, if required. A REMS could include medication guides, physician communication plans,
or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.
Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing
of products. Product approvals may be withdrawn for non-compliance with regulatory requirements or if problems occur following
initial marketing.
Reimbursement
Potential sales of
any of our product candidates, if approved, will depend, at least in part, on the extent to which such products will be covered
by third-party payors, such as government health care programs, commercial insurance and managed healthcare organizations. These
third-party payors are increasingly limiting coverage and/or reducing reimbursements for medical products and services. A third-party
payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved.
Further, one payor’s determination to provide coverage for a drug product does not assure that other payors will also provide
coverage for the drug product. In addition, the U.S. government, state legislatures and foreign governments have continued implementing
cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic
products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions
with existing controls and measures, could further limit our future revenues and results of operations. Decreases in third-party
reimbursement or a decision by a third-party payor to not cover a product candidate, if approved, or any future approved products
could reduce physician usage of our products, and have a material adverse effect on our sales, results of operations and financial
condition.
In the United States,
the Medicare Part D program provides a voluntary outpatient drug benefit to Medicare beneficiaries for certain products. We do
not know whether our product candidates, if approved, will be eligible for coverage under Medicare Part D, but individual Medicare
Part D plans offer coverage subject to various factors such as those described above. Furthermore, private payors often follow
Medicare coverage policies and payment limitations in setting their own coverage policies.
Pediatric Exclusivity and Pediatric
Use
The
Pediatric Research Equity Act, or PREA, requires a sponsor to conduct pediatric studies for most drugs and biologics, for a new
active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original NDAs,
biologics license applications and supplements thereto, must contain a pediatric assessment unless the sponsor has received a deferral
or waiver. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which an orphan drug
designation has been granted. The required assessment must assess the safety and effectiveness of the product for the claimed indications
in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product
is safe and effective. The sponsor or FDA may request a deferral of pediatric studies for some or all of the pediatric subpopulations.
A deferral may be granted for several reasons, including a finding that the drug or biologic is ready for approval for use in adults
before pediatric studies are complete or that additional safety or effectiveness data needs to be collected before the pediatric
studies begin.
Pediatric exclusivity
is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional
six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent and orphan exclusivity.
This six-month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a written request from
the FDA for such data. The data does not need to show the product to be effective in the pediatric population studied; rather,
if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports
of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or
regulatory periods of exclusivity or patent protection cover the product are extended by six months.
Healthcare Laws and Regulations
Sales of our product
candidates, if approved, or any other future product candidate will be subject to healthcare regulation and enforcement by the
federal government and the states and foreign governments in which we might conduct our business. The healthcare laws and regulations
that may affect our ability to operate include the following:
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The federal Anti-Kickback Statute makes it illegal for any person or entity to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is in exchange for or to induce the referral of business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything of value.
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Federal false claims and false statement laws, including the federal civil False Claims Act, prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent.
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Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created additional federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors or making any false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their implementing regulations, impose obligations on certain types of individuals and entities regarding the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information.
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The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services information related to payments or other transfers of value made to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
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Also, many states have
similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope and may apply regardless
of payor, in addition to items and services reimbursed under Medicaid and other state programs. Additionally, we may be subject
to state laws that require pharmaceutical companies to comply with the federal government’s and/or pharmaceutical industry’s
voluntary compliance guidelines, state laws that require drug manufacturers to report information related to payments and other
transfers of value to physicians and other healthcare providers or marketing expenditures, as well as state and foreign laws governing
the privacy and security of health information, many of which differ from each other in significant ways and often are not preempted
by HIPAA.
Additionally, to the
extent that our product is sold in a foreign country, we may be subject to similar foreign laws.
Risks Associated with Our Business
Our business is subject
to many significant risks, as more fully described in the section entitled “Risk Factors” immediately following this
prospectus summary. You should read and carefully consider these risks, together with the risks set forth under the section entitled
“Risk Factors” and all of the other information in this prospectus, including the financial statements and the related
notes included elsewhere in this prospectus, before deciding whether to invest in our common stock. If any of the risks discussed
in this prospectus actually occur, our business, financial condition or operating results could be materially and adversely affected.
In particular, our risks include, but are not limited to, the following:
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failure to obtain FDA approval to commercially sell our product candidates in a timely manner or at all;
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whether surgeons and patients in our target markets accept our product candidates, if approved;
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our ability to retain and recruit key personnel;
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reliance on third party suppliers for certain components of our product candidates;
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unanticipated working capital or other cash requirements;
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changes in FDA regulations, including testing procedures, of medical devices;
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our estimates of our expenses, ongoing losses, future revenue, capital requirements and our needs for, or ability to obtain, additional financing;
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our ability to obtain and maintain intellectual property protection for our product candidates; and
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changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the medical device industry.
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Corporate Information
We were incorporated
in Delaware on May 1, 1992. Our principal executive offices are located at One Rockefeller Plaza, 11th Floor, New
York, New York 10020, and our telephone number is (703) 992-9325. Our corporate website address is www.aikidopharma.com. The information
contained on or accessible through our website is not a part of this prospectus, and the inclusion of our website address in this
prospectus is an inactive textual reference only.
Our common stock trades
on The Nasdaq Capital Market under the symbol “AIKI”.
RISK FACTORS
Investing in our securities
involves a high degree of risk. Before deciding whether to invest in our securities, you should carefully consider the following
risk factors, together with the other risk factors we describe in any prospectus supplement and in any related free writing prospectus
for a specific offering of securities, as well as those incorporated by reference into this prospectus or such prospectus supplement.
You should also carefully consider other information contained and incorporated by reference in this prospectus and any applicable
prospectus supplement, including our financial statements and the related notes thereto incorporated by reference in this prospectus.
The risks and uncertainties described in the applicable prospectus supplement and our other filings with the SEC incorporated by
reference herein are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently
consider immaterial may also adversely affect us. If any of the described risks occur, our business, financial condition or results
of operations could be materially harmed. In such case, the value of our securities could decline and you may lose all or part
of your investment.
Risks Related to Our Business
Because we have a limited operating
history to evaluate our company, the likelihood of our success must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered by an early-stage company.
Since we have a limited
operating history in our current business of technology and biotechnology development, it will make it difficult for investors
and securities analysts to evaluate our business and prospects. You must consider our prospects in light of the risks,
expenses and difficulties we face as an early stage company with a limited operating history. Investors should evaluate
an investment in our securities in light of the uncertainties encountered by early stage companies in an intensely competitive
industry. There can be no assurance that our efforts will be successful or that we will be able to become profitable.
Our cancer treatment business
is pre-revenue, pre-development and subject to the risks of an early stage biotechnology company.
Since
the Company’s primary focus for the foreseeable future will likely be our cancer treatment business, shareholders should
understand that we are primarily an early stage biotechnology company with no history of revenue-generating operations, and our
only assets consist of our proprietary drug and the know-how of our officers. Therefore we are subject to all the risks and uncertainties
inherent in a new business, in particular new businesses engaged in the early detection of certain cancers. DHA-dFdC is
in its early stages of development, and we still must establish and implement many important functions necessary to commercialize
the biotechnology.
Accordingly,
you should consider the Company’s prospects in light of the costs, uncertainties, delays and difficulties frequently encountered
by companies in their pre-revenue and pre-development generating stages, particularly those in the biotechnology field. Shareholders
should carefully consider the risks and uncertainties that a business with no operating history will face. In particular, shareholders
should consider that there is a significant risk that we will not be able to:
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demonstrate the effectiveness of DHA-dFdC;
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implement or execute our current business plan, or that our current business plan is sound;
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raise sufficient funds in the capital markets or otherwise to fully effectuate our business plan;
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maintain our management team;
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conduct the required clinical studies;
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determine that the processes and technologies that we have developed or will develop are commercially viable; and/or
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attract, enter into or maintain contracts with potential commercial partners such as licensors of technology and suppliers.
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Any of the foregoing
risks may adversely affect the Company and result in the failure of our business. In addition, we expect to encounter unforeseen
expenses, difficulties, complications, delays and other known and unknown factors. At some point, we will need to transition
from a company with a research and development focus to a company capable of supporting commercial activities. We may not be able
to reach such achievements, which would have a material adverse effect on our Company.
We continue to incur operating losses and may not achieve
profitability.
Our loss from operations
for the three months ended March 31, 2020 and 2019 was $2.4 million and $0.7 million, respectively. Our net loss for the three
months ended March 31, 2020 and 2019 was $8.3 million and $1.1 million, respectively. Our accumulated deficit was $152.6 million
at March 31, 2020. Our ability to become profitable depends upon our ability to generate revenue from biotechnology products. We
do not know when, or if, we will generate any revenue from such biotechnology products. Even though our revenue may increase, we
expect to incur significant additional losses while we grow and expand our business. We cannot predict if and when we will achieve
profitability. Our failure to achieve and sustain profitability could negatively impact the market price of our common stock.
We expect to need additional capital
to fund our growing operations and if we are unable to obtain sufficient capital, we may be forced to limit the scope of our operations.
We expect that for
our business to grow we will need additional working capital. If adequate additional debt and/or equity financing is
not available on reasonable terms or at all, we may not be able to continue to expand our business or pay our outstanding obligations,
and we will have to modify our business plans accordingly. These factors would have a material adverse effect on our
future operating results and our financial condition.
If we reach a point
where we are unable to raise needed additional funds to continue as a going concern, we will be forced to cease our activities
and dissolve the Company. In such an event, we will need to satisfy various creditors and other claimants, severance,
lease termination and other dissolution-related obligations and we may not have sufficient funds to pay to our stockholders.
If we fail to maintain an effective
system of internal controls over financial reporting, we may not be able to accurately report our financial results or prevent
fraud and our business may be harmed and our stock price may be adversely impacted.
Effective internal
controls over financial reporting are necessary for us to provide reliable financial reports and to effectively prevent fraud. Any
inability to provide reliable financial reports or to prevent fraud could harm our business. The Sarbanes-Oxley Act of 2002
requires management to evaluate and assess the effectiveness of our internal control over financial reporting. In order to
continue to comply with the requirements of the Sarbanes-Oxley Act, we are required to continuously evaluate and, where appropriate,
enhance our policies, procedures and internal controls. If we fail to maintain the adequacy of our internal controls over
financial reporting, we could be subject to litigation or regulatory scrutiny and investors could lose confidence in the accuracy
and completeness of our financial reports. We cannot assure you that in the future we will be able to fully comply with the
requirements of the Sarbanes-Oxley Act or that management will conclude that our internal control over financial reporting is effective. If
we fail to fully comply with the requirements of the Sarbanes-Oxley Act, our business may be harmed and our stock price may decline.
Our assessment, testing
and evaluation of the design and operating effectiveness of our internal control over financial reporting resulted in our conclusion
that, as of March 31, 2020, our internal control over financial reporting was not effective, due to our lack of segregation
of duties, and lack of controls in place to ensure that all material transactions and developments impacting the financial statements
are reflected. We can provide no assurance as to conclusions of management with respect to the effectiveness of our internal
control over financial reporting in the future.
Our independent auditors have expressed
substantial doubt about our ability to continue as a going concern.
Due to our net losses,
negative cash flow and negative working capital, in their report on our audited financial statements for the years ended December
31, 2019 and 2018, our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to
continue as a going concern.
We may seek to internally develop
additional new inventions and intellectual property, which would take time and be costly. Moreover, the failure to obtain
or maintain intellectual property rights for such inventions would lead to the loss of our investments in such activities.
Part of our business
may include the internal development of new inventions or intellectual property that we will seek to monetize. For example,
in December 2019, we acquired substantially all of the assets of CBM, including the acquisition of certain licensing rights with
respect to patents and other intellectual property related to pioneering drug compounds that were developed at the University of
Wake Forest and the University of Texas at Austin, in the areas of acute myeloid leukemia (AML), acute lymphoblastic leukemia (ALL),
acral lentiginous melanoma and pancreatic cancer (collectively, the “University Developments”). Should we choose to
assist in the development of the University Developments and/or internally develop any other inventions or intellectual property,
such aspect of our business will require significant capital and will take time to achieve. Such activities may also
distract our management team from its present business initiatives, which could have a material and adverse effect on our business. There
is also the risk that our initiatives in this regard would not yield any viable new inventions or technology, which would lead
to a loss of our investments in time and resources in such activities.
Our ability to raise additional capital
may be adversely affected by certain of our agreements.
Our ability to raise
additional capital for use in our operating activities may be adversely impacted by the terms of a securities purchase agreement,
dated as of July 15, 2015 (the “Securities Purchase Agreement”), between us and the investors who purchased securities
in our July 2015 offering of our common stock and warrants for the purchase of our common stock. The Securities Purchase Agreement
provides that, until the warrants issued thereunder are no longer outstanding, we will not effect or enter into a variable rate
transaction, which includes issuances of securities whose prices or conversion prices may vary with the trading prices of or quotations
for the shares of our common Stock at any time after the initial issuance of such securities, as well as the entry into agreements
where our stock would be issued at a future-determined price. These warrants may remain outstanding as late as January 22, 2021,
when the warrants expire in accordance with their terms. These restrictions may have an adverse impact on our ability to raise
additional capital, or to use our cash to make certain payments that we are contractually obligated to make.
We may also identify
targets with patent or other intellectual property assets that cost more than we are prepared to spend with our own capital resources. We
may incur significant costs to organize and negotiate a structured acquisition that does not ultimately result in an acquisition
of any patent assets or, if consummated, proves to be unprofitable for us. Acquisitions involving issuance of our securities
could be dilutive to existing stockholders and could be at prices lower than those prices reflected in the trading markets. These
higher costs could adversely affect our operating results and, if we incur losses, the value of our securities will decline.
The integration of acquired assets may place a significant burden on management and our internal resources. The diversion
of management attention and any difficulties encountered in the integration process could harm our business.
As we are targeting
technology companies in the development stage, their patents and technologies are in the early stages of adoption. Demand
for some of these technologies will likely be untested and may be subject to fluctuation based upon the rate at which our licensees
or others adopt our patents and technologies in their products and services. As a result, there can be no assurance
as to whether technologies we acquire or develop will have value that can be realized through licensing or other activities.
We are exploring and evaluating strategic
alternatives and there can be no assurance that we will be successful in identifying, or completing any strategic alternative or
that any such strategic alternative will yield additional value for shareholders.
Our management and
board of directors (“Board of Directors”) has commenced a review of strategic alternatives which could result in, among
other things, a sale, a merger, consolidation or business combination, asset divestiture, partnering or other collaboration agreements,
or potential acquisitions or recapitalizations, in one or more transactions, or continuing to operate with our current business
plan and strategy. There can be no assurance that the exploration of strategic alternatives will result in the identification or
consummation of any transaction. In addition, we may incur substantial expenses associated with identifying and evaluating potential
strategic alternatives. The process of exploring strategic alternatives may be time consuming and disruptive to our business operations
and if we are unable to effectively manage the process, our business, financial condition and results of operations could be adversely
affected. We also cannot assure you that any potential transaction or other strategic alternative, if identified, evaluated and
consummated, will provide greater value to our shareholders than that reflected in the current stock price. Any potential transaction
would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions,
industry trends, the interest of third parties in our business and the availability of financing to potential buyers on reasonable
terms.
We may be unsuccessful at integrating
future acquisitions.
If we find appropriate
opportunities in the future, we may acquire businesses to strategically increase the number of patents in our portfolio and pursue
monetization. For example, in December 2019, we acquired substantially all of the assets of CBM, including the acquisition of certain
licensing rights with respect to patents and other intellectual property related to pioneering drug compounds that were developed
at the University of Wake Forest and the University of Texas at Austin, in the areas of acute myeloid leukemia (AML), acute lymphoblastic
leukemia (ALL), acral lentiginous melanoma and pancreatic cancer. There can be no guarantee that we will be able to successfully
integrate the business or assets of CBM into the Company.
As we acquire businesses
or substantial stakes in certain businesses, the process of integration may produce unforeseen operating difficulties and expenditures,
fail to result in expected synergies or other benefits and absorb significant attention of our management that would otherwise
be available for the ongoing development of our business. In addition, in the event of any future acquisitions, we may record a
portion of the assets we acquire as goodwill, other indefinite-lived intangible assets or finite-lived intangible assets. We do
not amortize goodwill and indefinite-lived intangible assets, but rather review them for impairment on an annual basis or whenever
events or changes in circumstances indicate that their carrying value may not be recoverable. The recoverability of goodwill and
indefinite-lived intangible assets is dependent on our ability to generate sufficient future earnings and cash flows. Changes in
estimates, circumstances or conditions, resulting from both internal and external factors, could have a significant impact on our
fair valuation determination, which could then have a material adverse effect on our business, financial condition and results
of operations. We cannot guarantee that we will be able to identify suitable acquisition opportunities, consummate any pending
or future acquisitions or that we will realize any anticipated benefits from any such acquisitions.
Our pre-CBM acquisition stockholders
have a reduced ownership and voting interest after the acquisition of CBM’s assets and exercise less influence over our management
and policies than they did prior to the acquisition.
Our pre-acquisition
stockholders had the right to vote in the election of our Board of Directors on other matters affecting us. As a result of the
CBM Purchase Agreement, because of the issuance of shares of common stock to the CBM shareholders, our pre-acquisition stockholders
hold a percentage ownership of the Company that is much smaller than the pre-acquisition stockholder’s previous percentage
ownership. Because of this, our pre-acquisition stockholders have less influence over the management and policies of the Company
than they now have after the consummation of the acquisition of CBM’s assets.
Any failure to maintain or protect
our patent assets or other intellectual property rights could significantly impair our return on investment from such assets and
harm our brand, our business and our operating results.
Our ability to operate
our new line of business and compete in the intellectual property market largely depends on the superiority, uniqueness and value
of our acquired patent assets and other intellectual property. To protect our proprietary rights, we will rely on a
combination of patent, trademark, copyright and trade secret laws, confidentiality agreements with our employees and third parties,
and protective contractual provisions. No assurances can be given that any of the measures we undertake to protect and
maintain our assets will have any measure of success.
We
are required to spend significant time and resources to maintain the effectiveness of our assets by paying maintenance fees and
making filings with the USPTO. We may acquire patent assets, including patent applications, which require us to spend
resources to prosecute the applications with the USPTO prior to issuance of patents. Further, there is a material risk
that patent related claims (such as, for example, infringement claims (and/or claims for indemnification resulting therefrom),
unenforceability claims, or invalidity claims) will be asserted or prosecuted against us, and such assertions or prosecutions
could materially and adversely affect our business.
Despite
our efforts to protect our intellectual property rights, any of the following or similar occurrences may reduce the value of our
intellectual property:
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our applications
for patents, trademarks and copyrights may not be granted and, if granted, may be challenged or invalidated;
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issued trademarks,
copyrights, or patents may not provide us with any competitive advantages when compared to potentially infringing other properties;
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our efforts to protect
our intellectual property rights may not be effective in preventing misappropriation of our technology; or
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our efforts may
not prevent the development and design by others of products or technologies similar to or competitive with, or superior to
those we acquire and/or prosecute.
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Moreover,
we may not be able to effectively protect our intellectual property rights in certain foreign countries where we may do business
or enforce our patents against infringers in foreign countries. If we fail to maintain, defend or prosecute our patent assets
properly, the value of those assets would be reduced or eliminated, and our business would be harmed.
We
may be at risk for delay in technology development and other economic repercussions as a result of the COVID-19 pandemic.
We
may be at risk as a result of the current COVID-19 pandemic. Risks that could affect our business include the duration and scope
of the COVID-19 pandemic and the impact on the demand for our products; actions by governments, businesses and individuals taken
in response to the pandemic; the length of time of the COVID-19 pandemic and the possibility of its reoccurrence; the timing required
to develop effective treatments and a vaccine in the event of future outbreaks; the eventual impact of the pandemic and actions
taken in response to the pandemic on global and regional economies; and the pace of recovery when the COVID-19 pandemic subsides.
Additionally,
New York, where our U.S. operations are based, is currently significantly affected by COVID-19, which led to measures taken by
the New York government trying to contain the spread of COVID-19, such as shelter in place, closure of schools and travel restrictions.
Additional travel and other restrictions may be put in place to further control the outbreak in U.S. Accordingly, our operation
and business have been and will continue to be adversely affected as the results of the COVID-19 pandemic.
The
extent to which COVID-19 negatively impacts our business is highly uncertain and cannot be accurately predicted. We believe that
the coronavirus outbreak and the measures taken to control it may have a significant negative impact on not only our business,
but economic activities globally. The magnitude of this negative effect on the continuity of our business operations in the U.S.
remains uncertain. These uncertainties impede our ability to conduct our daily operations and could materially and adversely affect
our business, financial condition and results of operations, and as a result affect our stock price and create more volatility.
Risks
Related to the Product Development, Regulatory Approval, Manufacturing and Commercialization
We
are early in our development efforts and currently have no clinical-stage product candidates. If we are unable to clinically develop
and ultimately commercialize DHA-dFdC or other product candidates, or experience significant delays in doing so, our business
will be materially harmed.
We
are early in our development efforts and have no clinical-stage product candidates as of the date of this prospectus. We have
the exclusive U.S. rights to develop DHA-dFdC for the treatment of cancer in the licensed field. We are presently planning on
filing an IND for DHA-dFdC, and we hope to begin human testing for this indication in 2021, although no assurance can be given
that we will be able to achieve this goal.
Therefore,
our ability to generate product or royalty revenues, which we do not expect will occur for several years, if ever, will depend
heavily on our ability to develop and eventually commercialize our product candidate. The positive development of our product
candidate will depend on several factors, including the following:
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positive
commencement and completion of clinical trials;
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successful
preparation of regulatory filings and receipt of marketing approvals from applicable regulatory authorities;
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obtaining
and maintaining patent and trade secret protection and potential regulatory exclusivity for our product candidate and protecting
our rights in our intellectual property portfolio;
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launching
commercial sales of our product, if and when approved for one or more indications, whether alone or in collaboration with
others;
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acceptance
of the product for one or more indications, if and when approved, by patients, the medical community and third-party payors;
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protection
from generic substitution based upon our own or licensed intellectual property rights;
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effectively
competing with other therapies;
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obtaining
and maintaining adequate reimbursement from healthcare payors; and
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maintaining
a continued acceptable safety profile of our product following approval, if any.
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If
we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability
to clinically develop and commercialize DHA-dFdC as a therapy for cancer, which would materially harm our business.
If
we are unable to convince physicians as to the benefits of DHA-dFdC as a therapy for cancer, if and when it is approved, we may
incur delays or additional expense in our attempt to establish market acceptance.
Use
of DHA-dFdC as a cancer therapy will require physicians to be informed regarding the intended benefits of the product for a new
indication. The time and cost of such an educational process may be substantial. Inability to carry out this physician education
process may adversely affect market acceptance of DHA-dFdC as a therapy for cancer. We may be unable to timely educate physicians
in sufficient numbers regarding our intended application of DHA-dFdC to achieve our marketing plans or to achieve product acceptance.
Any delay in physician education or acceptance may materially delay or reduce demand for our product candidate. In addition, we
may expend significant funds toward physician education before any acceptance or demand for DHA-dFdC as a therapy for cancer is
created, if at all.
Clinical
drug development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience
delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidate.
The
risk of failure for product candidates in clinical development is high. It is impossible to predict when our sole product candidate,
DHA-dFdC for the treatment of cancer, will prove effective and safe in humans or will receive regulatory approval for the treatment
of any disease, the indication for which is licensed to us. Before obtaining marketing approval from regulatory authorities for
the sale of DHA-dFdC as a cancer therapy, we must conduct one or more clinical trials to demonstrate the safety and efficacy of
our product candidate in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete
and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. Moreover, the outcome
of early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial
do not necessarily predict final results. In addition, preclinical and clinical data are often susceptible to varying interpretations
and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have
nonetheless failed to obtain marketing approval of their products.
We
may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to
receive marketing approval or commercialize our product candidate, including:
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regulators
or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical
trial at a prospective trial site;
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we
may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols
with prospective trial sites;
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clinical
trials of our product candidate may produce negative or inconclusive results, and we may decide, or regulators may require
us, to conduct additional clinical trials or abandon product development programs, which would be time consuming and costly;
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the
number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in
these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate
than we anticipate;
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we
may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the
participants are being exposed to unacceptable health risks;
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regulators
or institutional review boards may require that we or our investigators suspend or terminate clinical research for various
reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable
health risks;
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the
cost of clinical trials may be greater than we anticipate;
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the
supply or quality of materials necessary to conduct clinical trials of our product candidate may be insufficient or inadequate;
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our
product candidate may have undesirable side effects or other unexpected characteristics, causing us or our investigators,
regulators or institutional review boards to suspend or terminate the trials; and
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interactions
with other drugs.
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If
we are required to conduct additional clinical trials or other testing of our product candidate beyond those that we currently
contemplate, if we are unable to complete clinical trials of our product candidates or other testing, if the results of these
trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:
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be
delayed in obtaining marketing approval for our product candidate for one or more indications;
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not
obtain marketing approval at all for one or more indications;
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obtain
approval for indications or patient populations that are not as broad as intended or desired (particularly, in our case, for
different types of cancer);
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obtain
approval with labeling that includes significant use or distribution restrictions or safety warnings;
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be
subject to additional post-marketing testing requirements; or
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have
the product removed from the market after obtaining marketing approval.
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Our
product development costs will also increase if we experience delays in testing or marketing approvals. We do not know which,
if any, of our clinical trials will need to be restructured or will be completed on schedule, or at all. Significant preclinical
or clinical trial delays also could shorten any periods during which we may have the right to commercialize our product candidate
or allow our competitors to bring products to market before we do and impair our ability to commercialize our product candidate
and may harm our business and results of operations.
If
we experience delays or difficulties in the enrollment of patients in any future clinical trials, our receipt of necessary regulatory
approvals could be delayed or prevented.
We
may not be able to initiate or continue future clinical trials for DHA-dFdC or our present or future 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. In addition, some of our competitors have ongoing clinical trials
for product candidates that treat the same indications as our product candidate, and patients who would otherwise be eligible
for our future clinical trials may instead enroll in clinical trials of our competitors’ product candidates.
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
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.
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Our
inability to enroll a sufficient number of patients for any future clinical trials would result in significant delays and could
require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased
development costs for our product candidate, which would cause the value of our company to decline and otherwise materially and
adversely affect our company.
If
serious adverse or unacceptable side effects are identified during the development of our product candidate, we may need to abandon
or limit such development, which would adversely affect our company.
If
clinical testing of our product candidates results in undesirable side effects or demonstrates characteristics that are unexpected,
we may need to abandon such development or limit such development to more narrow uses or subpopulations in which the undesirable
side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many
compounds that initially showed promise in early stage testing for treating cancer have later been found to cause side effects
that prevented further development of the compound.
For
the foreseeable future, we expect to expend our limited resources primarily to pursue a particular product candidate, leaving
us unable to capitalize on other product candidates or indications that may be more profitable or for which there is a greater
likelihood of clinical and commercial development.
Because
we have limited financial and managerial resources, we will focus for the foreseeable future primarily on the clinical development
of DHA-dFdC for the treatment of prostate cancer. As a result, we may forego or be unable to pursue opportunities with other product
candidates or for indications other than those we intend to pursue that later prove to have greater commercial potential. Our
resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.
Our spending on research and development programs related to DHA-dFdC for the treatment of cancer may not yield any commercially
viable therapies. Because of this concentration of our efforts, our business will be particularly subject to significant risk
of failure of our one current product candidate.
We
expect to rely on collaborations with third parties for key aspects of our business. If we are unable to secure or maintain any
of these collaborations, or if these collaborations do not achieve their goals, our business would be adversely affected.
We
presently have very limited capabilities for drug development and do not yet have any capability for manufacturing, sales, marketing
or distribution. Accordingly, we expect to enter into collaborations with other companies that we believe can provide such capabilities.
These collaborations may also provide us with important funding for our development programs.
There
is a risk that we may not be able to maintain our current collaboration or to enter into additional collaborations on acceptable
terms or at all, which would leave us unable to progress our business plan. We will face significant competition in seeking appropriate
collaborators. Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment
of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s
evaluation of a number of factors. If we are unable to maintain or reach agreements with suitable collaborators on a timely basis,
on acceptable terms, or at all, we may have to curtail the development of our product candidate, reduce or delay its development
program, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures
and undertake development or commercialization activities at our own expense.
Moreover,
even if we are able to maintain and/or enter into such collaborations, such collaborations may pose a number of risks, including
the following:
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collaborators
may not perform their obligations as expected;
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disagreements
with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development,
might cause delays or termination of the research, development or commercialization of our product candidate, might lead to
additional responsibilities for us with respect to such product candidate, or might result in litigation or arbitration, any
of which would be time-consuming and expensive;
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collaborators
could independently develop or be associated with products that compete directly or indirectly
with our product candidate;
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collaborators
could have significant discretion in determining the efforts and resources that they will apply to our arrangements with them;
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should
our product candidate achieve regulatory approval, a collaborator with marketing and distribution rights to our product candidate
may not commit sufficient resources to the marketing and distribution of such product;
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collaborators
may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way
as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose
us to potential litigation;
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collaborators
may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;
and
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collaborations
may be terminated for the convenience of the collaborator and, if terminated, we could be required to either find alternative
collaborators (which we may be unable to do) or raise additional capital to pursue further development or commercialization
of our product candidate on our own.
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Our
business could be materially harmed if any of the foregoing or similar risks comes to pass with respect to our key collaborations.
Even
if any of our product candidates receive marketing approval for any indication, they may fail to achieve the degree of market
acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.
Even
if DHA-dFdC for the treatment of cancer receives marketing approval for any indication, it may nonetheless fail to gain sufficient
market acceptance by physicians, patients, third-party payors and others in the medical community. For example, current cancer
treatments such as chemotherapy, immunotherapy and radiation therapy are well established in the medical community, and doctors
may continue to rely on these treatments. If our product candidate does not achieve an adequate level of acceptance, we may not
generate significant product revenues and we may not become profitable. The degree of market acceptance of DHA-dFdC for the treatment
of cancer, if approved for commercial sale, will depend on a number of factors, including:
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the
efficacy and potential advantages compared to alternative treatments;
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our
ability to offer our products for sale at competitive prices;
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the
convenience and ease of administration compared to alternative treatments;
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the
willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
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the
strength of marketing and distribution support;
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the
availability of third-party coverage and adequate reimbursement;
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the
prevalence and severity of any side effects; and
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any
restrictions on the use of our product together with other medications.
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If
we are unable to establish sales, marketing and distribution capabilities, we may not be able to commercialize our product candidate
if and when it is approved.
We
currently do not have a sales or marketing infrastructure. To achieve any level of commercial success for any product for which
we have obtained marketing approval, we will need to establish a sales and marketing organization or outsource sales and marketing
functions to third parties, and achieve the following:
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successful
preparation of regulatory filings and receipt of marketing approvals from applicable regulatory authorities;
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obtaining
and maintaining patent and trade secret protection and potential regulatory exclusivity for our product candidate and protecting
our rights in our intellectual property portfolio;
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launching
commercial sales of our product, if and when approved for one or more indications, whether alone or in collaboration with
others;
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acceptance
of the product for one or more indications, if and when approved, by patients, the medical community and third-party payors;
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protection
from generic substitution based upon our own or licensed intellectual property rights;
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effectively
competing with other therapies;
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obtaining
and maintaining adequate reimbursement from healthcare payors; and
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maintaining
a continued acceptable safety profile of our product following approval, if any.
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If
we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability
to clinically develop and commercialize DHA-dFdC as a therapy for cancer, which would materially harm our business.
In
addition, given our current limited financial resources, we are currently focusing our efforts on one key cancer indication, namely
prostate cancer. We are thus faced with the risk that DHA-dFdC could be ineffective in addressing this particular cancer indication,
and if our efforts to demonstrate the efficacy of DHA-dFdC in prostate cancer are not positive, we may lack the resources to expand
our efforts into other cancer indications.
We
face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully
than we do.
The
development and commercialization of new drug products is highly competitive. We face competition with respect to our current
product candidate and will face competition with respect to any product candidates that we may seek to develop or commercialize
in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide.
There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing
the development of products for the treatment of cancer. Potential competitors also include academic institutions, government
agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative
arrangements for research, development, manufacturing and commercialization.
Our
commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more
effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop.
Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for
ours, which could result in our competitors establishing a strong market position before we are able to enter the market.
Many
of the companies against which we are competing or against which we may compete in the future have significantly greater financial
resources and expertise in research and development, manufacturing, conducting clinical trials, obtaining regulatory approvals
and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result
in even more resources being concentrated among a smaller number of our competitors. Smaller and other early stage companies may
also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical
trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary
for, our programs, and we may be unable to effectively compete with these companies for these or other reasons.
Even
if we are able to commercialize any product candidates, the products may become subject to unfavorable pricing regulations, third-party
reimbursement practices or healthcare reform initiatives, which would harm our business.
The
regulations that govern marketing approvals, pricing, coverage and reimbursement for new drug products vary widely from country
to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional
costs and cause delays in obtaining approvals.
Our
ability to commercialize any product candidate also will depend in part on the extent to which coverage and adequate reimbursement
for our product candidate will be available from government health administration authorities, private health insurers and other
organizations. Government authorities and third party payors, such as private health insurers and health maintenance organizations,
decide which medications they will pay for and establish reimbursement levels. A primary trend in the U.S. healthcare industry
and elsewhere is cost containment. Government authorities and third party payors have attempted to control costs by limiting coverage
and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies
provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Coverage
and reimbursement may not be available for any product that we commercialize and, even if these are available, the level of reimbursement
may not be satisfactory. Reimbursement may affect the demand for, or the price of, any product candidate for which we obtain marketing
approval. Obtaining and maintaining adequate reimbursement for our products may be difficult. We may be required to conduct expensive
pharmacoeconomic studies to justify coverage and reimbursement or the level of reimbursement relative to other therapies. If coverage
and adequate reimbursement are not available or reimbursement is available only to limited levels, we may not be able to commercialize
any product candidate for which we obtain marketing approval.
In
addition, there may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited
than the purposes for which the drug is approved by the FDA. Moreover, eligibility for reimbursement does not imply that a drug
will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution.
Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent.
Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement
levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs
may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors. Third-party payors
often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Our inability to
promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products
that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize
products and our overall financial condition.
Product
liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that
we may develop.
We
face an inherent risk of product liability exposure related to the testing of DHA-dFdC in human clinical trials and will face
an even greater risk if we commercially sell any products that we may develop. If we cannot defend ourselves against claims that
our product candidate or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome,
liability claims may result in:
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decreased
demand for any product candidates or products that we may develop;
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damage
to our reputation and significant negative media attention;
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withdrawal
of clinical trial participants;
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significant
costs to defend the related litigation;
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substantial
monetary awards to trial participants or patients;
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loss
of revenue;
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reduced
resources of our management to pursue our business strategy; and
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the
inability to commercialize any products that we may develop.
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We
currently do not have product liability insurance coverage, which leaves us exposed to any product-related liabilities that we
may incur. We may be unable to obtain insurance on reasonable terms or at all. Insurance coverage is increasingly expensive. We
may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may
arise.
If
we fail to comply with healthcare regulations, we could face substantial enforcement actions, including civil and criminal penalties
and our business, operations and financial condition could be adversely affected.
We
could be subject to healthcare fraud and abuse laws and patient privacy laws of both the federal government and the states in
which we conduct our business. The laws include:
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the
federal healthcare program anti-kickback law, which prohibits, among other things, persons from soliciting, receiving or providing
remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing
or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and
Medicaid programs;
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federal
false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be
presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent, and which
may apply to entities like us which provide coding and billing information to customers;
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the
federal Health Insurance Portability and Accountability Act of 1996, which prohibits executing a scheme to defraud any healthcare
benefit program or making false statements relating to healthcare matters and which also imposes certain requirements relating
to the privacy, security and transmission of individually identifiable health information;
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the
FDCA which among other things, strictly regulates drug manufacturing and product marketing, prohibits manufacturers from marketing
drug products for off-label use and regulates the distribution of drug sample; 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 payer, including commercial insurers, and state laws governing the privacy and security of health information
in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal
laws, thus complicating compliance efforts.
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If
our operations are found to be in violation of any of the laws described above or any governmental regulations that apply to us,
we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of
our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability
to operate our business and our financial results. Although compliance programs can mitigate the risk of investigation and prosecution
for violations of these laws, the risks cannot be entirely eliminated. Any action against us for violation of these laws, even
if we successfully defend against it, could cause us to incur significant legal expenses and divert management’s attention
from the operation of our business. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security
and fraud laws may prove costly.
Members
of our management team lack experience in the pharmaceutical field.
Members
of our management team lack experience in the pharmaceutical field. This lack of experience may impair our ability to commercialize
our pharmaceutical products and attain profitability. We will need to hire or engage managerial personnel with relevant experience
in the pharmaceutical field; however, there can be no assurance that such personnel will be available to us or, that once engaged,
will be retained by us. Failure to establish and maintain an effective management team with experience in the pharmaceutical field
and commercialization of pharmaceuticals products would have a material adverse effect on our business and results of operations.
The
marketing approval process of the FDA is lengthy, time consuming and inherently unpredictable, and if were ultimately are unable
to obtain marketing approval for the product candidates we intend to develop, our business will be substantially harmed.
None
of the product candidates we intend to develop have gained marketing approval in the U.S. and we cannot guarantee that we will
ever have marketable products. Our business is substantially dependent on our ability to complete the development of, obtain marketing
approval for, and successfully commercialize our product candidates in a timely manner. We cannot commercialize our product candidates
in the United States without first obtaining approval from the FDA to market each product candidate. Our product candidates could
fail to receive marketing approval for many reasons.
In
addition, the process of seeking regulatory clearance or approval to market the product candidates we intend to develop is expensive
and time consuming and, notwithstanding the effort and expense incurred, clearance or approval is never guaranteed. If we are
not successful in obtaining timely clearance or approval of our product candidates from the FDA, we may never be able to generate
significant revenue and may be forced to cease operations. The FDA process is costly, lengthy and uncertain. Any FDA application
filed by the Company will have to be supported by extensive data, including, but not limited to, technical, preclinical, clinical
trial, manufacturing and labeling data, to demonstrate to the FDA’s satisfaction the safety and efficacy of the product
for its intended use.
Obtaining
clearances or approvals from the FDA and from the regulatory agencies in other countries is an expensive and time consuming process
and is uncertain as to outcome. The FDA and other agencies could ask us to supplement our submissions, collect non-clinical data,
conduct additional clinical trials or engage in other time-consuming actions, or it could simply deny our applications. In addition,
even if we obtain an FDA approval or pre-market approvals in other countries, the approval could be revoked or other restrictions
imposed if post-market data demonstrates safety issues or lack of effectiveness. We cannot predict with certainty how, or when,
the FDA will act. If we are unable to obtain the necessary regulatory approvals, our financial condition and cash flow may be
adversely affected, and our ability to grow domestically and internationally may be limited. Additionally, even if cleared or
approved, the Company’s products may not be approved for the specific indications that are most necessary or desirable for
successful commercialization or profitability.
Modifications
to our products may require new FDA approvals.
Once
a particular product receives FDA approval or clearance, expanded uses or uses in new indications of our products may require
additional human clinical trials and new regulatory approvals or clearances, including additional IND and FDA submissions and
premarket approvals before we can begin clinical development, and/or prior to marketing and sales. If the FDA requires new clearances
or approvals for a particular use or indication, we may be required to conduct additional clinical studies, which would require
additional expenditures and harm our operating results. If the products are already being used for these new indications, we may
also be subject to significant enforcement actions. Conducting clinical trials and obtaining clearances and approvals can be a
time consuming process, and delays in obtaining required future clearances or approvals could adversely affect our ability to
introduce new or enhanced products in a timely manner, which in turn would harm our future growth.
Additional
delays to the completion of clinical studies may result from modifications being made to the protocol during the clinical trial,
if such modifications are warranted and/or required by the occurrences in the given trial.
Each
modification to the protocol during a clinical trial has to be submitted to the FDA. This could result in the delay or halt of
a clinical trial while the modification is evaluated. In addition, depending on the quantity and nature of the changes made, the
FDA could take the position that the data generated by the clinical trial is not poolable because the same protocol was not used
throughout the trial. This might require the enrollment of additional subjects, which could result in the extension of the clinical
trial and the FDA delaying clearance or approval of a product. Any such delay could have a material adverse effect on our business
and results of operations.
There
can be no assurance that the data generated from our clinical trials using modified protocols will be acceptable to FDA.
There
can be no assurance that the data generated using modified protocols will be acceptable to the FDA or that if future modifications
during the trial are necessary, that any such modifications will be acceptable to the FDA. If the FDA believes that its prior
approval is required for a particular modification, it can delay or halt a clinical trial while it evaluates additional information
regarding the change.
Serious
injury or death resulting from a failure of one of our drug candidates during current or future clinical trials could also result
in the FDA delaying our clinical trials or denying or delaying clearance or approval of a product.
Even
though an adverse event may not be the result of the failure of our drug candidate, the FDA or an Internal Review Board (“IRB”)
could delay or halt a clinical trial for an indefinite period of time while an adverse event is reviewed, and likely would do
so in the event of multiple such events.
Any
delay or termination of our current or future clinical trials as a result of the risks summarized above, including delays in obtaining
or maintaining required approvals from IRBs, delays in patient enrollment, the failure of patients to continue to participate
in a clinical trial, and delays or termination of clinical trials as a result of protocol modifications or adverse events during
the trials, may cause an increase in costs and delays in the filing of any product submissions with the FDA, delay the approval
and commercialization of our products or result in the failure of the clinical trial, which could adversely affect our business,
operating results and prospects.
The
future results of our current or future clinical trials may not support our product candidate claims or may result in the discovery
of unexpected adverse side effects.
Even
if our clinical trials are completed as planned, we cannot be certain that their results will support our drug candidate claims
or that the FDA or foreign authorities will agree with our conclusions regarding them. Success in preclinical studies and early
clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the later trials will
replicate the results of prior trials and preclinical studies. The clinical trial process may fail to demonstrate that our drug
candidates are safe and effective for the proposed indicated uses. If the FDA concludes that the clinical trials for DHA-dFdC,
or any other product for which we might seek clearance, has failed to demonstrate safety and effectiveness, we would not receive
FDA clearance to market that product in the United States for the indications sought.
In
addition, such an outcome could cause us to abandon the product candidate and might delay development of others. Any delay or
termination of our clinical trials will delay the filing of any product submissions with the FDA and, ultimately, our ability
to commercialize our product candidates and generate revenues. It is also possible that patients enrolled in clinical trials will
experience adverse side effects that are not currently part of the product candidate’s profile.
Current
and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product
candidates and affect the prices we may obtain for such product candidates.
In
the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed
changes regarding the healthcare system that could prevent or delay marketing approval for our product candidates, restrict or
regulate post-approval activities and affect our ability to profitably sell our product candidates. Legislative and regulatory
proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical
products. We do not know whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations
will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition,
increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval,
as well as subject us to more stringent product labeling and post-marketing testing and other requirements.
In
the United States, the Medicare Modernization Act (“MMA”) changed the way Medicare covers and pays for pharmaceutical
products. As a result of this legislation and the expansion of federal coverage of drug products, we expect that there will be
additional pressure to contain and reduce costs. These cost reduction initiatives and other provisions of this legislation could
decrease the coverage and price that we receive for our product candidates and could seriously harm our business.
The
Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010
(collectively, the “Health Care Reform Law”) is 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. The Health Care Reform Law remains subject to legislative efforts to repeal, modify or delay the implementation of the
law. However, if the Health Care Reform Law is repealed or modified, or if implementation of certain aspects of the Health Care
Reform Law are delayed, such repeal, modification or delay may materially adversely impact our business, strategies, prospects,
operating results or financial condition.
In
addition, other legislative changes have been proposed and adopted in the United States since the Health Care Reform Law was enacted.
We expect that additional federal healthcare reform measures will be adopted in the future, any of which could limit the amounts
that federal and state governments will pay for healthcare products and services, and in turn could significantly reduce the projected
value of certain development projects and reduce or eliminate our profitability.
Upon
commercialization of our products, we may be dependent on third parties to market, distribute and sell our products.
Our
ability to receive revenues may be dependent upon the sales and marketing efforts of any future co-marketing partners and third-party
distributors. At this time, we have not entered into an agreement with any commercialization partner and only plan to do so after
the successful completion of Phase 1 clinical trials and prior to commercialization. If we fail to reach an agreement with any
commercialization partner, or upon reaching such an agreement that partner fails to sell a large volume of our products, it may
have a negative impact on our business, financial condition and results of operations.
Adverse
events involving our products may lead the FDA to delay or deny clearance for our products or result in product recalls that could
harm our reputation, business and financial results.
Once
a product receives FDA clearance or approval, the agency has the authority to require the recall of commercialized products in
the event of adverse side effects, material deficiencies or defects in design or manufacture. The authority to require a recall
must be based on an FDA finding that there is a reasonable probability that the product would cause serious injury or death. Manufacturers
may, under their own initiative, recall a product if any material deficiency in a product is found. A government-mandated or voluntary
recall by us or one of our distributors could occur as a result of adverse side effects, impurities or other product contamination,
manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of our products would divert
managerial and financial resources and have an adverse effect on our financial condition and results of operations. The FDA requires
that certain classifications of recalls be reported to FDA within ten working days after the recall is initiated. Companies are
required to maintain certain records of recalls, even if they are not reportable to the FDA. We may initiate voluntary recalls
involving our products in the future that we determine do not require notification of the FDA. If the FDA disagrees with our determinations,
they could require us to report those actions as recalls. A future recall announcement could harm our reputation with customers
and negatively affect our sales. In addition, the FDA could take enforcement action for failing to report the recalls when they
were conducted.
Risks
Related to Ownership of Our Securities
We
face evolving regulation of corporate governance and public disclosure that may result in additional expenses and continuing uncertainty.
As
a public company, we incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002, or SOX, the
Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The Nasdaq Global Market and other applicable
securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective
disclosure and financial controls and corporate governance practices. Our management and other personnel devote a substantial
amount of time towards maintaining compliance with these requirements. These rules, regulations and standards are subject to varying
interpretations, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory
and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated
by ongoing revisions to disclosure and governance practices. We intend to invest the resources necessary to comply
with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses
and a diversion of management time and attention from revenue-generating activities to compliance activities. If our
efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing
bodies, regulatory authorities may initiate legal proceedings against us, which could be costly and time-consuming, and our reputation
and business may be harmed.
Our
common stock may be delisted from The Nasdaq Capital Market if we fail to comply with continued listing standards.
Our
common stock is currently traded on The Nasdaq Capital Market under the symbol “AIKI”. If we fail to meet
any of the continued listing standards of The Nasdaq Capital Market, our common stock could be delisted from The Nasdaq Capital
Market. These continued listing standards include specifically enumerated criteria, such as:
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a $1.00 minimum
closing bid price;
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stockholders’
equity of $2.5 million;
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500,000 shares of
publicly-held common stock with a market value of at least $1 million;
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300 round-lot stockholders;
and
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compliance with
Nasdaq’s corporate governance requirements, as well as additional or more stringent criteria that may be applied
in the exercise of Nasdaq’s discretionary authority.
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On
April 28, 2020, we received a staff deficiency notice from Nasdaq informing the Company that its common stock failed to comply
with the $1.00 minimum bid price required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).
Nasdaq’s letter advised the Company that, based upon the closing bid price during the period from March 16, 2020 to April
27, 2020, the Company no longer meets this test.
Given
the current extraordinary market conditions, Nasdaq has determined to toll the compliance periods for the bid price and market
value of publicly held shares requirements through June 30, 2020. Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company
has been provided with a compliance period of 180 calendar days, or until December 28, 2020, to regain compliance with the minimum
bid price requirement. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00
per share for a minimum of 10 consecutive business days prior to December 28, 2020.
There
can be no assurance that we will be able to maintain compliance and remain in compliance in the future. In particular, our share
price may continue to decline for a number of reasons, including many that are beyond our control. If we fail to comply with Nasdaq’s
continued listing standards, we may be delisted and our common stock will trade, if at all, only on the over-the-counter market,
such as the OTC Bulletin Board or OTCQX market, and then only if one or more registered broker-dealer market makers comply with
quotation requirements. In addition, delisting of our common stock could depress our stock price, substantially limit
liquidity of our common stock and materially adversely affect our ability to raise capital on terms acceptable to us, or at all.
Further, delisting of our common stock would likely result in our common stock becoming a “penny stock” under the
Exchange Act.
Our
share price may be volatile and there may not be an active trading market for our common stock.
There
can be no assurance that the market price of our common stock will not decline below its present market price or that there will
be an active trading market for our common stock. The market prices of technology or technology related companies have been
and are likely to continue to be highly volatile. Fluctuations in our operating results and general market conditions for
technology or technology related stocks could have a significant impact on the volatility of our common stock price. We have
experienced significant volatility in the price of our common stock. From January 1, 2019 through December 31, 2019,
the share price of our common stock (on a split-adjusted basis) ranged from a high of $3.92 to a low of $1.05. The reason for
the volatility in our stock is not well understood and may continue. Factors that may have contributed to such volatility
include, but are not limited to:
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developments regarding
regulatory filings;
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our funding requirements
and the terms of our financing arrangements;
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technological innovations;
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introduction of
new technologies by us or our competitors;
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material changes
in existing litigation;
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changes in the enforceability
or other matters surrounding our patent portfolios;
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government regulations
and laws;
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public sentiment
relating to our industry;
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developments in
patent or other proprietary rights;
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the number of shares
issued and outstanding;
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the number of shares
trading on an average trading day;
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performance of companies
in the non-performing entity space generally;
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announcements regarding
other participants in the technology and technology related industries, including our competitors;
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block sales of our
shares by stockholders to whom we have sold stock in private placements, or the cessation of transfer restrictions with respect
to those shares; and
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market speculation
regarding any of the foregoing.
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We
could fail in future financing efforts or be delisted from The Nasdaq Capital Market if we fail to receive stockholder approval
when needed.
We
are required under the Nasdaq rules to obtain stockholder approval for any issuance of additional equity securities that would
comprise more than 20% of the total shares of our common stock outstanding before the issuance of such securities sold in an offering
that is not deemed to be a “public offering” by Nasdaq. Funding of our operations and acquisitions of assets may require
issuance of additional equity securities that would comprise more than 20% of the total shares of our common stock outstanding,
but we might not be successful in obtaining the required stockholder approval for such an issuance. If we are unable to obtain
financing due to stockholder approval difficulties, such failure may have a material adverse effect on our ability to continue
operations.
Our
shares of common stock are thinly traded and, as a result, stockholders may be unable to sell at or near ask prices, or at all,
if they need to sell shares to raise money or otherwise desire to liquidate their shares.
Our
common stock has been “thinly-traded” meaning that the number of persons interested in purchasing our common stock
at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of
factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional
investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention
of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or
recommend the purchase of our shares until such time as we become more seasoned and viable. Our trading volumes are further adversely
affected by the 1-for-19 reverse stock split that was effective as of March 4, 2016. In addition, we believe that due to the limited
number of shares of our common stock outstanding, an options market has not been established for our common stock, limiting the
ability of market participants to hedge or otherwise undertake trading strategies available for larger companies with broader
shareholder bases which prevents institutions and others from acquiring or trading in our securities. Consequently, there may
be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer
which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect
on share price. We cannot give stockholders any assurance that a broader or more active public trading market for our common shares
will develop or be sustained, or that current trading levels will be sustained.
Because
of the Shareholder Rights Plan and “anti-takeover” provisions in our Amended and Restated Certificate of Incorporation
and Amended and Restated Bylaws, a third party may be discouraged from making a takeover offer that could be beneficial to our
stockholders.
Effective
as of January 24, 2013, we adopted a shareholder rights plan which was amended and restated as of June 9, 2017. The effect of
this rights plan and of certain provisions of our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws
and the anti-takeover provisions of the Delaware General Corporation Law, could delay or prevent a third party from acquiring
us or replacing members of our Board of Directors, or make more costly any attempt to acquire control of the Company, even if
the acquisition or the Board designees would be beneficial to our stockholders. These factors could also reduce the price that
certain investors might be willing to pay for shares of the common stock and result in the market price being lower than it would
be without these provisions.
Dividends
on our common stock are not likely.
During
the last five years, we have not paid cash dividends on our common stock, and we do not anticipate paying cash dividends on our
common stock in the foreseeable future. Investors must look solely to the potential for appreciation in the market
price of the shares of our common stock to obtain a return on their investment.
It
may be difficult to predict our financial performance because our quarterly operating results may fluctuate.
Our
revenues, operating results and valuations of certain assets and liabilities may vary significantly from quarter to quarter due
to a variety of factors, many of which are beyond our control. You should not rely on period-to-period comparisons of our results
of operations as an indication of our future performance. Our results of operations may fall below the expectations of market
analysts and our own forecasts. If this happens, the market price of our common stock may fall significantly. The factors that
may affect our quarterly operating results include the following:
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fluctuations in
results of our enforcement and licensing activities or outcome of cases;
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fluctuations in
duration of judicial processes and time to completion of cases;
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the timing and amount
of expenses incurred to negotiate with licensees and obtain settlements from infringers;
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the impact of our
anticipated need for personnel and expected substantial increase in headcount;
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fluctuations in
the receptiveness of courts and juries to significant damages awards in patent infringement cases and speed to trial in the
jurisdictions in which our cases may be brought and the accepted royalty rates attributable to damages analysis for patent
cases generally, including the royalty rates for industry standard patents which we may own or acquire;
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worsening economic
conditions which cause revenues or profits attributable to infringer sales of products or services to decline;
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changes in the regulatory
environment, including regulation of NPE activities or patenting practices, that may negatively impact our or infringers practices;
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the timing and amount
of expenses associated with litigation, regulatory investigations or restructuring activities, including settlement costs
and regulatory penalties assessed related to government enforcement actions;
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Any changes we make
in our Critical Accounting Estimates described in the Management’s Discussion and Analysis of Financial Condition and
Results of Operations sections of our periodic reports;
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the adoption of
new accounting pronouncements, or new interpretations of existing accounting pronouncements, that impact the manner in which
we account for, measure or disclose our results of operations, financial position or other financial measures; and
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costs related to
acquisitions of technologies or businesses.
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If
we fail to retain our key personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.
Our
future depends, in part, on our ability to attract and retain key personnel and the continued contributions of our executive officers,
each of whom may be difficult to replace. In particular, Anthony Hayes, our Chief Executive Officer, is important to the management
of our business and operations and the development of our strategic direction. The loss of the services of any such individual
and the process to replace any key personnel would involve significant time and expense and may significantly delay or prevent
the achievement of our business objectives.
Because
an increasing amount of our outstanding shares may become freely tradable, sales of these shares could cause the market price
of our common stock to drop significantly, even if our business is performing well.
As
of June 11, 2020, we had outstanding 34,920,219 shares of common stock, of which our directors and executive officers owned 28,989
shares which are subject to the limitations of Rule 144 under the Securities Act.
In
general, Rule 144 provides that any non-affiliate of ours, who has held restricted common stock for at least six-months, is entitled
to sell their restricted stock freely, provided that we are then current in our filings with the SEC.
An
affiliate of the Company may sell after six months with the following restrictions:
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we are current in
our filings;
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certain manner of
sale provisions;
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filing of Form 144;
and
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volume limitations
limiting the sale of shares within any three-month period to a number of shares that does not exceed the greater of 1% of
the total number of outstanding shares or, the average weekly trading volume during the four calendar weeks preceding the
filing of a notice of sale.
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Because
almost all of our outstanding shares are freely tradable (subject to certain restrictions imposed by lockup agreements executed
by the holders thereof) and the shares held by our affiliates may be freely sold (subject to the Rule 144 limitations), sales
of these shares could cause the market price of our common stock to drop significantly, even if our business is performing well.
USE
OF PROCEEDS
Unless
otherwise indicated in a prospectus supplement, we intend to use the net proceeds from these sales for general corporate purposes,
which includes, without limitation, the continued development of our products to treat pancreatic cancer, acute myeloid leukemia
(AML) and acute lymphoblastic leukemia (ALL), and working capital. The amounts and timing of these expenditures will depend on
numerous factors, including the development of our current business initiatives.
PLAN
OF DISTRIBUTION
We
may sell the securities from time to time to or through underwriters or dealers, through agents, or directly to one or more purchasers.
A distribution of the securities offered by this prospectus may also be effected through the issuance of derivative securities,
including without limitation, warrants, rights to purchase and subscriptions. In addition, the manner in which we may sell
some or all of the securities covered by this prospectus includes, without limitation, through:
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a block trade in
which a broker-dealer will attempt to sell as agent, but may position or resell a portion of the block, as principal, in order
to facilitate the transaction;
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purchases by a broker-dealer,
as principal, and resale by the broker-dealer for its account; or
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ordinary brokerage
transactions and transactions in which a broker solicits purchasers.
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A
prospectus supplement or supplements with respect to each series of securities will describe the terms of the offering, including,
to the extent applicable:
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the terms of the
offering;
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the name or names
of the underwriters or agents and the amounts of securities underwritten or purchased by each of them, if any;
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the public offering
price or purchase price of the securities or other consideration therefor, and the proceeds to be received by us from the
sale;
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any delayed delivery
requirements;
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any over-allotment
options under which underwriters may purchase additional securities from us;
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any underwriting
discounts or agency fees and other items constituting underwriters’ or agents’ compensation;
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any discounts or
concessions allowed or re-allowed or paid to dealers; and
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any securities exchange
or market on which the securities may be listed.
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The
offer and sale of the securities described in this prospectus by us, the underwriters or the third parties described above may
be effected from time to time in one or more transactions, including privately negotiated transactions, either:
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at a fixed price
or prices, which may be changed;
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in an “at
the market” offering within the meaning of Rule 415(a)(4) of the Securities Act;
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at prices related
to such prevailing market prices; or
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Only
underwriters named in the prospectus supplement will be underwriters of the securities offered by the prospectus supplement.
Underwriters
and Agents; Direct Sales
If
underwriters are used in a sale, they will acquire the offered securities for their own account and may resell the offered securities
from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying
prices determined at the time of sale. We may offer the securities to the public through underwriting syndicates represented
by managing underwriters or by underwriters without a syndicate.
Unless
the prospectus supplement states otherwise, the obligations of the underwriters to purchase the securities will be subject to
the conditions set forth in the applicable underwriting agreement. Subject to certain conditions, the underwriters will
be obligated to purchase all of the securities offered by the prospectus supplement, other than securities covered by any over-allotment
option. Any public offering price and any discounts or concessions allowed or re-allowed or paid to dealers may change from time
to time. We may use underwriters with whom we have a material relationship. We will describe in the prospectus supplement, naming
the underwriter, the nature of any such relationship.
We
may sell securities directly or through agents we designate from time to time. We will name any agent involved in the offering
and sale of securities, and we will describe any commissions we will pay the agent in the prospectus supplement. Unless the prospectus
supplement states otherwise, our agent will act on a best-efforts basis for the period of its appointment.
We
may authorize agents or underwriters to solicit offers by certain types of institutional investors to purchase securities from
us at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment
and delivery on a specified date in the future. We will describe the conditions to these contracts and the commissions we
must pay for solicitation of these contracts in the prospectus supplement.
Dealers
We
may sell the offered securities to dealers as principals. The dealer may then resell such securities to the public either at varying
prices to be determined by the dealer or at a fixed offering price agreed to with us at the time of resale.
Institutional
Purchasers
We
may authorize agents, dealers or underwriters to solicit certain institutional investors to purchase offered securities on a delayed
delivery basis pursuant to delayed delivery contracts providing for payment and delivery on a specified future date. The applicable
prospectus supplement or other offering materials, as the case may be, will provide the details of any such arrangement, including
the offering price and commissions payable on the solicitations.
We
will enter into such delayed contracts only with institutional purchasers that we approve. These institutions may include commercial
and savings banks, insurance companies, pension funds, investment companies and educational and charitable institutions.
Indemnification;
Other Relationships
We
may provide agents, underwriters, dealers and remarketing firms with indemnification against certain civil liabilities, including
liabilities under the Securities Act, or contribution with respect to payments that the agents or underwriters may make with respect
to these liabilities. Agents, underwriters, dealers and remarketing firms, and their affiliates, may engage in transactions with,
or perform services for, us in the ordinary course of business. This includes commercial banking and investment banking
transactions.
Market-Making;
Stabilization and Other Transactions
There
is currently no market for any of the offered securities, other than our common stock, which is quoted on The Nasdaq Capital Market.
If the offered securities are traded after their initial issuance, they may trade at a discount from their initial offering price,
depending upon prevailing interest rates, the market for similar securities and other factors. While it is possible that an underwriter
could inform us that it intends to make a market in the offered securities, such underwriter would not be obligated to do so,
and any such market-making could be discontinued at any time without notice. Therefore, no assurance can be given as to whether
an active trading market will develop for the offered securities. We have no current plans for listing of the debt securities,
preferred stock, warrants or subscription rights on any securities exchange or quotation system; any such listing with respect
to any particular debt securities, preferred stock, warrants or subscription rights will be described in the applicable prospectus
supplement or other offering materials, as the case may be.
Any
underwriter may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance
with Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Over-allotment involves sales
in excess of the offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified maximum price. Syndicate-covering or other short-covering transactions
involve purchases of the securities, either through exercise of the over-allotment option or in the open market after the distribution
is completed, to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when
the securities originally sold by the dealer are purchased in a stabilizing or covering transaction to cover short positions.
Those activities may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters
may discontinue any of the activities at any time.
Any
underwriters or agents that are qualified market makers on The Nasdaq Capital Market may engage in passive market making transactions
in our common stock on The Nasdaq Capital Market in accordance with Regulation M under the Exchange Act, during the business
day prior to the pricing of the offering, before the commencement of offers or sales of our common stock. Passive market makers
must comply with applicable volume and price limitations and must be identified as passive market makers. In general, a passive
market maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent
bids are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered
when certain purchase limits are exceeded. Passive market making may stabilize the market price of the securities at a level above
that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.
Fees
and Commissions
If
5% or more of the net proceeds of any offering of securities made under this prospectus will be received by a FINRA member participating
in the offering or affiliates or associated persons of such FINRA member, the offering will be conducted in accordance with FINRA
Rule 5121.
DESCRIPTION
OF SECURITIES WE MAY OFFER
General
This
prospectus describes the general terms of our capital stock. The following description is not complete and may not contain all
the information you should consider before investing in our capital stock. For a more detailed description of these securities,
you should read the applicable provisions of Delaware law and our Amended and Restated Certificate of Incorporation and our Amended
and Restated Bylaws. When we offer to sell a particular series of these securities, we will describe the specific terms of the
series in a supplement to this prospectus. Accordingly, for a description of the terms of any series of securities, you must refer
to both the prospectus supplement relating to that series and the description of the securities described in this prospectus.
To the extent the information contained in the prospectus supplement differs from this summary description, you should rely on
the information in the prospectus supplement.
The
total number of shares of capital stock we are authorized to issue is 150,000,000 shares, of which (a) 100,000,000 are common
stock and (b) 50,000,000 are preferred stock.
We,
directly or through agents, dealers or underwriters designated from time to time, may offer, issue and sell, together or separately,
up to $100,000,000 in the aggregate of:
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warrants to purchase
our securities;
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subscription rights
to purchase our securities;
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secured or unsecured
debt securities consisting of notes, debentures or other evidences of indebtedness which may be senior debt securities, senior
subordinated debt securities or subordinated debt securities, each of which may be convertible into equity securities; or
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units comprised
of, or other combinations of, the foregoing securities.
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We
may issue the debt securities as exchangeable for or convertible into shares of common stock, preferred stock or other securities
that may be sold by us pursuant to this prospectus or any combination of the foregoing. The preferred stock may also be exchangeable
for and/or convertible into shares of common stock, another series of preferred stock or other securities that may be sold by
us pursuant to this prospectus or any combination of the foregoing. When a particular series of securities is offered, a
supplement to this prospectus will be delivered with this prospectus, which will set forth the terms of the offering and sale
of the offered securities.
Amended
and Restated Certificate of Incorporation
On
April 24, 2014, we filed an Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware,
which was previously approved by our stockholders at our annual meeting held on February 6, 2014. The Amended and Restated Certificate
of Incorporation, among other things, increased our authorized number of shares of common stock to 200,000,000 shares from 50,000,000
shares.
Additionally,
on April 23, 2014, we filed a Certificate of Elimination with the Secretary of State of the State of Delaware eliminating our
Series B Convertible Preferred Stock, Series E Convertible Preferred Stock and Series F Convertible Preferred Stock and returning
them to authorized but undesignated shares of our preferred stock.
On
March 4, 2016, the Company implemented a reverse stock split with a ratio of 1-for-19. The par value and other terms of the common
stock were not affected by the reverse stock split. In addition, the amendment to the Company’s Amended and Restated Certificate
of Incorporation that effected the reverse stock split simultaneously reduced the number of authorized shares of common stock
from 200,000,000 to 100,000,000.
Common
Stock
As
of June 11, 2020, there were 34,920,219 shares of common stock issued and outstanding, held of record by approximately 123 stockholders.
Subject to preferential rights with respect to any outstanding preferred stock, all outstanding shares of common stock are of
the same class and have equal rights and attributes. Subject to the rights of the preferred stock, holders of common stock are
entitled to receive such dividends as are declared by our Board of Directors out of funds legally available for the payment of
dividends. We presently intend to retain any earnings to fund the development of our business. Accordingly, we do not anticipate
paying any dividends on our common stock for the foreseeable future. Any future determination as to declaration and payment of
dividends will be made at the discretion of our Board of Directors.
In
the event of the liquidation, dissolution, or winding up of the Company, each outstanding share of our common stock will be entitled
to share equally in any of our assets remaining after payment of or provision for our debts and other liabilities.
Holders
of common stock are entitled to one vote per share on matters to be voted upon by stockholders. There is no cumulative voting
for the election of directors, which means that the holders of shares entitled to exercise more than 50% of the voting rights
in the election of directors are able to elect all of the directors.
Holders
of common stock have no preemptive rights to subscribe for or to purchase any additional shares of common stock or other obligations
convertible into shares of common stock which we may issue after the date of this prospectus.
All
of the outstanding shares of common stock are fully paid and non-assessable. Holders of our common stock are not liable for further
calls or assessments.
The
rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights
of the holders of shares of any series of preferred stock that we may designate in the future.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is VStock Transfer, LLC, with an address at 18 Lafayette Place, Woodmere, New
York 11598.
Listing
Our
common stock is listed on the Nasdaq Capital Market under the symbol “AIKI”. We have not applied to list our common
stock on any other exchange or quotation system.
Limitations
on Directors’ Liability
Our
Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain provisions indemnifying our directors
and officers to the fullest extent permitted by Delaware law.
In
addition, as permitted by Delaware law, our Amended and Restated Certificate of Incorporation provides that no director will be
liable to us or our stockholders for monetary damages for breach of the director’s fiduciary duty as a director. The effect
of this provision is to restrict our rights and the rights of our stockholders in derivative suits to recover monetary damages
against a director for breach of the director’s fiduciary duty as a director, except that a director will be personally
liable for:
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any breach of his
or her duty of loyalty to us or our stockholders;
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acts or omissions
not in good faith which involve intentional misconduct or a knowing violation of law;
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the payment of dividends
or the redemption or purchase of stock in violation of Delaware law; or
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any transaction
from which the director derived an improper personal benefit.
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This
provision does not affect a director’s liability under the federal securities laws.
To
the extent that our directors, officers and controlling persons are indemnified under the provisions contained in our Amended
and Restated Certificate of Incorporation or Delaware law against liabilities arising under the Securities Act, we have been advised
that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore
unenforceable.
Provisions
of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, our Shareholder Rights Plan and Delaware
Law that May Have an Anti-Takeover Effect
Certain
provisions set forth in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, our Amended and
Restated Shareholder Rights Plan and Delaware law could have the effect of discouraging potential acquisition proposals or making
a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions
may also prevent or frustrate attempts by our stockholders to replace or remove our management.
Amended
and Restated Certificate of Incorporation and Amended and Restated Bylaws
In
particular, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, among other things:
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authorize our Board
of Directors to issue, without further action by the stockholders, up to 50,000,000 shares of undesignated preferred stock;
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provide that stockholders
must provide advance notice to nominate persons for election to our Board of Directors or submit proposals for consideration
at stockholder meetings;
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specify that special
meetings of our stockholders can be called only by our Board of Directors or by any officer instructed by the Board of Directors
to a call a special meeting;
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provide that vacancies
on the Board of Directors may be filled by a majority of directors in office, although less than a quorum, or by the sole
remaining director; and
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provide the Board
of Directors with the ability to alter the Amended and Restated Bylaws without stockholder approval.
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Shareholder
Rights Plan
On
January 1, 2013, and as amended and restated on June 9, 2017, we adopted a stockholder rights plan in which rights to purchase
shares of Series A Preferred Stock were distributed as a dividend at the rate of one right for each share of common stock. The
rights are designed to guard against partial tender offers and other abusive and coercive tactics that might be used in an attempt
to gain control of AIkido or to deprive our stockholders of their interest in the long-term value of AIkido. These rights seek
to achieve these goals by forcing a potential acquirer to negotiate with our Board of Directors (or go to court to try to force
the Board of Directors to redeem the rights), because only the Board of Directors can redeem the rights and allow the potential
acquirer to acquire our shares without suffering very significant dilution. However, these rights also could deter or prevent
transactions that stockholders deem to be in their interests, and could reduce the price that investors or an acquirer might be
willing to pay in the future for shares of our common stock.
Each
right entitles the registered holder to purchase one nineteen-hundredth of a share (a “Unit”) of our Series A Preferred
Stock. Each Unit of Series A Preferred Stock will be entitled to an aggregate dividend of 100 times the dividend declared per
share of common stock. In the event of liquidation, the holders of the Units of Series A Preferred Stock will be entitled to an
aggregate payment of 100 times the payment made per share of common stock. Each Unit of Series A Preferred Stock will have 100
votes, voting together with the common stock. Finally, in the event of any merger, consolidation or other transaction in which
shares of common stock are exchanged, each Unit of Series A Preferred Stock will be entitled to receive 100 times the amount received
per share of common stock. These rights are protected by customary anti-dilution provisions.
The
rights will be exercisable only if a person or group acquires ten percent (10%) or more of our common stock (subject to certain
exceptions stated in the plan) or announces a tender offer the consummation of which would result in ownership by a person or
group of ten percent (10%) or more of our common stock. Our Board of Directors may redeem the rights at a price of $0.001 per
right. The stockholder rights plan provides that the rights will expire at the close of business on December 31, 2020 unless the
expiration date is extended or unless the rights are earlier redeemed or exchanged by the Company.
Delaware
Takeover Statute
Section
203 of the Delaware General Corporation Law (the “DGCL”) prohibits a Delaware corporation that is a public company
from engaging in any “business combination” (as defined below) with any “interested stockholder” (defined
generally as an entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity
or person affiliated with such entity or person) for a period of three years following the date that such stockholder became an
interested stockholder, unless:
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before such date,
the board of directors of the corporation approved either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;
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●
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upon
consummation of the transaction that resulted in the stockholder becoming an interested stockholder,
the interested stockholder owned at least 85% of the voting stock of the corporation outstanding
at the time the transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned by persons who are directors and also officers and by
employee stock plans in which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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●
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on or subsequent
to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting
of stockholders, and not by written consent, by the affirmative vote of at least 66-2/3% of the outstanding voting stock that
is not owned by the interested stockholder.
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Section
203 of the DCGL defines “business combination” to include:
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any merger or consolidation
involving the corporation and the interested stockholder;
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any sale, transfer,
pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
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subject to certain
exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to
the interested stockholder;
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●
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any transaction
involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of
the corporation beneficially owned by the interested stockholder; or
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the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by
or through the corporation.
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Preferred
Stock
Our
Amended and Restated Certificate of Incorporation authorizes 50,000,000 shares of preferred stock. Our Board of Directors is authorized,
without further stockholder action, to establish various series of such preferred stock from time to time and to determine the
rights, preferences and privileges of any unissued series including, among other matters, any dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms, the number of shares constituting
any such series, and the description thereof and to issue any such shares. Although there is no current intent to do so, our Board
of Directors may, without stockholder approval, issue shares of an additional class or series of preferred stock with voting and
conversion rights which could adversely affect the voting power of the holders of the common stock.
One
of the effects of the preferred stock may be to enable the Board of Directors to render more difficult or to discourage an attempt
to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise, and thereby to protect the continuity
of the management.
The
DGCL provides that the holders of preferred stock will have the right to vote separately as a class on any proposal involving
certain fundamental changes in the rights of holders of that series of preferred stock. This right is in addition to any voting
rights provided for in the applicable certificate of designation.
Our
Board of Directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect
the voting power or other rights of the holders of our common stock. Preferred stock could be issued quickly with terms designed
to delay or prevent a change in control of our Company or make removal of management more difficult. Additionally, the issuance
of preferred stock could have the effect of decreasing the market price of our common stock.
The
Company had designated separate series of its capital stock as of June 11, 2020 as summarized below:
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Number
of
Shares Issued
and Outstanding
as of June 11,
2020
|
|
|
Par
Value
|
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|
Conversion
Ratio
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|
Series
“A”
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|
|
—
|
|
|
$
|
0.0001
|
|
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N/A
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|
Series
“C”
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|
|
—
|
|
|
|
0.0001
|
|
|
|
0.05:1
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|
Series
“D”
|
|
|
4,725
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|
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|
0.0001
|
|
|
|
0.53:1
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|
Series “D-1”
|
|
|
834
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|
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|
0.0001
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|
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|
0.53:1
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|
Series “F-1”
|
|
|
—
|
|
|
|
0.0001
|
|
|
|
0.05:1
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|
Series
“H”
|
|
|
—
|
|
|
|
0.0001
|
|
|
|
0.53:1
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|
Series
“I”
|
|
|
—
|
|
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|
0.0001
|
|
|
|
1.05:1
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|
Series
“J”
|
|
|
—
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|
|
|
0.0001
|
|
|
|
0.05:1
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|
Series
“K”
|
|
|
—
|
|
|
|
0.0001
|
|
|
|
263.16:1
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|
Series
“L”
|
|
|
—
|
|
|
|
0.0001
|
|
|
|
1,000:1
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|
On
April 23, 2014, the Company filed a Certificate of Elimination with the Secretary of State of the State of Delaware eliminating
its Series B Convertible Preferred Stock, Series E Convertible Preferred Stock and Series F Convertible Preferred Stock and returning
them to authorized but undesignated shares of preferred stock. No shares of the foregoing series of preferred stock were
outstanding.
On
March 24, 2020, the Company filed a Certificate of Designation of Series L Preferred Stock with the Secretary of State of the
State of Delaware to designate a new Series L Convertible Preferred Stock of the Company.
Series
D Convertible Preferred Stock
In
connection with the acquisition of North South’s patent portfolio in September 2013, the Company issued 1,379,685 shares
of its Series D Convertible Preferred Stock (“Series D Preferred Stock”) to the stockholders of North South. Each
share of Series D Preferred Stock has a stated value of $0.0001 per share and is convertible into ten-nineteenths of a share of
common stock. Upon the liquidation, dissolution or winding up of the Company’s business, each holder of Series
D Preferred Stock shall be entitled to receive, for each share of Series D Preferred Stock held, a preferential amount in cash
equal to the greater of (i) the stated value or (ii) the amount the holder would receive as a holder of common stock on an “as
converted” basis. Each holder of Series D Preferred Stock shall be entitled to vote on all matters submitted
to its stockholders and shall be entitled to such number of votes equal to the number of shares of common stock such shares of
Series D Preferred Stock are convertible into at such time, taking into account the beneficial ownership limitations set forth
in the governing Certificate of Designation and the conversion limitations described below. At no time may shares of
Series D Preferred Stock be converted if such conversion would cause the holder to hold in excess of 4.99% of issued and outstanding
common stock, subject to an increase in such limitation up to 9.99% of the issued and outstanding common stock on 61 days’
written notice to the Company. The conversion ratio of the Series D Preferred Stock is subject to adjustment in the
event of stock splits, stock dividends, combination of shares and similar recapitalization transactions.
As
of June 11, 2020, 4,725 shares of Series D Preferred Stock remained issued and outstanding.
Series
D-1 Convertible Preferred Stock
The
Company’s Series D-1 Convertible Preferred Stock (“Series D-1 Preferred Stock”) was established on November
22, 2013. Each share of Series D-1 Preferred Stock has a stated value of $0.0001 per share and is convertible into ten- nineteenths
of a share of common stock. Upon the liquidation, dissolution or winding up of the Company’s business, each holder
of Series D-1 Preferred Stock shall be entitled to receive, for each share of Series D-1 Preferred Stock held, a preferential
amount in cash equal to the greater of (i) the stated value or (ii) the amount the holder would receive as a holder of common
stock on an “as converted” basis. Each holder of Series D-1 Preferred Stock shall be entitled to vote on
all matters submitted to the Company’s stockholders and shall be entitled to such number of votes equal to the number of
shares of common stock such shares of Series D-1 Preferred Stock are convertible into at such time, taking into account the beneficial
ownership limitations set forth in the governing Certificate of Designation. At no time may shares of Series D-1 Preferred
Stock be converted if such conversion would cause the holder to hold in excess of 9.99% of issued and outstanding common stock. The
conversion ratio of the Series D-1 Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination
of shares and similar recapitalization transactions. The Company commenced an exchange with holders of Series D Convertible
Preferred Stock pursuant to which the holders of the Company’s outstanding shares of Series D Preferred Stock acquired in
the Merger could exchange such shares for shares of the Company’s Series D-1 Preferred Stock on a one-for-one basis.
As
of June 11, 2020, 834 shares of Series D-1 Preferred Stock remained issued and outstanding.
Purchase
Contracts
We
may issue purchase contracts, representing contracts obligating holders to purchase from us, and us to sell to the holders, a
specific or varying number of common stock, preferred stock, warrants, depositary shares, debt securities, warrants or any combination
of the above, at a future date or dates. Alternatively, the purchase contracts may obligate us to purchase from holders, and obligate
holders to sell to us, a specific or varying number of common stock, preferred stock, warrants, depositary shares, debt securities,
or any combination of the above. The price of the securities and other property subject to the purchase contracts may be fixed
at the time the purchase contracts are issued or may be determined by reference to a specific formula set forth in the purchase
contracts. The purchase contracts may be issued separately or as a part of a unit that consists of (a) a purchase contract
and (b) one or more of the other securities that may be sold by us pursuant to this prospectus or any combination of the
foregoing, which may secure the holders’ obligations to purchase the securities under the purchase contract. The purchase
contracts may require us to make periodic payments to the holders or require the holders to make periodic payments to us. These
payments may be unsecured or prefunded and may be paid on a current or on a deferred basis. The purchase contracts may require
holders to secure their obligations under the contracts in a manner specified in the applicable prospectus supplement.
We
will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from
a current report on Form 8-K that we file with the SEC, forms of the purchase contracts and purchase contract agreement, if any.
The applicable prospectus supplement will describe the terms of any purchase contracts in respect of which this prospectus is
being delivered, including, to the extent applicable, the following:
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whether
the purchase contracts obligate the holder or us to purchase or sell, or both purchase and sell, the securities subject to
purchase under the purchase contract, and the nature and amount of each of those securities, or the method of determining
those amounts;
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whether
the purchase contracts are to be prepaid or not;
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whether
the purchase contracts are to be settled by delivery, or by reference or linkage to the value, performance or level of the
securities subject to purchase under the purchase contract;
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●
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any acceleration,
cancellation, termination or other provisions relating to the settlement of the purchase contracts; and
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●
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whether the purchase
contracts will be issued in fully registered or global form.
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Warrants
We
may issue warrants to purchase our securities or other rights, including rights to receive payment in cash or securities based
on the value, rate or price of one or more specified commodities, currencies, securities or indices, or any combination of the
foregoing. Warrants may be issued independently or together with any other securities that may be sold by us pursuant to this
prospectus or any combination of the foregoing and may be attached to, or separate from, such securities. To the extent warrants
that we issue are to be publicly-traded, each series of such warrants will be issued under a separate warrant agreement to be
entered into between us and a warrant agent.
We
will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from
a current report on Form 8-K that we file with the SEC, forms of the warrant and warrant agreement, if any. The prospectus supplement
relating to any warrants that we may offer will contain the specific terms of the warrants and a description of the material provisions
of the applicable warrant agreement, if any. These terms may include the following:
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the title of the
warrants;
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●
|
the price or prices
at which the warrants will be issued;
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●
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the designation,
amount and terms of the securities or other rights for which the warrants are exercisable;
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●
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the designation
and terms of the other securities, if any, with which the warrants are to be issued and the number of warrants issued with
each other security;
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●
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the aggregate number
of warrants;
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●
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any provisions for
adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price of the warrants;
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●
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the price or prices
at which the securities or other rights purchasable upon exercise of the warrants may be purchased;
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●
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if applicable, the
date on and after which the warrants and the securities or other rights purchasable upon exercise of the warrants will be
separately transferable;
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●
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a discussion of
any material U.S. federal income tax considerations applicable to the exercise of the warrants;
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●
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the date on which
the right to exercise the warrants will commence, and the date on which the right will expire;
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●
|
the maximum or minimum
number of warrants that may be exercised at any time;
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●
|
information with
respect to book-entry procedures, if any; and
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●
|
any other terms
of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants.
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Each
warrant will entitle the holder of warrants to purchase the amount of securities or other rights, at the exercise price stated
or determinable in the prospectus supplement for the warrants. Warrants may be exercised at any time up to the close of business
on the expiration date shown in the applicable prospectus supplement, unless otherwise specified in such prospectus supplement.
After the close of business on the expiration date, if applicable, unexercised warrants will become void. Warrants may be exercised
in the manner described in the applicable prospectus supplement. When the warrant holder makes the payment and properly completes
and signs the warrant certificate at the corporate trust office of the warrant agent, if any, or any other office indicated in
the prospectus supplement, we will, as soon as possible, forward the securities or other rights that the warrant holder has purchased.
If the warrant holder exercises less than all of the warrants represented by the warrant certificate, we will issue a new warrant
certificate for the remaining warrants.
A
summary of warrant activity for the three months ended March 31, 2020 is presented below:
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|
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Total
Intrinsic
Value
|
|
|
Weighted
Average
Remaining
Contractual
Life
(in years)
|
|
Outstanding as of December 31, 2019
|
|
|
351,939
|
|
|
$
|
19.96
|
|
|
$
|
111,332
|
|
|
|
0.94
|
|
Issued
|
|
|
11,207,244
|
|
|
|
0.72
|
|
|
|
-
|
|
|
|
0.15
|
|
Exercised
|
|
|
(10,695,706
|
)
|
|
|
0.67
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding as of March 31, 2020
|
|
|
863,477
|
|
|
$
|
19.96
|
|
|
|
33,126
|
|
|
|
0.70
|
|
On
May 29, 2019, the Company entered into the Master Service Agreement (“MSA”) with a consultant, World Wide Holdings,
LLC (“Consultant”). In consideration for services provided by Consultant, the Company paid to Consultant three warrants
(the “Consultant Warrant”), with each warrant immediately exercisable for 33,333 shares of common stock with a $0.01
strike price. The Company issued each of the three warrants on June 28, July 28 and August 27, 2019, respectively. The Company
recorded $0.3 million in stock-based compensation during the year ended December 31, 2019 related to this arrangement. On July
12, 2019, the Company issued 33,333 shares of common stock upon exercise of one Consultant Warrant which resulted in gross proceeds
of approximately $333.
Subscription
Rights
We
may issue rights to purchase our securities. The rights may or may not be transferable by the persons purchasing or receiving
the rights. In connection with any rights offering, we may enter into a standby underwriting or other arrangement with one or
more underwriters or other persons pursuant to which such underwriters or other persons would purchase any offered securities
remaining unsubscribed for after such rights offering. In connection with a rights offering to holders of our capital stock a
prospectus supplement will be distributed to such holders on the record date for receiving rights in the rights offering set by
us.
We
will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from
a current report on Form 8-K that we file with the SEC, forms of the subscription rights, standby underwriting agreement or other
agreements, if any. The prospectus supplement relating to any rights that we offer will include specific terms relating to the
offering, including, among other matters:
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●
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the date of determining
the security holders entitled to the rights distribution;
|
|
●
|
the aggregate number
of rights issued and the aggregate amount of securities purchasable upon exercise of the rights;
|
|
●
|
the conditions to
completion of the rights offering;
|
|
●
|
the date on which
the right to exercise the rights will commence and the date on which the rights will expire; and
|
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●
|
any applicable federal
income tax considerations.
|
Each
right would entitle the holder of the rights to purchase the principal amount of securities at the exercise price set forth in
the applicable prospectus supplement. Rights may be exercised at any time up to the close of business on the expiration date for
the rights provided in the applicable prospectus supplement. After the close of business on the expiration date, all unexercised
rights will become void.
Holders
may exercise rights as described in the applicable prospectus supplement. Upon receipt of payment and the rights certificate
properly completed and duly executed at the corporate trust office of the rights agent, if any, or any other office indicated
in the prospectus supplement, we will, as soon as practicable, forward the securities purchasable upon exercise of the rights. If
less than all of the rights issued in any rights offering are exercised, we may offer any unsubscribed securities directly to
persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, including
pursuant to standby underwriting arrangements, as described in the applicable prospectus supplement.
Depositary
Shares
General.
We may offer fractional shares of preferred stock, rather than full shares of preferred stock. If we decide to offer
fractional shares of our preferred stock, we will issue receipts for depositary shares. Each depositary share will represent a
fraction of a share of a particular series of our preferred stock, and the applicable prospectus supplement will indicate that
fraction. The shares of preferred stock represented by depositary shares will be deposited under a deposit agreement between us
and a depositary that is a bank or trust company that meets certain requirements and is selected by us. The depositary will be
specified in the applicable prospectus supplement. Each owner of a depositary share will be entitled to all of the rights and
preferences of the preferred stock represented by the depositary share. The depositary shares will be evidenced by depositary
receipts issued pursuant to the deposit agreement. Depositary receipts will be distributed to those persons purchasing the fractional
shares of our preferred stock in accordance with the terms of the offering. We will file as exhibits to the registration statement
of which this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we file with the SEC,
forms of the deposit agreement, form of certificate of designation of underlying preferred stock, form of depositary receipts
and any other related agreements.
Dividends
and Other Distributions. The depositary will distribute all cash dividends or other cash distributions received
by it in respect of the preferred stock to the record holders of depositary shares relating to such preferred shares in proportion
to the numbers of depositary shares held on the relevant record date.
In
the event of a distribution other than in cash, the depositary will distribute securities or property received by it to the record
holders of depositary shares in proportion to the numbers of depositary shares held on the relevant record date, unless the depositary
determines that it is not feasible to make such distribution. In that case, the depositary may make the distribution by such method
as it deems equitable and practicable. One such possible method is for the depositary to sell the securities or property and then
distribute the net proceeds from the sale as provided in the case of a cash distribution.
Redemption
of Depositary Shares. Whenever we redeem the preferred stock, the depositary will redeem a number of depositary
shares representing the same number of shares of preferred stock so redeemed. If fewer than all of the depositary shares are to
be redeemed, the depositary shares to be redeemed will be selected by lot, pro rata or by any other equitable method as the depositary
may determine.
Voting
of Underlying Shares. Upon receipt of notice of any meeting at which the holders of our preferred stock of any series
are entitled to vote, the depositary will mail the information contained in the notice of the meeting to the record holders of
the depositary shares relating to that series of preferred stock. Each record holder of the depositary shares on the record date
will be entitled to instruct the depositary as to the exercise of the voting rights represented by the number of shares of preferred
stock underlying the holder’s depositary shares. The depositary will endeavor, to the extent it is practical to do so, to
vote the number of whole shares of preferred stock underlying such depositary shares in accordance with such instructions. We
will agree to take all action that the depositary may deem reasonably necessary in order to enable the depositary to do so. To
the extent the depositary does not receive specific instructions from the holders of depositary shares relating to such preferred
shares, it will abstain from voting such shares of preferred stock.
Withdrawal
of Shares. Upon surrender of depositary receipts representing any number of whole shares at the depositary’s office,
unless the related depositary shares previously have been called for redemption, the holder of the depositary shares evidenced
by the depositary receipts will be entitled to delivery of the number of whole shares of the related series of preferred stock
and all money and other property, if any, underlying such depositary shares. However, once such an exchange is made, the preferred
stock cannot thereafter be re-deposited in exchange for depositary shares. Holders of depositary shares will be entitled to receive
whole shares of the related series of preferred stock on the basis set forth in the applicable prospectus supplement. If the depositary
receipts delivered by the holder evidence a number of depositary shares representing more than the number of whole shares of preferred
stock of the related series to be withdrawn, the depositary will deliver to the holder at the same time a new depositary receipt
evidencing the excess number of depositary shares.
Amendment
and Termination of Depositary Agreement. The form of depositary receipt evidencing the depositary shares and
any provision of the applicable depositary agreement may at any time be amended by agreement between us and the depositary. We
may, with the consent of the depositary, amend the depositary agreement from time to time in any manner that we desire. However,
if the amendment would materially and adversely alter the rights of the existing holders of depositary shares, the amendment would
need to be approved by the holders of at least a majority of the depositary shares then outstanding.
The
depositary agreement may be terminated by us or the depositary if:
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●
|
all outstanding
depositary shares have been redeemed; or
|
|
●
|
there has been a
final distribution in respect of the shares of preferred stock of the applicable series in connection with our liquidation,
dissolution or winding up and such distribution has been made to the holders of depositary receipts.
|
Resignation
and Removal of Depositary. The depositary may resign at any time by delivering to us notice of its election to do so.
We may remove a depositary at any time. Any resignation or removal will take effect upon the appointment of a successor depositary
and its acceptance of appointment.
Charges
of Depositary. We will pay all transfer and other taxes and governmental charges arising solely from the existence
of any depositary arrangements. We will pay all charges of each depositary in connection with the initial deposit of the preferred
shares of any series, the initial issuance of the depositary shares, any redemption of such preferred shares and any withdrawals
of such preferred shares by holders of depositary shares. Holders of depositary shares will be required to pay any other transfer
taxes.
Notices.
Each depositary will forward to the holders of the applicable depositary shares all notices, reports and communications
from us which are delivered to such depositary and which we are required to furnish the holders of the preferred stock represented
by such depositary shares.
Miscellaneous.
The depositary agreement may contain provisions that limit our liability and the liability of the depositary to the holders of
depositary shares. Both the depositary and we are also entitled to an indemnity from the holders of the depositary shares prior
to bringing, or defending against, any legal proceeding. We or any depositary may rely upon written advice of counsel or accountants,
or information provided by persons presenting preferred shares for deposit, holders of depositary shares or other persons believed
by us to be competent and on documents believed by us or them to be genuine.
Debt
Securities
As
used in this prospectus, the term “debt securities” means the debentures, notes, bonds and other evidences of indebtedness
that we may issue from time to time. The debt securities will either be senior debt securities, senior subordinated debt or subordinated
debt securities. We may also issue convertible debt securities. Debt securities may be issued under an indenture (which we refer
to herein as an Indenture), which are contracts entered into between us and a trustee to be named therein. The Indenture has been
filed as an exhibit to the registration statement of which this prospectus forms a part. We may issue debt securities and incur
additional indebtedness other than through the offering of debt securities pursuant to this prospectus. It is likely that convertible
debt securities will not be issued under an Indenture.
The
debt securities may be fully and unconditionally guaranteed on a secured or unsecured senior or subordinated basis by one or more
guarantors, if any. The obligations of any guarantor under its guarantee will be limited as necessary to prevent that guarantee
from constituting a fraudulent conveyance under applicable law. In the event that any series of debt securities will be subordinated
to other indebtedness that we have outstanding or may incur, the terms of the subordination will be set forth in the prospectus
supplement relating to the subordinated debt securities.
We
may issue debt securities from time to time in one or more series, in each case with the same or various maturities, at par or
at a discount. Unless indicated in a prospectus supplement, we may issue additional debt securities of a particular series without
the consent of the holders of the debt securities of such series outstanding at the time of the issuance. Any such additional
debt securities, together with all other outstanding debt securities of that series, will constitute a single series of debt securities
under the applicable Indenture and will be equal in ranking.
Should
an Indenture relate to unsecured indebtedness, in the event of a bankruptcy or other liquidation event involving a distribution
of assets to satisfy our outstanding indebtedness or an event of default under a loan agreement relating to secured indebtedness
of our company or its subsidiaries, the holders of such secured indebtedness, if any, would be entitled to receive payment of
principal and interest prior to payments on the unsecured indebtedness issued under an Indenture.
Each
prospectus supplement will describe the terms relating to the specific series of debt securities. These terms will include some
or all of the following:
|
●
|
the title of debt
securities and whether the debt securities are senior or subordinated;
|
|
●
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any limit on the
aggregate principal amount of debt securities of such series;
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the percentage of
the principal amount at which the debt securities of any series will be issued;
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the ability to issue
additional debt securities of the same series;
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the purchase price
for the debt securities and the denominations of the debt securities;
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the specific designation
of the series of debt securities being offered;
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the maturity date
or dates of the debt securities and the date or dates upon which the debt securities are payable and the rate or rates at
which the debt securities of the series shall bear interest, if any, which may be fixed or variable, or the method by which
such rate shall be determined;
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the basis for calculating
interest;
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the date or dates
from which any interest will accrue or the method by which such date or dates will be determined;
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the duration of
any deferral period, including the period during which interest payment periods may be extended;
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whether the amount
of payments of principal of (and premium, if any) or interest on the debt securities may be determined with reference to any
index, formula or other method, such as one or more currencies, commodities, equity indices or other indices, and the manner
of determining the amount of such payments;
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the dates on which
we will pay interest on the debt securities and the regular record date for determining who is entitled to the interest payable
on any interest payment date;
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the place or places
where the principal of (and premium, if any) and interest on the debt securities will be payable, where any securities may
be surrendered for registration of transfer, exchange or conversion, as applicable, and notices and demands may be delivered
to or upon us pursuant to the applicable Indenture;
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the rate or rates
of amortization of the debt securities;
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any terms for the
attachment to the debt securities of warrants, options or other rights to purchase or sell our securities;
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if the debt securities
will be secured by any collateral and, if so, a general description of the collateral and the terms and provisions of such
collateral security, pledge or other agreements;
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if we possess the
option to do so, the periods within which and the prices at which we may redeem the debt securities, in whole or in part,
pursuant to optional redemption provisions, and the other terms and conditions of any such provisions;
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our obligation or
discretion, if any, to redeem, repay or purchase debt securities by making periodic payments to a sinking fund or through
an analogous provision or at the option of holders of the debt securities, and the period or periods within which and the
price or prices at which we will redeem, repay or purchase the debt securities, in whole or in part, pursuant to such obligation,
and the other terms and conditions of such obligation;
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the terms and conditions,
if any, regarding the option or mandatory conversion or exchange of debt securities;
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the period or periods
within which, the price or prices at which and the terms and conditions upon which any debt securities of the series may be
redeemed, in whole or in part at our option and, if other than by a board resolution, the manner in which any election by
us to redeem the debt securities shall be evidenced;
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any restriction
or condition on the transferability of the debt securities of a particular series;
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the portion, or
methods of determining the portion, of the principal amount of the debt securities which we must pay upon the acceleration
of the maturity of the debt securities in connection with any event of default;
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the currency or
currencies in which the debt securities will be denominated and in which principal, any premium and any interest will or may
be payable or a description of any units based on or relating to a currency or currencies in which the debt securities will
be denominated;
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provisions, if any,
granting special rights to holders of the debt securities upon the occurrence of specified events;
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any deletions from,
modifications of or additions to the events of default or our covenants with respect to the applicable series of debt securities,
and whether or not such events of default or covenants are consistent with those contained in the applicable Indenture;
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any limitation on
our ability to incur debt, redeem stock, sell our assets or other restrictions;
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the application,
if any, of the terms of the applicable Indenture relating to defeasance and covenant defeasance (which terms are described
below) to the debt securities;
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what subordination
provisions will apply to the debt securities;
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the terms, if any,
upon which the holders may convert or exchange the debt securities into or for our securities or property;
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whether we are issuing
the debt securities in whole or in part in global form;
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any change in the
right of the trustee or the requisite holders of debt securities to declare the principal amount thereof due and payable because
of an event of default;
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the depositary for
global or certificated debt securities, if any;
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any material federal
income tax consequences applicable to the debt securities, including any debt securities denominated and made payable, as
described in the prospectus supplements, in foreign currencies, or units based on or related to foreign currencies;
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any right we may
have to satisfy, discharge and defease our obligations under the debt securities, or terminate or eliminate restrictive covenants
or events of default in the Indentures, by depositing money or U.S. government obligations with the trustee of the Indentures;
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the names of any
trustees, depositories, authenticating or paying agents, transfer agents or registrars or other agents with respect to the
debt securities;
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to whom any interest
on any debt security shall be payable, if other than the person in whose name the security is registered, on the record date
for such interest, the extent to which, or the manner in which, any interest payable on a temporary global debt security will
be paid;
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if the principal
of or any premium or interest on any debt securities is to be payable in one or more currencies or currency units other than
as stated, the currency, currencies or currency units in which it shall be paid and the periods within and terms and conditions
upon which such election is to be made and the amounts payable (or the manner in which such amount shall be determined);
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the portion of the
principal amount of any debt securities which shall be payable upon declaration of acceleration of the maturity of the debt
securities pursuant to the applicable Indenture;
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if the principal
amount payable at the stated maturity of any debt security of the series will not be determinable as of any one or more dates
prior to the stated maturity, the amount which shall be deemed to be the principal amount of such debt securities as of any
such date for any purpose, including the principal amount thereof which shall be due and payable upon any maturity other than
the stated maturity or which shall be deemed to be outstanding as of any date prior to the stated maturity (or, in any such
case, the manner in which such amount deemed to be the principal amount shall be determined); and
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any other specific
terms of the debt securities, including any modifications to the events of default under the debt securities and any other
terms which may be required by or advisable under applicable laws or regulations.
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Unless
otherwise specified in the applicable prospectus supplement, we do not anticipate the debt securities will be listed on any securities
exchange. Holders of the debt securities may present registered debt securities for exchange or transfer in the manner described
in the applicable prospectus supplement. Except as limited by the applicable Indenture, we will provide these services without
charge, other than any tax or other governmental charge payable in connection with the exchange or transfer.
Debt
securities may bear interest at a fixed rate or a variable rate as specified in the prospectus supplement. In addition, if specified
in the prospectus supplement, we may sell debt securities bearing no interest or interest a t a rate that at the time of issuance
is below the prevailing market rate, or at a discount below their stated principal amount. We will describe in the applicable
prospectus supplement any special federal income tax considerations applicable to these discounted debt securities.
We
may issue debt securities with the principal amount payable on any principal payment date, or the amount of interest payable on
any interest payment date, to be determined by referring to one or more currency exchange rates, commodity prices, equity indices
or other factors. Holders of such debt securities may receive a principal amount on any principal payment date, or interest payments
on any interest payment date, that are greater or less than the amount of principal or interest otherwise payable on such dates,
depending upon the value on such dates of applicable currency, commodity, equity index or other factors. The applicable prospectus
supplement will contain information as to how we will determine the amount of principal or interest payable on any date, as well
as the currencies, commodities, equity indices or other factors to which the amount payable on that date relates and certain additional
tax considerations.
Units
We
may issue units consisting of any combination of the other types of securities offered under this prospectus in one or more series.
We may evidence each series of units by unit certificates that we may issue under a separate agreement. We may enter into unit
agreements with a unit agent. Each unit agent, if any, may be a bank or trust company that we select. We will indicate the name
and address of the unit agent, if any, in the applicable prospectus supplement relating to a particular series of units. Specific
unit agreements, if any, will contain additional important terms and provisions. We will file as an exhibit to the registration
statement of which this prospectus is a part, or will incorporate by reference from a current report that we file with the SEC,
the form of unit and the form of each unit agreement, if any, relating to units offered under this prospectus.
If
we offer any units, certain terms of that series of units will be described in the applicable prospectus supplement, including,
without limitation, the following, as applicable:
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the title of the
series of units;
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identification and
description of the separate constituent securities comprising the units;
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the price or prices
at which the units will be issued;
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the date, if any,
on and after which the constituent securities comprising the units will be separately transferable;
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a discussion of
certain United States federal income tax considerations applicable to the units; and
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any other material
terms of the units and their constituent securities.
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Undesignated
Preferred Stock
The
ability of our Board of Directors to issue up to 50,000,000 shares of undesignated preferred stock with voting or other rights
or preferences as designated by our Board of Directors could impede the success of any attempt to change control of us. These
and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company.
Requirements
for Advance Notification of Stockholder Nominations and Proposals
Our
Amended and Restated Bylaws establish advance notice procedures with respect to stockholder proposals to be brought before a stockholder
meeting and the nomination of candidates for election as directors, other than nominations made by or at the direction of the
Board of Directors or a committee of the Board of Directors.
FORMS
OF SECURITIES
Each
security may be represented either by a certificate issued in definitive form to a particular investor or by one or more global
securities representing the entire issuance of securities. Certificated securities in definitive form and global securities will
be issued in registered form. Definitive securities name you or your nominee as the owner of the security, and in order to transfer
or exchange these securities or to receive payments other than interest or other interim payments, you or your nominee must physically
deliver the securities to the trustee, registrar, paying agent or other agent, as applicable. Global securities name a depositary
or its nominee as the owner of the debt securities, warrants or units represented by these global securities. The depositary maintains
a computerized system that will reflect each investor’s beneficial ownership of the securities through an account maintained
by the investor with its broker/dealer, bank, trust company or other representative, as we explain more fully below.
Registered
Global Securities
We
may issue the securities in the form of one or more fully registered global securities that will be deposited with a depositary
or its nominee identified in the applicable prospectus supplement and registered in the name of that depositary or nominee. In
those cases, one or more registered global securities will be issued in a denomination or aggregate denominations equal to the
portion of the aggregate principal or face amount of the securities to be represented by registered global securities. Unless
and until it is exchanged in whole for securities in definitive registered form, a registered global security may not be transferred
except as a whole by and among the depositary for the registered global security, the nominees of the depositary or any successors
of the depositary or those nominees.
The
specific terms of the depositary arrangement with respect to any securities to be represented by a registered global security
will be described in the prospectus supplement relating to those securities. We anticipate that the following provisions will
apply to all depositary arrangements.
Ownership
of beneficial interests in a registered global security will be limited to persons, called participants, that have accounts with
the depositary or persons that may hold interests through participants. Upon the issuance of a registered global security, the
depositary will credit, on its book-entry registration and transfer system, the participants’ accounts with the respective
principal or face amounts of the securities beneficially owned by the participants. Any dealers, underwriters or agents participating
in the distribution of the securities will designate the accounts to be credited. Ownership of beneficial interests in a registered
global security will be shown on, and the transfer of ownership interests will be effected only through, records maintained by
the depositary, with respect to interests of participants, and on the records of participants, with respect to interests of persons
holding through participants. The laws of some states may require that some purchasers of securities take physical delivery of
these securities in definitive form. These laws may impair your ability to own, transfer or pledge beneficial interests in registered
global securities.
So
long as the depositary, or its nominee, is the registered owner of a registered global security, that depositary or its nominee,
as the case may be, will be considered the sole owner or holder of the securities represented by the registered global security
for all purposes under the applicable indenture, warrant agreement or unit agreement.
Except
as described below, owners of beneficial interests in a registered global security will not be entitled to have the securities
represented by the registered global security registered in their names, will not receive or be entitled to receive physical delivery
of the securities in definitive form and will not be considered the owners or holders of the securities under the applicable indenture,
warrant agreement or unit agreement. Accordingly, each person owning a beneficial interest in a registered global security must
rely on the procedures of the depositary for that registered global security and, if that person is not a participant, on the
procedures of the participant through which the person owns its interest, to exercise any rights of a holder under the applicable
indenture, warrant agreement or unit agreement. We understand that under existing industry practices, if we request any action
of holders or if an owner of a beneficial interest in a registered global security desires to give or take any action that a holder
is entitled to give or take under the applicable indenture, warrant agreement or unit agreement, the depositary for the registered
global security would authorize the participants holding the relevant beneficial interests to give or take that action, and the
participants would authorize beneficial owners owning through them to give or take that action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments
to holders with respect to securities represented by a registered global security registered in the name of a depositary or its
nominee will be made to the depositary or its nominee, as the case may be, as the registered owner of the registered global security.
None of the Company, the trustees, the warrant agents, the unit agents or any other agent of the Company, agent of the trustees,
the warrant agents or unit agents will have any responsibility or liability for any aspect of the records relating to payments
made on account of beneficial ownership interests in the registered global security or for maintaining, supervising or reviewing
any records relating to those beneficial ownership interests.
We
expect that the depositary for any of the securities represented by a registered global security, upon receipt of any payment
of principal, premium, interest or other payment or distribution to holders of that registered global security, will immediately
credit participants’ accounts in amounts proportionate to their respective beneficial interests in that registered global
security as shown on the records of the depositary. We also expect that payments by participants to owners of beneficial interests
in a registered global security held through participants will be governed by standing customer instructions and customary practices,
as is now the case with the securities held for the accounts of customers or registered in “street name,” and will
be the responsibility of those participants.
If
the depositary for any of these securities represented by a registered global security is at any time unwilling or unable to continue
as depositary or ceases to be a clearing agency registered under the Exchange Act and a successor depositary registered as a clearing
agency under the Exchange Act is not appointed by us within 90 days, we will issue securities in definitive form in exchange for
the registered global security that had been held by the depositary. Any securities issued in definitive form in exchange for
a registered global security will be registered in the name or names that the depositary gives to the relevant trustee, warrant
agent, unit agent or other relevant agent of ours or theirs. It is expected that the depositary’s instructions will be based
upon directions received by the depositary from participants with respect to ownership of beneficial interests in the registered
global security that had been held by the depositary.
LEGAL
MATTERS
Unless
otherwise indicated in the applicable prospectus supplement, the validity of the securities offered by this prospectus will be
passed upon for us by Ellenoff Grossman & Schole LLP, New York, New York. If legal matters in connection with offerings
made by this prospectus are passed on by counsel for the underwriters, dealers or agents, if any, that counsel will be named in
the applicable prospectus supplement.
EXPERTS
The
financial statements of AIkido Pharma Inc. as of December 31, 2019 and 2018 and for each of the years ended December 31, 2019
and 2018 have been audited by Marcum LLP, an independent registered public accounting firm, as stated in their report appearing
herein. Such financial statements are included in this prospectus and registration statement in reliance upon the report (which
report includes an explanatory paragraph relating to our ability to continue as a going concern) of Marcum LLP, appearing elsewhere
herein, and upon the authority of such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
file annual, quarter and periodic reports, proxy statements and other information with the Securities and Exchange Commission
using the Commission’s EDGAR system. You may inspect these documents and copy information from them at the Commission’s
offices at public reference room at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330. The Commission maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file electronically with the Commission. The address of
such site is http//www.sec.gov.
INCORPORATION
OF DOCUMENTS BY REFERENCE
We
are “incorporating by reference” in this prospectus certain documents we file with the SEC, which means that we can
disclose important information to you by referring you to those documents. The information in the documents incorporated
by reference is considered to be part of this prospectus. Statements contained in documents that we file with the SEC and that
are incorporated by reference in this prospectus will automatically update and supersede information contained in this prospectus,
including information in previously filed documents or reports that have been incorporated by reference in this prospectus, to
the extent the new information differs from or is inconsistent with the old information. We have filed or may file the following
documents with the SEC and they are incorporated herein by reference as of their respective dates of filing.
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Current Reports
on Form 8-K, filed with the SEC on February 24, 2020, March 9, 2020, March 10, 2020, March 25, 2020, March 26, 2020 (with
respect to two reports), March 30, 2020, April 15, 2020, April 20, 2020 and May 1, 2020;
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Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2020, filed with the SEC on May 14, 2020;
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Annual Report on
Form 10-K for the year ended December 31, 2019, filed with the SEC on January 31, 2020; and
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Definitive Proxy
Statement on Schedule 14A filed with the SEC on July 24, 2019.
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All
documents that we filed with the SEC pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act subsequent to the date
of this registration statement and prior to the filing of a post-effective amendment to this registration statement that indicates
that all securities offered under this prospectus have been sold, or that deregisters all securities then remaining unsold, will
be deemed to be incorporated in this registration statement by reference and to be a part hereof from the date of filing of such
documents.
Any
statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus shall be deemed modified,
superseded or replaced for purposes of this prospectus to the extent that a statement contained in this prospectus, or in any
subsequently filed document that also is deemed to be incorporated by reference in this prospectus, modifies, supersedes or replaces
such statement. Any statement so modified, superseded or replaced shall not be deemed, except as so modified, superseded or replaced,
to constitute a part of this prospectus. None of the information that we disclose under Items 2.02 or 7.01 of any Current Report
on Form 8-K or any corresponding information, either furnished under Item 9.01 or included as an exhibit therein, that we may
from time to time furnish to the SEC will be incorporated by reference into, or otherwise included in, this prospectus, except
as otherwise expressly set forth in the relevant document. Subject to the foregoing, all information appearing in this prospectus
is qualified in its entirety by the information appearing in the documents incorporated by reference.
You
may requests, orally or in writing, a copy of these documents, which will be provided to you at no cost (other than exhibits,
unless such exhibits are specifically incorporate by reference), by contacting Michelle Parisi, c/o AIkido Pharma Inc., at One
Rockefeller Plaza, 11th Floor, New York, New York 10020. Our telephone number is (703) 992-9325. Information about
us is also available at our website at http://www.aikidopharma.com/. However, the information in our website is not a part of
this prospectus and is not incorporated by reference.
46,875,000 Shares of Common Stock
PROSPECTUS SUPPLEMENT
H.C. Wainwright
& Co.
February 16, 2021
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