Business Overview
We are a late-stage clinical biopharmaceutical
company focused on the discovery, development and commercialization of drugs for the treatment of cancer. Our core objective is
to leverage our proprietary phospholipid drug conjugate™ (PDC™) delivery platform to develop PDCs that are designed
to specifically target cancer cells and deliver improved efficacy and better safety as a result of fewer off-target effects. Our
PDC platform possesses the potential for the discovery and development of the next generation of cancer-targeting treatments,
and we plan to develop PDCs both independently and through research and development collaborations.
The COVID-19 pandemic has created uncertainties
in the expected timelines for clinical stage biopharmaceutical companies such as us, and because of such uncertainties, it is difficult
for us to accurately predict expected outcomes. We have not yet experienced any significant impacts as a result of the pandemic.
However, COVID-19 may impact our future ability to recruit patients for clinical studies, obtain adequate supply of CLR 131 and
obtain additional financing.
Our lead PDC therapeutic, CLR 131 is a
small-molecule PDC designed to provide targeted delivery of iodine-131 directly to cancer cells, while limiting exposure to healthy
cells. We believe this profile differentiates CLR 131 from many traditional on-market treatments. CLR 131 is currently being evaluated
in the CLOVER-WaM Phase 2 pivotal study in patients with relapsed/refractory (r/r) Waldenstrom’s macroglobulinemia (WM),
a Phase 2B study in r/r multiple myeloma (MM) patients and the CLOVER-2 Phase 1 study for a variety of pediatric cancers.
The CLOVER-1 Phase 2 study met the primary
efficacy endpoints from the Part A dose-finding portion, conducted in r/r B-cell malignancies. The CLOVER-WaM Study is a pivotal
registration study currently evaluating CLR 131 in Bruton tyrosine kinase inhibitor (BTKi) failed or suboptimal response in WM.
The CLOVER-1 Phase 2B study is ongoing where CLR 131 remains under further evaluation in highly refractory multiple myeloma (MM)
patients.
The CLOVER-2 Phase 1 pediatric study is
an open-label, sequential-group, dose-escalation study to evaluate the safety and tolerability of CLR 131 in children and adolescents
with relapsed or refractory cancers, including malignant brain tumors, neuroblastoma, sarcomas, and lymphomas (including Hodgkin’s
lymphoma). The study is being conducted internationally at seven leading pediatric cancer centers.
The U.S. Food and Drug Administration (“FDA”)
granted CLR 131 Fast Track Designation for WM patients having received two or more prior treatment regimens, as well as r/r MM
and r/r diffuse large B-cell lymphoma (DLBCL). Orphan Drug Designations (ODDs) have been granted for WM, MM, neuroblastoma, rhabdomyosarcoma,
Ewing’s sarcoma and osteosarcoma. CLR 131 was also granted Rare Pediatric Disease Designation (RPDD) for the treatment of
neuroblastoma, rhabdomyosarcoma, Ewing’s sarcoma and osteosarcoma. The European Commission granted an ODDs for r/r MM and
WM.
Our product pipeline also includes one
preclinical PDC chemotherapeutic program (CLR 1900) and several partnered PDC assets. The CLR 1900 Series is being targeted
for solid tumors with a payload that inhibits mitosis (cell division) a validated pathway for treating cancers.
We have leveraged our PDC platform to establish
three ongoing collaborations featuring four unique payloads and mechanisms of action. Through research and development collaborations,
our strategy is to generate near-term capital, supplement internal resources, gain access to novel molecules or payloads, accelerate
product candidate development and broaden our proprietary and partnered product pipelines.
Our PDC platform provides selective delivery of a diverse range
of oncologic payloads to cancerous cells, whether a hematologic cancer or solid tumor, a primary tumor, or a metastatic tumor and
cancer stem cells. The PDC platform’s mechanism of entry does not rely upon specific cell surface epitopes or antigens as
are required by other targeted delivery platforms. Our PDC platform takes advantage of a metabolic pathway utilized by all tumor
cell types in all stages of the tumor cycle. Tumor cells modify specific regions on the cell surface as a result of the utilization
of this metabolic pathway. Our PDCs bind to these regions and directly enter the intracellular compartment. This mechanism allows
the PDC molecules to accumulate in tumor cells over time, which can enhance drug efficacy, and to avoid the specialized highly
acidic cellular compartment known as lysosomes, which allows a PDC to deliver molecules that previously could not be delivered.
Additionally, molecules targeting specific cell surface epitopes face challenges in completely eliminating a tumor because the
targeted antigens are limited in the total number on the cell surface, have longer cycling time from internalization to being present
on the cell surface again and available for binding and are not present on all of the tumor cells in any cancer. This means a subpopulation
of tumor cells always exist that cannot be targeted by therapies targeting specific surface epitopes. In addition to the benefits
provided by the mechanism of entry, PDCs offer the ability to conjugate payload molecules in numerous ways, thereby increasing
the types of molecules selectively delivered via the PDC.
The PDC platform features include the capacity
to link with almost any molecule, provide a significant increase in targeted oncologic payload delivery and the ability to target
all types of tumor cells. As a result, we believe that we can generate PDCs to treat a broad range of cancers with the potential
to improve the therapeutic index of oncologic drug payloads, enhance or maintain efficacy while also reducing adverse events by
minimizing drug delivery to healthy cells, and increasing delivery to cancerous cells and cancer stem cells.
We employ a drug discovery and development
approach that allows us to efficiently design, research and advance drug candidates. Our iterative process allows us to rapidly
and systematically produce multiple generations of incrementally improved targeted drug candidates.
In June 2020, the European Medicines
Agency (EMA) granted us Small and Medium-Sized Enterprise (SME) status by the EMA’s Micro, Small and Medium-sized Enterprise
office. SME status allows us to participate in significant financial incentives that include a 90% to 100% EMA fee reduction for
scientific advice, clinical study protocol design, endpoints and statistical considerations, quality inspections of facilities
and fee waivers for selective EMA pre and post-authorization regulatory filings, including orphan drug and PRIME designations.
We are also eligible to obtain EMA certification of quality and manufacturing data prior to review of clinical data. Other financial
incentives include EMA-provided translational services of all regulatory documents required for market authorization, further reducing
the financial burden of the market authorization process.
A description of our PDC product candidates
follows:
Clinical Pipeline
Our lead PDC therapeutic, CLR 131 is a
small-molecule PDC designed to provide targeted delivery of iodine-131 directly to cancer cells, while limiting exposure to healthy
cells. We believe this profile differentiates CLR 131 from many traditional on-market treatments and treatments in development.
CLR 131 is currently being evaluated in the CLOVER-WaM Phase 2 pivotal study in patients with r/r WM, a Phase 2B study in r/rMM
patients and the CLOVER-2 Phase 1 study for a variety of pediatric cancers.
CLR 131 is currently being evaluated in
a pivotal study, CLOVER-WaM, in WM patients that have failed or had a suboptimal response to a BTKi therapy after receiving first
line standard of care. The CLOVER-1 Phase 2 study met the primary efficacy endpoints from the Part A dose-finding portion,
conducted in r/r B-cell malignancies, and is now enrolling an MM expansion cohort (Phase 2B). The Phase 2B study will evaluate
highly refractory MM patients including triple, quad and penta class refractory patients. The initial Investigational New Drug
(IND) application was accepted by the FDA in March 2014 with multiple INDs submitted since that time. The Phase 1 study was
designed to assess the compound’s safety and tolerability in patients with r/r MM (to determine maximum tolerated dose (MTD)
and was initiated in April 2015. The study completed enrollment and the final clinical study report is expected in the first
half of 2021. Initiated in March 2017, the primary goal of the Phase 2A study was to assess the compound’s efficacy
in a broad range of hematologic cancers.
The CLOVER-2 Phase 1 pediatric study
is being conducted internationally at seven leading pediatric cancer centers. The study is an open-label, sequential-group,
dose-escalation study to evaluate the safety and tolerability of CLR 131 in children and adolescents with relapsed or
refractory cancers, including malignant brain tumors, neuroblastoma, sarcomas, and lymphomas (including Hodgkin’s
lymphoma). The FDA previously accepted our IND application for a Phase 1 open-label, dose escalating study to evaluate the
safety and tolerability of a single intravenous administration of CLR 131 in up to 30 children and adolescents with cancers
including neuroblastoma, sarcomas, lymphomas (including Hodgkin’s lymphoma) and malignant brain tumors. This study was
initiated during the first quarter of 2019. These cancer types were selected for clinical, regulatory and commercial
rationales, including the radiosensitive nature and continued unmet medical need in the r/r setting, and the rare disease
determinations made by the FDA based upon the current definition within the Orphan Drug Act.
In December 2014, the FDA granted
ODD for CLR 131 for the treatment of MM. In 2018, the FDA granted ODD and RPDD for CLR 131 for the treatment of neuroblastoma,
rhabdomyosarcoma, Ewing’s sarcoma and osteosarcoma. In May 2019, the FDA granted Fast Track designation for CLR 131
for the treatment of MM and in July 2019 for the treatment of DLBCL, in September 2019 CLR 131 received Orphan Drug Designation
from the European Union for Multiple Myeloma, in January 2020, the FDA granted Orphan Drug Designation for CLR 131 Waldenstrom’s
macroglobulinemia and the European Union granted Orphan Drug Designation for CLR 131 Waldenstrom’s macroglobulinemia. The
FDA granted Fast Track designation for CLR 131 for the treatment of WM in May 2020.
The FDA may award priority review vouchers
(PRV) to sponsors of a RPDD that meet its specified criteria. The key criteria to receiving a PRV is that the disease being treated
is life-threatening and that it primarily effects individuals under the age of 18. Under this program, a sponsor who receives an
approval for a drug or biologic for a rare pediatric disease can receive a PRV that can be redeemed to receive a priority review
of a subsequent marketing application for a different product. Additionally, the PRV’s can be exchanged or sold to other
companies so that the receiving company may use the voucher.
CLOVER-WaM: Phase 2 Study Pivotal Study in: Patients with
r/r Waldenstrom’s Macroglobulinemia
In
January 2021, we announced that a Type C guidance meeting with the FDA was conducted in September of 2020. The results
of that guidance meeting provided Cellectar with an agreed upon path for conducting the CLOVER-WaM study; a single arm, pivotal
study in WM patients that have received standard of care first line therapy and either failed or had a suboptimal response to BTKi
therapy. The FDA agreed with the dose to be tested, our proposal for a safety and futility assessment to be conducted on the first
10 patients, the endpoint to be assessed, the statistical analysis plan and study size of 50 patients. Based upon this agreement
the pivotal study was initiated. WM is a rare, indolent and incurable form of non-Hodgkin’s lymphoma (NHL) that is
composed of a patient population in need of new and better treatment options.
Phase 2A Study: Patients with r/r
Waldenstrom’s Macroglobulinemia Cohort
Current data from
our Phase 2A CLOVER-1 clinical study show that six WM patients demonstrated 100% overall response rate (ORR) and an 83.3% major
response rate with one patient achieving a complete response (CR), which continues at nearly 27 months post- last treatment. While
median treatment free survival (TRS) also known as treatment free remission (TFR)) and duration of response (DOR) has not been
reached, the average treatment TFS/TFR is currently at 330 days. This may represent an important improvement in the treatment of
r/r WM as we believe no approved or late-stage development treatments for second- and third-line patients have reported a CR to
date.
Phase 2A Study: Patients with r/r
Multiple Myeloma Cohort
In September 2020,
we announced that a 40% ORR was observed in the subset of refractory multiple myeloma patients deemed triple class refractory who
received 60 mCi or greater total body dose (TBD). Triple class refractory is defined as patients that are refractory to immunomodulatory,
proteasome inhibitors and anti-CD38 antibody drug classes. The 40% ORR (6/15 patients) represents triple class refractory patients
enrolled in Part A of Cellectar’s CLOVER-1 study and additional patients enrolled in Part B from March through
May 2020 and received >60mCi TBD. All MM patients enrolled in the expansion cohort are required to be triple class
refractory. The additional six patients enrolled in 2020 were heavily pre-treated with an average of nine prior multi-drug regimens.
Three patients received a TBD of > 60 mCi and three received less than 60 mCi. Consistent with the data released in February 2020,
patients receiving > 60 mCi typically exhibit greater responses. Based on study results to date, patients continue to
tolerate CLR 131 well, with the most common and almost exclusive treatment emergent adverse events being cytopenias.
Phase 2A: Patients with r/r non-Hodgkin’s
lymphoma Cohort
In February 2020,
we announced positive data from our Phase 2a CLOVER-1 study in patients with relapsed/refractory non-Hodgkin lymphoma (NHL)
patients were treated with three different doses (<50mCi, ~50mCi and >60mCi TBD. Patients with r/r NHL who received
<60mCi TBD and the >60mCi TBD had a 42% and 43% ORR, respectively and a combined rate of 42%. These patients were
also heavily pre-treated, having a median of three prior lines of treatment (range, 1 to 9) with the majority of patients
being refractory to rituximab and/or ibrutinib. The patients had a median age of 70 with a range of 51 to 86. All patients had
bone marrow involvement with an average of 23%. In addition to these findings, subtype assessments were completed in the r/r B-cell
NHL patients. Patients with DLBCL demonstrated a 30% ORR with one patient achieving a (CR), which continues at nearly 24 months
post-treatment. The ORR for chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL) and
marginal zone lymphoma (MZL) patients was 33%.
Based upon the
dose response observed in the Phase 2A for patients receiving TBDs of 60mCi or greater, we determined that patient dosing of CLR
131 would be >60mCi TBD. Therefore, patients are now grouped as receiving <60mCi or >60mCi TBD.
The
most frequently reported adverse events in all patients were cytopenias, which followed a predictable course and timeline. The
frequency of adverse events have not increased as doses were increased and the profile of cytopenias remains consistent. Importantly,
these cytopenias have had a predictable pattern to initiation, nadir and recovery and are treatable. The most common grade ≥3
events at the highest dose (75mCi TBD) were hematologic toxicities including thrombocytopenia (65%), neutropenia (41%), leukopenia
(30%), anemia (24%) and lymphopenia (35%). No patients experienced cardiotoxicities, neurological toxicities, infusion site reactions,
peripheral neuropathy, allergic reactions, cytokine release syndrome, keratopathy, renal toxicities, or changes in liver enzymes.
The safety and tolerability profile in patients with r/r NHL was similar to r/r MM patients except for fewer cytopenias of any
grade. Based upon CLR 131 being well tolerated across all dose groups and the observed response rate, especially in difficult to
treat patients such as high risk and triple class refractory or penta-refractory, and corroborating data showing the potential
to further improve upon current ORRs and durability of those responses, the study has been expanded to test a two-cycle dosing
optimization regimen with a target TBD >60 mCi/m2 of CLR 131.
In July 2016, we were awarded a $2,000,000 National Cancer
Institute (NCI) Fast-Track Small Business Innovation Research grant to further advance the clinical development of CLR 131. The
funds supported the Phase 2 study initiated in March 2017 to define the clinical benefits of CLR 131 in r/r MM and other niche
hematologic malignancies with unmet clinical need. These niche hematologic malignancies include Chronic Lymphocytic Leukemia, Small
Lymphocytic Lymphoma, Marginal Zone Lymphoma, Lymphoplasmacytic Lymphoma/WM and DLBCL. The study is being conducted in approximately
10 U.S. cancer centers in patients with orphan-designated relapse or refractory hematologic cancers. The study’s primary
endpoint is clinical benefit response (CBR), with secondary endpoints of ORR, progression free survival (PFS,) median Overall Survival
(mOS) and other markers of efficacy following patients receiving one of three TBDs of CLR 131 (<50mCi, ~50mCi and >60mCi),
with the option for a second cycle approximately 75-180 days later. Dosages were provided either as a single bolus or fractionated
(the assigned dose level split into two doses) given day 1 and day 15.
In May 2020, we announced that the
FDA granted Fast Track Designation for CLR 131 in WM in patients having received two prior treatment regimens or more.
Phase 1 Study in Patients with r/r Multiple Myeloma
In February 2020, we announced the
successful completion of our Phase 1 dose escalation study. Data from the study demonstrated that CLR 131 was safe and tolerated
up to a TBD of approximately 95mCi in r/r MM. The Phase 1 multicenter, open-label, dose-escalation study was designed to evaluate
the safety and tolerability of CLR 131 administered in an up to 30-minute I.V. infusion, either as a single bolus dose or as fractionated
doses. The r/r multiple myeloma patients in this study received single cycle doses ranging from approximately 20mCi to 95mCi TBD.
An independent Data Monitoring Committee determined that all doses used were safe and well-tolerated by patients.
CLR 131 in combination with dexamethasone
was under investigation in adult patients with r/r MM. Patients had to be refractory to or relapsed from at least one proteasome
inhibitor and at least one immunomodulatory agent. The clinical study was a standard three-plus-three dose escalation safety study
to determine the maximum tolerable dose. Multiple myeloma is an incurable cancer of the plasma cells and is the second most common
form of hematologic cancers. Secondary objectives included the evaluation of therapeutic activity by assessing surrogate efficacy
markers, which include M protein, free light chain (FLC), PFS and OS. All patients were heavily pretreated with an average of five
prior lines of therapy. CLR 131 was deemed by an Independent Data Monitoring Committee (IDMC) to be safe and tolerable up to its
planned maximum single, bolus dose of 31.25 mCi/m2 or a TBD of ~63 mCi. The four single dose cohorts examined were:
12.5 mCi/m2 (~25mCi TBD), 18.75 mCi/m2 (~37.5mCi TBD), 25 mCi/m2(~50mCi TBD), and 31.25 mCi/m2(~62.5mCi
TBD), all in combination with low dose dexamethasone (40 mg weekly). Of the five patients in the first cohort, four achieved stable
disease and one patient progressed at Day 15 after administration and was taken off the study. Of the five patients admitted to
the second cohort, all five achieved stable disease however one patient progressed at Day 41 after administration and was taken
off the study. Four patients were enrolled to the third cohort and all achieved stable disease. In September 2017, we announced
results for cohort 4, showing that a single infusion up to 30-minutes of 31.25mCi/m2 of CLR 131 was safe and tolerated
by the three patients in the cohort. Additionally, all three patients experienced CBR with one patient achieving a partial response
(PR). We use the International Myeloma Working Group (IMWG) definitions of response, which involve monitoring the surrogate markers
of efficacy, M protein and FLC. The IMWG defines a PR as a greater than or equal to 50% decrease in FLC levels (for patients in
whom M protein is unmeasurable) or 50% or greater decrease in M protein. The patient experiencing a PR had an 82% reduction in
FLC. This patient did not produce M protein, had received seven prior lines of treatment including radiation, stem cell transplantation
and multiple triple combination treatments including one with daratumumab that was not tolerated. One patient experiencing stable
disease attained a 44% reduction in M protein. In January 2019, we announced that the pooled mOS data from the first four
cohorts was 22.0 months. In late 2018, we modified this study to evaluate a fractionated dosing strategy to potentially increase
efficacy and decrease adverse events.
Cohort 5 and 6 were fractionated cohorts
of 31.25 mCi/m2(~62.5mCi TBD) and 37.5 mCi/m2(~75mCi TBD), each administered on day 1 and on day 8. Following
the determination that all prior dosing cohorts were safe and tolerated, we initiated a cohort 7 utilizing a 40mCi/m2 (~95mCi TBD)
fractionated dose administered 20mCi/m2 (~40mCi TBD) on days 1 and day 8. Cohort 7 was the highest pre-planned dose cohort and
subjects have completed the evaluation period. The study completed enrollment and the final clinical study report is expected in
the first half of 2021.
In May 2019, we announced that the
FDA granted Fast Track Designation for CLR 131 in fourth line or later r/r MM. CLR 131 is our small molecule radiotherapeutic PDC
designed to deliver cytotoxic radiation directly and selectively to cancer cells and cancer stem cells. It is currently being evaluated
in our ongoing CLOVER-1 Phase 2 clinical study in patients with relapsed or refractory multiple myeloma and other select B-cell
lymphomas.
Phase 1 Study in r/r
Pediatric Patients with select Solid tumors, Lymphomas and Malignant Brain Tumors
In December 2017 the Division of Oncology
at the FDA accepted our IND and study design for the Phase 1 study of CLR 131 in children and adolescents with select rare and
orphan designated cancers. This study was initiated during the first quarter of 2019. In December 2017, we filed an IND application
for r/r pediatric patients with select solid tumors, lymphomas and malignant brain tumors. The Phase 1 clinical study of CLR 131
is an open-label, sequential-group, dose-escalation study evaluating the safety and tolerability of intravenous administration
of CLR 131 in children and adolescents with cancers including neuroblastoma, sarcomas, lymphomas (including Hodgkin’s lymphoma)
and malignant brain tumors. Secondary objectives of the study are to identify the recommended efficacious dose of CLR 131 and to
determine preliminary antitumor activity (treatment response) of CLR 131 in children and adolescents. In August 2020, it was
announced that four dose levels 15mCi/m2 up to 60mCi/m2 were deemed safe and tolerable by an independent
Data Monitoring Committee and evaluation of the next higher dose cohort, 75mCi/m2 was initiated. In November 2020, we
announced that CLR 131 had been measured in tumors, confirming that systemic administration of CLR
131 crosses the blood brain barrier and is delivered into tumors and that disease control has been exhibited in heavily pretreated
patients with ependymomas. In 2018, the FDA granted ODD and RPDD for CLR 131 for the treatment of neuroblastoma, rhabdomyosarcoma,
Ewing’s sarcoma and osteosarcoma. Should CLR 131 be approved for any of these pediatric indications, the first approved RPDD
would enable us to receive a priority review voucher. Priority review vouchers can be used by the sponsor to receive priority review
for a future New Drug Application (“NDA”) or Biologic License Application (“BLA”) submission, which would
reduce the FDA review time from 12 months to six months. Currently, these vouchers can also be transferred or sold to another entity.
In December 2020, the FDA extended the Priority Review Voucher Program through September 2026 for rare pediatric diseases.
Phase 1 Study in r/r Head and Neck Cancer
In August 2016, the University of Wisconsin Carbone Cancer
Center (“UWCCC”) was awarded a five-year Specialized Programs of Research Excellence (“SPORE”) grant of
$12,000,000 from the National Cancer Institute and the National Institute of Dental and Craniofacial Research to improve treatments
and outcomes for head and neck cancer, HNC, patients. HNC is the sixth most common cancer across the world with approximately 56,000
new patients diagnosed every year in the U.S. As a key component of this grant, the UWCCC researchers completed testing of CLR
131 in various animal HNC models and initiated the first human clinical study enrolling up to 30 patients combining CLR 131 and
external beam radiation with recurrent HNC in Q4 2019. This clinical study was suspended due to the COVID-19 pandemic over the
first three quarters of 2020 but is now open and actively enrolling patients.
Preclinical Pipeline
We believe our PDC platform has potential
to provide targeted delivery of a diverse range of oncologic payloads, as exemplified by the product candidates listed below, that
may result in improvements upon current standard of care (“SOC”) for the treatment of a broad range of human cancers:
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CLR 1900 Series is an internally developed proprietary PDC program leveraging a novel small molecule cytotoxic compound as the payload. The payload inhibits mitosis (cell division) and targets a key pathway required to inhibit rapidly dividing cells that results in apoptosis. We believe that this program could produce a product candidate targeted to select solid tumors. Currently, the program is in early preclinical development and if we elect to progress any molecules further, we will select preferred candidates.
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CLR 2000 Series is a collaborative PDC program with Avicenna Oncology, or Avicenna, that we entered into in July 2017. Avicenna is a developer of antibody drug conjugates (“ADCs”). The objective of the research collaboration is to design and develop a series of PDCs utilizing Avicenna’s proprietary cytotoxic payload. Although Avicenna is a developer of ADCs, this collaboration was sought as a means to overcome many of the challenges associated with ADCs, including those associated with the targeting of specific cell surface epitopes. The CLR 2000 Series has demonstrated improved safety, efficacy and tissue distribution with the cytotoxic payload in animal models. A candidate molecule and a back-up have been selected for further advancement at a future time.
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CLR 12120 Series is a collaborative PDC program with Orano
Med for the development of novel PDCs utilizing Orano Med’s unique alpha emitter, lead 212 conjugated to our phospholipid
ether; the companies intend to evaluate the new PDCs in up to three oncology indications.
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Technology Overview
Our product candidates are based on a cancer-targeting
delivery platform of optimized phospholipid ether (PLE) analogs (phospholipid ether proprietary delivery vehicle) that interact
with lipid rafts. Lipid rafts are specialized regions of a cell’s membrane phospholipid bilayer that contain high concentrations
of cholesterol and sphingolipids and serve to organize cell surface and intracellular signaling molecules. As a result of enrichment
and stabilization of lipid rafts in cancer cells, including cancer stem cells, our product candidates provide selective targeting
preferentially to cancer cells over normal healthy cells. The cancer-targeting PLE delivery vehicle was deliberately designed to
be combined with therapeutic, diagnostic and imaging molecules. For example, the cytotoxic radioisotope, iodine-131 can be attached
via a stable covalent bond to the PLE resulting in our lead PDC, CLR 131. Non-radioactive molecules, including many classes of
small molecule chemotherapeutic compounds, peptides and other molecules can also be attached to the delivery vehicle.
In parallel to advancing the clinical development
of our lead PDC, CLR 131 in both adult and pediatric orphan indications; we remain focused on exploring the creation of additional
PDCs ranging from newly discovered to well-characterized anti-cancer agent payloads. The objective is to develop PDC chemotherapeutics
through conjugation of our delivery vehicle and non-targeted anti-cancer agents to improve therapeutic indices and expand potential
indications through the targeted delivery of chemotherapeutic payloads. Initial PDC product candidates include our CLR 1900, 2000
and 12120 series of conjugated compounds currently being researched independently and through partnerships. Other than CLR 12120,
all are small-molecule, cancer-targeting chemotherapeutics in pre-clinical research. To date, multiple cancer-targeting product
profiles have been generated from a single chemical core structure that is the foundation of our technology platform. We also believe
that additional cytotoxic PDCs may be developed possessing enhanced therapeutic indices versus the original, non-targeted cytotoxic
payload as a monotherapy.
Malignant tumor targeting, including targeting
of cancer stem cells, has been demonstrated in vivo in animal models as well as in clinical studies. Mice without intact
immune systems and inoculated with Panc-1 (pancreatic carcinoma) cells, were injected with CLR 1502, 24 or 96 hours prior to imaging.
In vivo optical imaging showed pronounced accumulation of CLR 1502 in tumors versus non-target organs and tissues. Similarly,
positron emission tomography (PET) imaging of tumor-bearing animals (colon, glioma, triple negative breast and pancreatic tumor
xenograft models) administered the imaging agent CLR 124 clearly shows selective uptake and retention by both primary tumors and
metastases, including cancer stem cells. PET/CT analysis following co-injection of CLR 131 (for therapy) and CLR 124 (for imaging)
revealed time-dependent tumor responses and disappearance over nine days in a cancer xenograft model. We believe that the capability
of our technology to target and be selectively retained by cancer stem cells in vivo, was demonstrated by treating glioma
stem cell-derived orthotopic tumor-bearing mice with another fluorescent-labeled PDC (CLR 1501), and then removing the tumor and
isolating cancer stem cells, which continued to display CLR 1501 labeling even after three weeks in cell culture.
The basis for selective tumor targeting
of our compounds lies in differences between the plasma membranes of cancer cells as compared to those of most normal cells. Data
suggests that lipid rafts serve as portals of entry for PDCs such as CLR 131 and our multiple series of drug conjugates. The marked
selectivity of our compounds for cancer cells versus non-cancer cells likely results from cancer cells maintenance of an overabundance
of lipid rafts and the stabilization of these microdomains within the plasma membrane as compared to normal cells. Following cell
entry via lipid rafts, CLR 131 is transported into the cytoplasm, where it traffics along the Golgi apparatus and is distributed
to various peri-nuclear organelles (including mitochondria and the endoplasmic reticulum). The pivotal role played by lipid rafts
is underscored by the fact that disruption of lipid raft architecture significantly eliminates uptake of our PDC delivery vehicle
into cancer cells.
Products in Development
CLR 131
CLR 131 is a small-molecule PDC designed
to provide targeted delivery of iodine-131 (radioisotope) directly to cancer cells, while limiting exposure to healthy cells unlike
many traditional on-market treatment options. CLR 131 is comprised of our proprietary PLE, 18-(p-[I-131]iodophenyl) octadacyl phosphocholine,
acting as a cancer-targeting delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic (cell-killing) radioisotope
with a half-life of eight days that is already in common use to treat thyroid, pediatric tumors and other cancer types including
NHL. It is this “intracellular radiation” mechanism of cancer cell killing, coupled with delivery to a wide range of
malignant tumor types that we believe provides CLR 131 with anti-cancer activity and a unique product profile. Selective uptake
and retention have been demonstrated in cancer stem cells compared with normal cells, offering the prospect of longer lasting anti-cancer
activity.
The
primary objective of the multicenter Phase 1b dose-escalation study in patients with a range of advanced solid tumors was to define
the MTD of CLR 131. In addition to determining the MTD, the Phase 1b study was intended to evaluate overall tumor response (using
standard RESIST 1.1 criteria) and safety. In September 2012, we announced that we had successfully completed the second cohort
in this Phase 1b dose-escalation study. Dose escalation in four cohorts subsequently occurred with refractory cancer patients receiving
single doses of 25 mCi/m2, 31.25 mCi/m2 or 37.5 mCi/m2.
Tumor treatment with radioactive isotopes
has been used as a fundamental cancer therapeutic for decades. The goals of targeted cancer therapy — selective delivery
of effective doses of isotopes that destroy tumor tissue, sparing of surrounding normal tissue, and non-accumulation in vital organs
such as the liver and kidneys — remain goals of new therapies as well. We believe our targeted delivery technology has the
potential to achieve these goals. CLR 131 has been shown in animal models to reliably and near-universally accumulate in cancer
cells, including cancer stem cells.
In view of CLR 131’s selective uptake
and retention in a wide range of solid tumors and in cancer stem cells, its single-agent efficacy in animal models and its non-specific
mechanism of cancer-killing (radiation), along with an understanding of classical oncology drug development our initial plan was
to develop CLR 131 as a monotherapy for cancer indications with significant unmet medical need. CLR 131’s unique benefits
such as a novel mechanism of action, ease of administration, and positive benefit/risk profile offered potential treatment benefits
for a variety of high unmet cancer populations. While a number of cancer indications were evaluated as the initial target treatment,
multiple myeloma was selected principally because, like many hematologic malignancies, is known to be highly radiosensitive and
remained an incurable hematologic disease with significant unmet medical need in the relapse or refractory clinical setting. Additionally,
MM is designated as an orphan disease and drugs granted an orphan drug designation (ODD) are provided regulatory and marketing
exclusivity benefits. The IND application for MM was accepted by the FDA in September 2014. In December 2014, the FDA granted ODD
for CLR 131 for the treatment of MM. We initiated our Phase 1 Study of CLR 131 for the treatment of r/r MM in April 2015. The Phase
1 study was a multicenter, open-label, dose-escalation study designed to evaluate the safety and tolerability of CLR 131 administered
as a 15-20-minute IV infusion, either as a single bolus dose or as two fractionated doses, in patients with R/R MM. All cohorts
dosed were deemed safe and well tolerated by an independent Data Monitoring Committee (DMC). The study was successfully completed
in February 2020.
In February 2020, final results from a
multicenter, phase 1 clinical trial of CLR 131 in r/r MM were presented. The trial was designed to evaluate the safety and potential
initial efficacy of CLR 131 in heavily pretreated MM patients and enrolled a total of 26 evaluable patients at three trial sites.
For the trial, which used a modified 3 + 3 dose escalation design, 15 evaluable patients were dosed in single bolus doses from
12.5mCi/m2 up to 31.25mCi/m2 (TBD 20.35-59.17 mCi) and 11 evaluable patients were dosed in fractionated dosing cohorts of 31.25mCi/m2
to 40mCi/m2 (TBD 54.915-89.107 mCi). An independent data monitoring committee determined that no dose-limiting toxicities were
seen in any cohort. Of the 26 evaluable patients in the trial, a partial response was seen in 4 of 26 patients (15.4%) and stable
disease or minimal response in 22 of 26 patients (84.6%), for a disease control rate of 100%. A significant decrease in M-protein
and FLC was also observed, suggesting ample targeting of the tumor.
The Phase 2 A study (CLOVER-1) of CLR 131
was initiated in July 2017 and conducted in approximately 10 leading cancer centers in the United States for patients with relapsed
or refractory B-cell hematologic cancers. The hematologic cancers being studied in the trial included MM, lymphoplasmacytic lymphoma
(LPL) / Waldenstrom’s macroglobulinemia (WM), chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL), marginal
zone lymphoma (MZL), mantle cell lymphoma (MCL), and diffuse large B-cell lymphoma (DLBCL).
The planned study enrollment was up to
80 patients. Its primary endpoint was clinical benefit response (CBR), with additional endpoints of ORR, progression free survival
(PFS), median overall survival (OS) and other markers of efficacy. Over the course of the study the dosing regimen of CLR 131 advanced
from a single bolus dose to two cycles of fractionated administrations of 15 mCi/m2 per dose on days 1, 15 (cycle 1), and days
57, 71 (cycle 2).
In September 2020,
we announced that a 40% ORR was observed in the subset of r/r MM deemed triple class refractory who received 60 mCi or greater
TBD. Triple class refractory is defined as patients that are refractory to immunomodulatory, proteasome inhibitors and anti-CD38
antibody drug classes. The 40% ORR (6/15 patients) represents triple class refractory patients enrolled in Part A of our CLOVER-1
study and additional patients enrolled in Part B from March through May 2020 and received >60mCi TBD.
All MM patients enrolled in the expansion cohort are required to be triple class refractory. The six patients enrolled from March
through May 2020 were heavily pre-treated with an average of nine prior multi-drug regimens. Three patients received a TBD of >
60 mCi and three received less than 60 mCi. Consistent with the data released in February 2020, patients receiving >
60 mCi typically exhibit greater responses. Based on study results to date, patients continue to tolerate CLR 131 well, with the
most common and almost exclusive treatment emergent adverse events being cytopenias. This
cohort will continue to enroll and evaluate patients that are even more refractory (quad-class refractory (proteasome inhibitor,
immunomodulatory drug, anti-CD-38 antibodies, nuclear export inhibitors, or BCMA antibody drug conjugates) or hepta-drug refractory)
to determine if CLR 131 at the dose of >60mCi TBD can be effective in patients that likely have no alternative therapies.
Data from our
Phase 2 CLOVER-1 clinical study show that six WM patients demonstrated 100% ORR and an 83.3% major response rate with one patient
achieving a CR, which continues at nearly 27 months post- last treatment. While median treatment free survival (or treatment free
remission) and duration of response has not been reached, the average treatment free survival is currently at 330 days. This may
represent an important improvement in the treatment of r/r WM as we believe no approved or late-stage development treatments for
second- and third-line patients have reported a CR nor do any therapies provide any significant benefit after the therapy is stopped.
In January 2021, we announced the initiation
of the CLOVER-WaM pivotal study in WM. The study is designed as a global, non-comparator, single arm,
study of CLR 131. We believe this design is in alignment with the feedback received from the FDA during the guidance meeting held
in September 2020.
The study will enroll 50 WM patients who
have failed first-line therapy and have failed or had a suboptimal response to a BTK i (i.e. ibrutinib). Patients in the trial
will receive up to 4-doses of CLR 131 over two cycles (cycle one days 1, 15, and cycle two days 57, 71). The primary endpoint of
the trial is major response rate (MRR) as defined as a partial response (a minimum of a 50% reduction in IgM) or better in patients
that receive a minimum TBD of 60 mCi with secondary endpoints of treatment free survival (treatment free remission), duration of
response and progression free survival. An independent data monitoring committee (iDMC) will perform an interim safety and futility
evaluation on the first 10 patients enrolled. The assessment will occur patient by patient and will conclude after the tenth
patient is evaluated; there is no planned study stoppage. The trial has been initiated at select US cancer centers and will
roll out to additional US and international sites in early 2021.
In
July 2018, we announced that after a single 25mCi/m2 IV administration of CLR 131, patients with relapsed/refractory
aggressive DLBCL were assessed for response. These interim data show a 33% ORR and a 50% CBR. In addition, the observed responses
to date show overall tumor reduction ranged from 60% to greater than 90%. As a result of these favorable outcomes, we have expanded
this cohort to include up to 30 additional patients. We also announced that a patient in the lymphoplasmacytic lymphoma (LPL) arm
with advanced Waldenstrom macroglobulinema showed a 94% reduction in tumor burden and complete resolution in four of five targeted
masses after two doses of CLR 131 separated by 123 days.
In
December 2017, we filed an IND application with the Division of Oncology at the FDA for a proposed Phase 1 study of CLR 131 in
children and adolescents with select rare and orphan designated cancers. The
Phase 1 pediatric study is an open-label, sequential-group, dose-escalation study to evaluate the safety and tolerability of CLR
131 in children and adolescents with relapsed or refractory cancers, including malignant brain tumors, neuroblastoma, sarcomas,
and lymphomas (including Hodgkin’s lymphoma). The Phase 1 study was initiated in 2019 at 3 pediatric cancer
centers and is currently
being conducted internationally at seven leading pediatric cancer centers. Secondary objectives of the study are
to identify the recommended Phase 2 dose of CLR 131 and to determine preliminary antitumor activity (treatment response) of CLR
131 in children and adolescents.
In
November 2020, we announced that CLR 131 demonstrated preliminary activity in inoperable brain tumors as part of the Phase 1 study.
Similar to previous CLR 131 studies in adults, this study demonstrated that 20-40% of the infused CLR 131 is delivered to cancer
tumors. Additionally, the study demonstrated that systemic administration of CLR 131 results in a sufficient proportion of infused
drug crossing the blood brain barrier and is delivered to different types of malignant brain tumors. CLR 131 has achieved disease
control at multiple dose levels in rapidly progressing, heavily pretreated patients, including two patients at distinct dose levels
with rapidly growing ependymomas. Pediatric HGGs are a collection of aggressive brain and central nervous system tumor subtypes
(i.e. diffuse intrinsic pontine gliomas, glioblastomas, astrocytomas, ependymomas, etc.) with about 400 new pediatric cases diagnosed
annually in the United States. Children with these tumors have a poor prognosis and limited 5-year survival.
The FDA has granted ODD’s and RPDDs
for CLR 131 for the treatment of neuroblastoma, rhabdomyosarcoma, Ewing’s sarcoma and osteosarcoma. Should any of these indications
reach approval, the RPDD may enable us to receive a priority review voucher. Priority review vouchers can be used by the sponsor
to receive Priority Review for a future NDA or BLA submission, which would reduce the statutory FDA review time from 12 months
to six months. Currently, these vouchers can also be transferred or sold to another entity.
Market Overview
Our target market is broad and represents
the market for the treatment of cancer. The American Cancer Society estimated that approximately 1.90 million new cancer cases
were expected to be diagnosed in the U.S. in 2019 and approximately 608,570 cancer deaths in the U.S.1 The global market for cancer
drugs reached $143 billion in annual sales (2019), and could reach $250 billion by 2024, according to a report dated September
2020 by McKinsey & Company.2 This growth will be driven by emerging targeted therapies, which are expected to change the cancer
treatment landscape (Cowen Report), and an increased use of cancer drug combination regimens.
Waldenstrom’s macroglobulinemia
Waldenstrom’s macroglobulinemia (WM)
is a rare and incurable disease defined by specific genotypic subtypes that defines patient responses and long-term outcomes. The
annual incidence is 6,500 with prevalence of approximately 60,000 patients globally. WM is a lymphoma, or cancer of the lymphatic
system. The disease occurs in a type of white blood cell called a B-lymphocyte or B-cell, which normally matures into a plasma
cell whose job is to manufacture immunoglobulins (antibodies) to help the body fight infection. In WM, there is a malignant change
to the B-cell in the late stages of maturing, and it continues to proliferate into a clone of identical cells, primarily in the
bone marrow but also in the lymph nodes and other tissues and organs of the lymphatic system. These clonal cells over-produce an
antibody of a specific class called IgM.
WM cells have characteristics of both cancerous
B-lymphocytes (NHL) and plasma cells (multiple myeloma), and they are called lymphoplasmacytic cells. For that reason, WM is classified
as a type of non-Hodgkin’s lymphoma called lymphoplasmacytic lymphoma (LPL). About 95% of LPL cases are WM; the remaining
5% do not secrete IgM and consequently are not classified as WM.
Several drugs have demonstrated activity
either alone or in combinations but only a single drug has received regulatory approval. Treatment is mainly focused on the control
of symptoms and the prevention of organ damage. Front-line treatments for WM include rituximab alone or in combination with other
agents. In the salvage therapy (second line or later) setting, ibrutinib, combinations of proteosome inhibitors and immunomodulatory
drugs and stem cell transplantation are considered. Ibrutinib is the only drug to receive regulatory approval (2015) as a salvage
therapy; in late 2019, it was approved for front-line treatment in combination with rituximab. Factors such as long-term cytopenias,
age, hyper viscosity, the need for quick disease control, lymphadenopathy, co-morbidities, and IgM-related end-organ damage are
key consideration in the choice of treatment.
Multiple Myeloma
According to the National Cancer Institute
SEER database, multiple myeloma is the second most common hematologic cancer with a U.S. incidence rate and a relapse or refractory
patient population of 10,000 to 15,000. In 2019, Global Data Research Group estimated the multiple myeloma dollar market size to
be over $20B in 2021 and is forecasted to increase to nearly $28B in 2027. The increase in drug sales over this period will be
mainly driven by the increasing incidence of multiple myeloma with the U.S. market remaining the largest potential market. It is
believed the largest growth will occur in patients receiving at least three lines of treatment due to the expanding elderly population,
increases in treatment population and increasing rates of survival from earlier lines of treatment. According to data obtained
from Decision Resource Group, over 40% of patients in later lines of therapy while eligible, refuse treatment due to higher treatment
failure, severity of adverse events and difficulty of treatment dosing regimen. The average response rates for patients receiving
their fourth- and fifth-line treatment are 15% and 8% response rates respectively. Additionally, the mOS for these patients also
decreases by line of therapy and is less than 9 months post third-line treatment.
Based on the CLR 131 Phase 1 and Phase
2 product profile demonstrated in fifth-line patients to date with a single dose, we believe CLR 131 may meet the unmet medical
need in the heavily pre-treated patient population described above.
B-Cell Lymphoma
B-cell lymphoma represents cancers of the
lymphatic system. The lymphoma may be indolent or aggressive and circulates in the blood or form tumors in lymph nodes. According
to the WHO Global Cancer Observatory database, the estimated 2020 US incidence of B-Cell Lymphoma was 66,289 cases.9 Types of B-Cell
Lymphomas include Chronic Lymphocytic Lymphoma, Small Lymphocytic Lymphoma, Mantle Cell Lymphoma, Marginal Zone Lymphoma, and the
most common lymphoma, DLBCL. According to a report dated June 2019 by Global Data Research Group, the B-cell Lymphoma market was
valued at $5.7 billion for 2017, with a forecasted increase to $9.2 billion in 2027 at a Compound Annual Growth Rate (CAGR) of
4.9%.
We
believe there is a significant unmet medical need in B-cell lymphoma due to continued high mortality and poor response rates remain
in second- and third- line treatments compounded by the limited durability of responses.
Based on the CLR 131 Phase 2 product profile
demonstrated in DLBCL patients to date with a single dose, we believe CLR 131 may meet the unmet medical need in the patient population
described above as well.
Neuroblastoma
Neuroblastoma, a
neoplasm of the sympathetic nervous system, is the most common extracranial solid tumor of childhood, accounting for approximately
7.8% of childhood cancers in the U.S. The National Cancer Institute states the incidence is about 10.54 cases per 1 million per
year in children younger than 15 years and 90% are younger than 5 years at diagnosis. Over 650 new cases are diagnosed each year
in North America. Approximately 50% of patients present with metastatic disease requiring systemic treatment. Clinical consequences
include abdominal distension, proptosis, bone pain, pancytopenia, fever and paralysis. Although the prognosis is favorable in children
under one year of age with an 86 to 95% 5-year survival, in children aged one to 14 years the 5-year survival ranges from 34 to
68%.
Sarcomas
Sarcomas represent a heterogeneous disease
group. Sarcomas grow in connective tissue, or cells that connect or support other kinds of tissue in the body. These tumors are
most common in the bones, muscles, tendons, cartilage, nerves and blood vessels. Sarcomas represent 15% of all pediatric tumors
and 21% of pediatric solid tumors. The National Cancer Institute SEER data base estimates
that there were 2,060 incidences in 2019. The median age at diagnosis was 3, the median age of death was 5.
We
are focused on 3 subsets of Sarcomas:
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Osteosarcoma: The tumor develops in growing bone tissues, accounts for 28% of all bone sarcomas and is the most common pediatric sarcoma (56%).
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Ewing’s Sarcoma: The tumor develops in immature tissues in bone marrow.
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Rhabdomyosarcoma: Tumors develop in the muscles predominately skeletal muscle.
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Based on information from Market Insights, Epidemiology, and
Market Forecast, the global market value of the Pediatric Sarcoma Market is expected to nearly double from $324 million in 2018
to $635 million in 2025. This growth is expected to be driven by the high rate of recurrence in pediatrics, increased incidence
in select markets and new high-priced therapies coming to the market.
Manufacturing
CLR 131 drug product is made via a five-step
synthetic scheme. The release specifications for the drug product have been established and validated. Through process improvements,
we have been able to achieve a longer expiry dating for the compound extending finished product shelf-life to further facilitate
ex-U.S. distribution from North America.
We have successfully executed large scale production of the
drug substance via a contract manufacturing organization that has been inspected and approved by the FDA and the European Medicines
Agency. We have also demonstrated 60-month stability for the drug substance in desiccated and refrigerated forms at small
scale and are replicating this at large scale.
Centre for Probe Development and Commercialization
(”CPDC”), a validated Current Good Manufacturing Practices (“cGMPs”) manufacturing organization specializing
in radiopharmaceuticals, as our exclusive source to supply drug product for our ongoing research and clinical studies, including
our Phase 1 and Phase 2 studies of CLR 131. We believe that CPDC and our other third-party manufactures have the ability to supply
large scale clinical and commercial scale material.
Sales and Marketing
We plan to pursue and evaluate all available
options to develop, launch and commercialize our compounds. These options presently include but are not limited to: entering into
an agreement for a contract sales organization (CSO) or partnering arrangement with one or more biotechnology or pharmaceutical
company with strong product development and commercialization expertise and distribution infrastructure in the U.S., Europe and/or
Japan. While we currently do not plan to build our own commercial organization for the launch and commercialization of our compounds,
we may reconsider that in the future.
Potential Commercial Competition to Our Current and Future
Clinical-Stage Compounds
Currently,
many classes of approved products with various mechanisms of action exist, including: immune-modulating agents, proteasome inhibitors,
histone deacetylase inhibitors, monoclonal antibodies, corticosteroids, and traditional chemotherapeutics for the treatment of
liquid and solid tumors. There also remain a significant number of compounds being researched and developed for the treatment of
cancer. We are focused on the product development and commercialization of adult and pediatric orphan designated indications with
unmet clinical need. While multiple adult hematology indications for CLR 131 were evaluated, WM was selected based on CLR
131’s efficacy and safety profile demonstrated to date. Other considerations such as the regulatory pathway, unmet clinical
need, limited commercial competition and cost efficiencies were also assessed. We believe CLR 131 is a therapeutic option in either
adult or pediatric relapse or refractory settings either as a monotherapy or in combination with currently approved agents, some
of which are radio-sensitizing and maintain a differential adverse event profile from that of CLR 131.
Intellectual Property
Our core technology platform is based on
research conducted at the University of Michigan in 1994, where phospholipid ether analogs were initially designed, synthesized,
radiolabeled, and evaluated. This research was transferred to the University of Wisconsin - Madison between 1998 and the subsequent
founding of Cellectar in 2002 to further develop and commercialize the technology. We obtained exclusive rights to the related
technology patents owned by University of Michigan in 2003 and continued development of the PDC platform while obtaining ownership
of numerous additional patents and patent applications (with various expiry until 2034 without extensions). We have established
a broad U.S. and international intellectual property rights portfolio around our proprietary cancer-targeting PLE technology platform
including CLR 131 and our PDC Programs.
PDC chemotherapeutic Programs
In November 2015, we converted our previously
filed provisional patent application for Phospholipid-Ether Analogs as Cancer Targeting Drug Vehicles to non-provisional US and
International (PCT) patent applications and were published by the U.S. Patent & Trade Office (USPTO) in May of 2016. These
patent applications further protect composition of matter and method of use for PDCs developed with our proprietary phospholipid-ether
delivery vehicle conjugated with any existing or future cytotoxic agents, including chemotherapeutics for targeted delivery to
cancer cells and cancer stem cells. Additional cytotoxic PDC compounds are covered by pending patent applications directed to the
composition of matter and method of use for cancer therapy provide intellectual property protection in the U.S. and up to 148 additional
countries. These applications, if granted, offer protection extending through at least 2035 in the U.S. and key international markets.
CLR 131
We have taken a broad approach to creating
market exclusivity for CLR 131 both within the U.S., and globally, including all major markets. This approach includes numerous
patents, patent applications and regulatory filings to provide maximum market exclusivity. Our patent portfolio for CLR 131 includes
all of the typical filings as well as unique methods of use, methods of manufacturing, use in combinations, use to treat cancer
stem cells, novel formulations, etc. In addition, to our patents, we were granted ODD for CLR 131 by the FDA for the treatment
of MM in December 2014 and for WM in January 2020. In addition, we received ODD from the European Union for MM in September 2019,
and for WM in January 2021. We expect to file additional orphan designations for other rare diseases. We continue to evaluate CLR
131 in additional hematologic and solid tumor orphan designated indications. Our patents have a variety expected expiry with some
potentially being extended on a country-by-country basis. In 2018, the FDA a granted orphan drug and a RPDD for CLR 131 for the
treatment of neuroblastoma, rhabdomyosarcoma, Ewing’s sarcoma and osteosarcoma. We initiated a Phase 1 study in 2019.
We expect to continue to file patent applications
and acquire licenses to other patents covering methods of use, composition of matter, formulation, method of manufacture and other
patentable claims related to CLR 131 and new PDCs. These patent applications will be filed in key commercial markets worldwide.
The issued patents will generally expire between 2025 and 2035, unless extended, most likely under clinical development extensions.
In addition to the above noted patents/applications
directed to CLR 131 and our PDC pipeline portfolio, we own other patents/applications directed to different forms of phospholipid
ethers, methods of use and methods of manufacturing of phospholipid ethers.
Separate from any patent protection and
following product approval by regulatory authorities, data exclusivity may be available for various compounds for up to 10 years
on a country-by-country basis (e.g., up to five years in the U.S. and up to ten years in Europe).
Licenses / Collaborations
In August 2018, we entered into a collaboration
with Orano Med for the development of novel PDCs utilizing Orano Med’s alpha emitter lead-212 conjugated to our phospholipid
ether; the companies intend to evaluate the new PDCs in up to three oncology indications.
In July 2017, we entered into an arrangement
with Avicenna Oncology GMBH (Avicenna). Under this arrangement, Avicenna will provide us a selection of its proprietary toxins.
We will use our proprietary conjugation capabilities to proceed with the conjugation in order to obtain PDCs. We will process various
in vitro and in cellulo screening against such PDCs to develop new conjugates. We granted Avicenna an exclusive option
to acquire an exclusive license to our intellectual property with respect to each conjugate developed. In the event the parties
cannot reach agreement on the terms of a definitive agreement despite good faith negotiations, Avicenna’s exclusive option
terminates as to such conjugate. Avicenna also granted to us an exclusive option to acquire an exclusive license to its intellectual
property with respect to the material provided. In the event the parties do not reach agreement on the terms of a definitive agreement,
our exclusive option terminates as to the material of Avicenna.
Research and Development
Our primary activity to date has been research
and development. The research had historically been conducted at our facility in Madison, Wisconsin and through third-party laboratories
and academic universities. Starting in 2018, we no longer used the facility in Madison, Wisconsin for these activities. The clinical
development has been completed primarily through contract research organizations at hospitals and academic centers. We have established
a collaboration outsourcing model to leverage third-party expertise, accelerate project timelines, improve productivity and limit
spend and fixed costs. Our research and development expenses were approximately $10,141,000 and $8,996,000 for 2020 and 2019, respectively.
Regulation
The production, distribution, and
marketing of products employing our technology, and our development activities, are subject to extensive governmental
regulation in the U.S. and in other countries. In the U.S., we are subject to the Federal Food, Drug, and Cosmetic Act, as
amended, and the regulations of the FDA, as well as to other federal, state, and local statutes and regulations, including
the federal, state and local laws and regulations governing the storage, use and disposal of hazardous materials, including
radioactive isotopes. These laws, and similar laws outside the U.S., govern the clinical and pre-clinical testing,
manufacture, safety, effectiveness, approval, labeling, distribution, sale, import, export, storage, record-keeping,
reporting, advertising, and promotion of drugs. Product development and approval within this regulatory framework, if
successful, will take many years and involve the expenditure of substantial resources. Violations of regulatory
requirements at any stage may result in various adverse consequences, including the delay in approving or refusal to approve
a product by the FDA or other health authorities. Violations of regulatory requirements also may result in enforcement
actions, which include civil money penalties, injunctions, seizure of regulated product, and civil and criminal charges. The
following paragraphs provide further information on certain legal and regulatory issues with a particular potential to affect
our operations or future marketing of products employing our technology.
U.S. Research, Development, and Product Approval Process
The research, development, and approval
process in the U.S. and elsewhere is intensive and rigorous and generally takes many years to complete. The typical process
required by the FDA before a therapeutic drug may be marketed in the U.S. includes:
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pre-clinical laboratory and animal tests performed under the FDA’s Good Laboratory Practices regulations, referred to herein as GLP;
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submission to the FDA of an IND application, which must become effective before human clinical studies may commence;
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human clinical studies performed under the FDA’s Good Clinical Practices regulations, to evaluate the drug’s safety and effectiveness for its intended uses;
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FDA review of whether the facility in which the drug is manufactured, processed, packed, or held meets standards designed to assure the product’s continued quality; and
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submission of a marketing application to the FDA, and approval of the application by the FDA.
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Pre-Clinical Testing
During pre-clinical testing, studies are
performed with respect to the chemical and physical properties of candidate formulations. These studies are subject to GLP requirements.
Biological testing is typically done in animal models to demonstrate the activity of the compound against the targeted disease
or condition and to assess the apparent effects of the new product candidate on various organ systems, as well as its relative
therapeutic effectiveness and safety.
Submission of IND
An IND must be submitted to the FDA and
become effective before studies in humans may commence. The IND must include a sufficient amount of data and other information
concerning the safety and effectiveness of the compound from laboratory, animal, and human clinical testing, as well as data and
information on manufacturing, product quality and stability, and proposed product labeling.
Clinical Studies
Clinical study programs in humans
generally follow a three-phase process. Typically, Phase 1 studies are conducted in small numbers of healthy volunteers or,
on occasion, in patients afflicted with the target disease. Phase 1 studies are conducted to determine the metabolic and
pharmacological action of the product candidate in humans and the side effects associated with increasing doses, and, if
possible, to gain early evidence of effectiveness. In Phase 2, studies are generally conducted in larger groups of patients
having the target disease or condition in order to validate clinical endpoints, and to obtain preliminary data on the
effectiveness of the product candidate and optimal dosing. This phase also helps determine further the safety profile of the
product candidate. In Phase 3, large-scale clinical studies are generally conducted in patients having the target disease or
condition to provide sufficient data for the statistical proof of effectiveness and safety of the product candidate as
required by U.S. regulatory agencies.
In the case of products for certain serious
or life-threatening diseases, the initial human testing may be done in patients with the disease rather than in healthy volunteers.
Because these patients are already afflicted with the target disease or condition, it is possible that such studies will also provide
results traditionally obtained in Phase 2 studies. These studies are often referred to as “Phase 1/2” studies. However,
even if patients participate in initial human testing and a Phase 1/2 study is carried out, the sponsor is still responsible for
obtaining all the data usually obtained in both Phase 1 and Phase 2 studies.
U.S. law requires that studies conducted
to support approval for product marketing be “adequate and well controlled.” In general, this means that either a placebo
or a product already approved for the treatment of the disease or condition under study must be used as a reference control. Studies
must also be conducted in compliance with good clinical practice requirements, and informed consent must be obtained from all study
subjects. The clinical study process for a new compound can take ten years or more to complete. The FDA may prevent clinical studies
from beginning or may place clinical studies on hold at any point in this process if, among other reasons, it concludes that study
subjects are being exposed to an unacceptable health risk. Studies may also be prevented from beginning or may be terminated by
institutional review boards, which must review and approve all research involving human subjects. Side effects or adverse events
that are reported during clinical studies can delay, impede, or prevent marketing authorization. Similarly, adverse events that
are reported after marketing authorization can result in additional limitations being placed on a product’s use and, potentially,
withdrawal of the product from the market.
Submission of NDA
Following the completion of clinical studies, the data are analyzed
to determine whether the studies successfully demonstrated safety and effectiveness and whether a product approval application
may be submitted. In the U.S., if the product is regulated as a drug, an NDA must be submitted and approved before commercial marketing
may begin. The NDA must include a substantial amount of data and other information concerning the safety and effectiveness of the
compound from laboratory, animal, and human clinical testing, as well as data and information on manufacturing, product quality
and stability, and proposed product labeling.
Each domestic and foreign manufacturing
establishment, including any contract manufacturers we may decide to use, must be listed in the NDA and must be registered with
the FDA. The application generally will not be approved until the FDA conducts a manufacturing inspection, approves the applicable
manufacturing process and determines that the facility is in compliance with cGMP requirements.
Under the Prescription Drug User Fee Act,
as amended, the FDA receives fees for reviewing an NDA and supplements thereto, as well as annual fees for commercial manufacturing
establishments and for approved products. These fees can be significant. For fiscal year 2020, the NDA review fee alone is $2,942,965,
although we may qualify for a waiver of these FDA filing fees since we are a small business entity.
Each NDA submitted for FDA approval is
usually reviewed for administrative completeness and reviewability within 45 to 60 days following submission of the application.
If deemed complete, the FDA will “file” the NDA, thereby triggering substantive review of the application. The FDA
can refuse to file any NDA that it deems incomplete or not properly reviewable. The FDA has established performance goals for the
review of NDAs— six months for priority applications and ten months for standard applications. However, the FDA is not legally
required to complete its review within these periods, and these performance goals may change over time.
Moreover, the
outcome of the review, even if generally favorable, typically is not an actual approval but an “action letter”
that describes additional work that must be done before the application can be approved. The FDA’s review of an
application may involve review and recommendations by an independent FDA advisory committee. Even if the FDA approves a
product, it may limit the approved therapeutic uses for the product as described in the product labeling, require that
warning statements be included in the product labeling, require that additional studies be conducted following approval as a
condition of the approval, impose restrictions and conditions on product distribution, prescribing, or dispensing in the form
of a risk management plan, or otherwise limit the scope of any approval.
Post NDA Regulation
Significant legal and regulatory requirements
also apply after FDA approval to market under an NDA. These include, among other things, requirements related to adverse event
and other reporting, product advertising and promotion, and ongoing adherence to cGMP requirements, as well as the need to submit
appropriate new or supplemental applications and obtain FDA approval for certain changes to the approved product labeling, or manufacturing
process. The FDA also enforces the requirements of the Prescription Drug Marketing Act which, among other things, imposes various
requirements in connection with the distribution of product samples to physicians.
The regulatory framework applicable to
the production, distribution, marketing and/or sale of our product pipeline may change significantly from the current descriptions
provided herein in the time that it may take for any of our products to reach a point at which an NDA is approved.
Overall research, development, and approval
times depend on a number of factors, including the period of review at FDA, the number of questions posed by the FDA during review,
how long it takes to respond to the FDA’s questions, the severity or life-threatening nature of the disease in question,
the availability of alternative treatments, the availability of clinical investigators and eligible patients, the rate of enrollment
of patients in clinical studies, and the risks and benefits demonstrated in the clinical studies.
Other U.S. Regulatory Requirements
In the U.S., the research, manufacturing,
distribution, sale, and promotion of drug and biological products are potentially subject to regulation by various federal, state,
and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, other divisions of the
U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice and individual
U.S. Attorney offices within the Department of Justice, and state and local governments. For example, sales, marketing, and scientific/educational
grant programs must comply with the anti-fraud and abuse provisions of the Social Security Act, the False Claims Act, the privacy
provision of the Health Insurance Portability and Accountability Act, and similar state laws, each as amended. Pricing and rebate
programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health
Care Act of 1992, each as amended. If products are made available to authorized users of the Federal Supply Schedule of the General
Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal
and state consumer protection, unfair competition, and other laws.
Our research and development, manufacturing,
and administration of our drugs involve the controlled use of hazardous materials, including chemicals and radioactive materials,
such as radioactive isotopes. Therefore, we are subject to federal, state and local laws and regulations governing the storage,
use and disposal of these materials and some waste products and are required to maintain both a manufacturer’s license and
a radioactive materials license with State of Wisconsin agencies.
Moreover, we are now, and may become subject
to, additional federal, state, and local laws, regulations, and policies relating to safe working conditions, laboratory practices,
the experimental use of animals, and/or the use, storage, handling, transportation, and disposal of human tissue, waste, and hazardous
substances, including radioactive and toxic materials and infectious disease agents used in conjunction with our research work.
Foreign Regulatory Requirements
We, and any
future collaborative partners, may be subject to widely varying foreign regulations that may be quite different from those of
the FDA governing clinical studies, manufacture, product registration and approval, and pharmaceutical sales. Whether or not
FDA approval has been obtained, we or any future collaboration partners must obtain a separate approval for a product by the
comparable regulatory authorities of foreign countries prior to the commencement of product marketing in these countries. In
certain countries, regulatory authorities also establish pricing and reimbursement criteria. The approval process varies from
country to country, and the time may be longer or shorter than that required for FDA approval. In addition, under current
U.S. law, there are restrictions on the export of products not approved by the FDA, depending on the country involved and the
status of the product in that country.
Reimbursement
and Pricing Controls
In many of the markets where we, or any
future collaborative partners would commercialize a product following regulatory approval, the prices of pharmaceutical products
are subject to direct price controls by law and to drug reimbursement programs with varying price control mechanisms. Public and
private health care payors control costs and influence drug pricing through a variety of mechanisms, including through negotiating
discounts with the manufacturers and through the use of tiered formularies and other mechanisms that provide preferential access
to certain drugs over others within a therapeutic class. Payors also set other criteria to govern the uses of a drug that will
be deemed medically appropriate and therefore reimbursed or otherwise covered. In particular, many public and private health care
payors limit reimbursement and coverage to the uses of a drug that are either approved by the FDA or that are supported by other
appropriate evidence (for example, published medical literature) and appear in a recognized drug compendium. Drug compendia are
publications that summarize the available medical evidence for particular drug products and identify which uses of a drug are supported
or not supported by the available evidence, whether or not such uses have been approved by the FDA. For example, in the case of
Medicare coverage for physician-administered oncology drugs, the Omnibus Budget Reconciliation Act of 1993, with certain exceptions,
prohibits Medicare carriers from refusing to cover unapproved uses of an FDA-approved drug if the unapproved use is supported by
one or more citations in the American Hospital Formulary Service Drug Information, the American Medical Association Drug Evaluations,
or the U.S. Pharmacopoeia Drug Information. Another commonly cited compendium, for example under Medicaid, is the DRUGDEX Information
System.
Employees
As of December 31, 2020, we had eleven
employees, all of whom are full-time employees.
Risks
Related to Capital and Our Operations
We will require additional capital in order
to continue our operations and may have difficulty raising additional capital.
We expect that we will continue to generate
operating losses for the foreseeable future. At December 31, 2020, our consolidated cash balance was approximately $57.2 million.
We believe our cash balance at December 31, 2020, is adequate to fund our basic budgeted operations for at least 12 months from
the filing of this annual report. We will require additional funds to conduct research and development, establish and conduct clinical
and preclinical studies, establish commercial-scale manufacturing arrangements and provide for the marketing and distribution of
our products. Our ability to execute our operating plan depends on our ability to obtain additional funding via the sale of equity
and/or debt securities, a strategic transaction or otherwise. We plan to actively pursue financing alternatives. However, there
can be no assurance that we will obtain the necessary funding in the amounts we seek or that it will be available on a timely basis
or upon terms acceptable to us. If we obtain capital by issuing debt or preferred stock, the holders of such securities would likely
obtain rights that are superior to those of holders of our common stock.
Our capital requirements and our ability
to meet them depend on many factors, including:
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the number of potential products and technologies in development;
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continued progress and cost of our research and development programs;
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progress with preclinical studies and clinical studies;
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the time and costs involved in obtaining regulatory clearance;
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costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
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costs of developing sales, marketing and distribution channels and our ability to sell our drugs;
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costs involved in establishing manufacturing capabilities for clinical study and commercial quantities of our drugs;
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competing technological and market developments;
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claims or enforcement actions with respect to our products or operations;
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market acceptance of our products;
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costs for recruiting and retaining management, employees and consultants;
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our ability to manage computer system failures or security breaches;
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costs for educating physicians regarding the application and use of our products;
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whether we are able to maintain our listing on a national exchange;
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uncertainty and economic instability resulting from conflicts, military actions, terrorist attacks, natural disasters, public health crises, including the occurrence of a contagious disease or illness, such as the COVID-19 coronavirus, cyber-attacks and general instability; and
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the condition of capital markets and the economy generally, both in the U.S. and globally.
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We may consume
available resources more rapidly than currently anticipated, resulting in the need for additional funding sooner than
expected. We may seek to raise any additional funds through the issuance of any combination of common stock, preferred stock,
warrants and debt financings or by executing collaborative arrangements with corporate partners or other sources, any of
which may be dilutive to existing stockholders or have a material effect on our current or future business prospects. If we
cannot secure adequate financing when needed, we may be required to delay, scale back or eliminate one or more of our
research and development programs or to enter into license or other arrangements with third parties to commercialize products
or technologies that we would otherwise seek to develop and commercialize ourselves. In the event that additional funds are
obtained through arrangements with collaborative partners or other sources, we may have to relinquish economic and/or
proprietary rights to some of our technologies or products under development that we would otherwise seek to develop or
commercialize by ourselves. In such an event, our business, prospects, financial condition and results of operations may be
adversely affected.
The COVID-19 pandemic could materially and adversely
affect our business.
The COVID-19 pandemic could significantly
disrupt our business and may prevent us from conducting business activities due to spread of the disease, or due to shutdowns that
may be requested or mandated by federal, state and local governmental authorities. Business disruptions have included restrictions
on our ability to travel, as well as temporary closures. While we have not yet experienced any significant impacts as a result
of the pandemic, it is not possible at this time to estimate the ultimate impact that it could have on our business. The continued
rapid spread of COVID-19 including new virus strains and the measures taken by government authorities has created uncertainties
and could delay our ongoing clinical studies or the manufacture or shipment of CLR 131 for clinical studies.
We continue to evaluate the impact COVID-19
may have on our ability to effectively conduct our business. Our clinical trial sites may be affected by travel or quarantine
restrictions imposed by federal, state or local governments. We may in the future need to update or suspend our clinical studies
as a result of the pandemic. In addition, we have made and we (and our CROs) may need to make certain adjustments to the operation
of clinical studies in an effort to ensure the monitoring and safety of patients and minimize risks to trial data integrity during
the pandemic in accordance with the guidance issued by the FDA in 2020, which describes a number of considerations for sponsors
of clinical studies impacted by the pandemic, including, among other requirements, the requirements to include in the clinical
trial report contingency measures implemented to manage the clinical trial, any disruption of the clinical trial as
a result of the COVID-19 pandemic, and analyses and corresponding discussions that address the impact of implemented contingency
measures on the safety and efficacy results reported for the clinical trial. To the extent we (or our third-party suppliers
and manufacturers) are required to implement additional or to modify existing policies and procedures for our clinical studies
and/or manufacturing functions, or if the pandemic significantly impacts recruitment of patients or the conduct of our clinical
studies, our anticipated timelines for initiating or completing clinical studies and seeking regulatory approval may be substantially
delayed, and we may incur additional costs. Also, to the extent FDA and other regulatory authorities experience any delays or limited
resources in reviewing our regulatory applications or requests for meetings and/or guidance, and inspection of manufacturing facilities
prior to regulatory approval due to the COVID-19 pandemic or other reasons, we may experience significant delays in our anticipated
timelines for our clinical studies and/or seeking regulatory approvals, which could adversely affect our business.
Although we expect no material impact
on the supply of CLR 131 for our current clinical studies, should our third-party manufacturers experience extended disruptions,
we could experience delays in future trials. Further, in June 2020, FDA issued a guidance on good manufacturing practice considerations
for responding to COVID-19 infection in employees in drug products manufacturing, including recommendations for manufacturing controls
to prevent contamination of drugs. Such guidance and any future guidance or regulatory requirements impacting drug product manufacturing,
including delays associated with complying with new requirements, could impact the operations of our contract manufacturers, our
business, and our ability to obtain sufficient supplies for our clinical development on a timely basis.
The COVID-19 pandemic continues to rapidly
evolve. While the extent of the impact of the COVID-19 pandemic on our business and financial results is uncertain, a continued
and prolonged public health crisis could have a material negative impact on our business, financial condition and operating results.
To the extent that COVID-19 pandemic impacts our business in any way, it may also have the effect of heightening the impact of
other risk factors disclosed herein.
Conflicts, military actions, terrorist attacks,
natural disasters. public health crises, including the occurrence of a contagious disease or illness, such as the COVID-19 coronavirus,
cyber-attacks and general instability could adversely affect our business.
Conflicts,
military actions, terrorist attacks, natural disasters, public health crises and cyber-attacks have precipitated economic
instability and turmoil in financial markets. Instability and turmoil may result in raw material cost increases. The uncertainty
and economic disruption resulting from hostilities, military action, acts of terrorism, public health crises or cyber-attacks may
impact our operations or those of our suppliers. Accordingly, any conflict, military action, terrorist attack, public health crises
or cyber-attack that impacts us or any of our suppliers, could have a material adverse effect on our business, liquidity, prospects,
financial condition and results of operations.
Our business and operations may be materially
adversely affected in the event of computer system failures or security breaches.
Despite
the implementation of security measures, our internal computer systems, and those of our third-party manufacturers, contract research
organizations and other third parties on which we rely, are vulnerable to damage from computer viruses, unauthorized access, cyber-attacks,
phishing attempts, natural disasters, fire, terrorism, war and telecommunication and
electrical failures. If such an event were to occur and interrupt our operations, it could result in a material disruption in our
business. For example, the loss of clinical study data from ongoing or planned clinical studies could result in delays in our regulatory
approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security
breach results in a loss of or damage to our data or applications, loss of trade secrets, inappropriate disclosure of confidential
or proprietary information, including protected health information or personal data of employees or former employees, lack of access
to our clinical data, or disruption of the manufacturing process, we could incur liability and the further development of our drug
candidates could be delayed. We may also be vulnerable to cyber-attacks or other malfeasance by hackers. This type of breach of
our cybersecurity may compromise our confidential and financial information, adversely affect our business, or result in legal
proceedings. Further, these cybersecurity breaches may inflict reputational harm upon us that may result in decreased market value
and erode public trust.
Risks Related to Manufacturing and Supply
We rely on a collaborative outsourced business
model, and disruptions with our third-party collaborators, including potential disruptions at our sole source supplier of CLR 131,
Centre for Probe Development and Commercialization, CPDC, may impede our ability to gain FDA approval and delay or impair commercialization
of any products.
We are in the preclinical and clinical
study phases of product development and commercialization. We have closed manufacturing operations located at our corporate headquarters,
and have implemented a collaboration outsourcing model to more efficiently manage costs. We rely significantly on contracts with
third parties to use their facilities to conduct our research, development and manufacturing.
We have engaged CPDC, which has been a
validated cGMP manufacturing organization specializing in radiopharmaceuticals, as our exclusive source to supply drug product
for our ongoing research and clinical studies, including our Phase 1 and Phase 2 studies of CLR 131.
In addition, we rely exclusively on contract
research organizations to conduct research and development. Any inability of these organizations to fulfill the requirements of
their agreements with us may delay or impair our ability to gain FDA approval and commercialization of our drug delivery technology
and products.
Our reliance on third-party collaborators
exposes us to risks related to not being able to directly oversee the activities of these parties. Furthermore, these collaborators,
whether foreign or domestic, may experience regulatory compliance difficulties, mechanical shutdowns, employee strikes, or other
unforeseeable acts that may delay fulfillment of their agreements with us. Failure of any of these collaborators to provide the
required services in a timely manner or on commercially reasonable terms could materially delay the development and approval of
our products, increase our expenses, and materially harm our business, prospects, financial condition and results of operations.
We believe that
we have a good working relationship with our third-party collaborators. However, should the situation change, we may be
required to relocate these activities on short notice, and we do not currently have access to alternate facilities to which
we could relocate our research, development and/or manufacturing activities. The cost and time to establish or locate an
alternate research, development and/or manufacturing facility to develop our technology would be substantial and would delay
obtaining FDA approval and commercializing our products.
Furthermore, if our products are approved
for commercial sale, we will need to work with our existing third-party collaborators to ensure sufficient capacity, or engage
additional parties with the capacity, to commercially manufacture our products in accordance with FDA and other regulatory requirements.
There can be no assurance that we would be able to successfully establish any such capacity or identify suitable manufacturing
partners on acceptable terms.
Risks
Related to Research and Development and the FDA
We cannot
assure the successful development and commercialization of our compounds in development.
At present, our success is dependent on
one or more of the following to occur: the successful development of CLR 131 for the treatment of a hematologic or solid tumor
cancer including Waldenstrom’s macroglobulinemia, multiple myeloma and B-Cell lymphomas or the treatment of pediatric
solid tumors and lymphomas; the development of new PDCs, specifically new products developed from our PDC program, and the advancement
of our PDC agents through research and development; and/or commercialization partnerships.
We are a late-stage clinical biopharmaceutical
company focused on the discovery, development and commercialization of drugs for the treatment of cancer. We leverage our PDC platform
to specifically target treatments to cancer cells. The PDC platform possesses the potential for the discovery and development of
the next generation of cancer-targeting agents. The PDC platform features include the capacity to link with almost any molecule,
the delivery of a significant increase in targeted oncologic payload, and the ability to target all tumor cells. As a result, we
believe that we can generate PDCs to treat a broad range of cancers with the potential to improve the therapeutic index of oncologic
drug payloads, enhance or maintain efficacy while reducing adverse events by minimizing drug delivery to healthy cells, and increase
delivery to cancerous cells and cancer stem cells.
Our proposed products and their potential
applications are in clinical and manufacturing/process development and face a variety of risks and uncertainties, including the
following:
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Future clinical study results may show that our cancer-targeting and delivery technologies are not well-tolerated by patients at their effective doses or are not efficacious.
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Future clinical study results may be inconsistent with testing results obtained to-date.
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Even if our cancer-targeting and delivery technologies are shown to be safe and effective for their intended purposes, we may face significant or unforeseen difficulties in obtaining or manufacturing sufficient quantities at reasonable prices or at all.
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Our ability to complete the development and commercialization of our cancer-targeting and delivery technologies for their intended use is substantially dependent upon our ability to raise sufficient capital or to obtain and maintain experienced and committed partners to assist us with obtaining clinical and regulatory approvals for, and the manufacturing, marketing and distribution of, our products.
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Even if our cancer-targeting and delivery technologies are successfully developed, approved by all necessary regulatory authorities, and commercially produced, there is no guarantee that there will be market acceptance of our products.
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Our competitors may develop therapeutics or other treatments that are superior or less costly than our own with the result that our product candidates, even if they are successfully developed, manufactured and approved, may not generate sufficient revenues to offset the development and manufacturing costs of our product candidates.
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If we are unsuccessful in dealing with
any of these risks, or if we are unable to successfully advance the development of our cancer-targeting and delivery technologies
for some other reason, our business, prospects, financial condition and results of operations may be adversely affected.
Failure to complete the development of our
technologies, obtain government approvals, including required FDA approvals, or comply with ongoing governmental regulations could
prevent, delay or limit introduction or sale of proposed products and result in failure to achieve revenues or maintain our ongoing
business.
Our research and development activities
and the manufacture and marketing of our intended products are subject to extensive regulation for safety, efficacy and quality
by numerous government authorities in the U.S. and abroad. Before receiving approval to market our proposed products by the FDA,
we will have to demonstrate that our products are safe and effective for the patient population for the diseases that are to be
treated. Clinical studies, manufacturing and marketing of drugs are subject to the rigorous testing and approval process of the
FDA and equivalent foreign regulatory authorities. The Federal Food, Drug, and Cosmetic Act and other federal, state and foreign
statutes and regulations govern and influence the testing, manufacturing, labeling, advertising, distribution and promotion of
drugs and medical devices. As a result, clinical studies and regulatory approval can take many years to accomplish and require
the expenditure of substantial financial, managerial and other resources.
In addition to the required regulatory
approval described above, in order to be commercially viable, we must successfully research, develop, manufacture, introduce, market
and distribute our technologies. This includes meeting a number of critical developmental milestones, including:
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demonstrating benefit from delivery of each specific drug for specific medical indications;
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demonstrating through preclinical and clinical studies that each drug is safe and effective; and
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demonstrating that we have established viable FDA cGMPs capable of potential scale-up.
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The timeframe necessary to achieve these
developmental milestones may be long and uncertain, and we may not successfully complete these milestones for any of our intended
products in development.
In addition to the risks previously discussed,
our technology is subject to developmental risks that include the following:
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uncertainties arising from the rapidly growing scientific aspects of drug therapies and potential treatments;
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uncertainties arising as a result of the broad array of alternative potential treatments related to cancer and other diseases; and
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expense and time associated with the development and regulatory approval of treatments for cancer and other diseases.
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In order to conduct the clinical studies
that are necessary to obtain approval by the FDA to market a product, it is necessary to receive clearance from the FDA to conduct
such clinical studies. The FDA can halt clinical studies at any time for safety reasons or because we or our clinical investigators
do not follow the FDA’s requirements for conducting clinical studies. If any of our studies are halted, we will not be able
to obtain FDA approval until and unless we can address the FDA’s concerns. If we are unable to receive clearance to conduct
clinical studies for a product, we will not be able to achieve any revenue from that product in the U.S., as it is illegal to sell
any drug for use in humans in the U.S. without FDA approval.
Even if we do ultimately receive FDA approval
for any of our products, these products will be subject to extensive ongoing regulation, including regulations governing manufacturing,
labeling, packaging, testing, dispensing, prescription and procurement quotas, record keeping, reporting, handling, shipment and
disposal of any such drug. Failure to obtain and maintain required registrations or to comply with any applicable regulations could
further delay or preclude development and commercialization of our drugs and subject us to enforcement action.
The FDA has granted rare pediatric disease
designation, RPDD, to CLR 131 for treatment of neuroblastoma, rhabdomyosarcoma, Ewing’s sarcoma and osteosarcoma; however,
we may not be able to realize any value from such designation.
Our CLR 131 compound has received RPDD designation from the
FDA for the treatment of neuroblastoma, rhabdomyosarcoma, osteosarcoma and Ewing’s sarcoma. The FDA defines a “rare
pediatric disease” as a disease that affects fewer than 200,000 individuals in the U.S. primarily under the age of 18 years
old. Under the FDA’s Rare Pediatric Disease Priority Review Voucher Program, upon the approval of an NDA or a BLA for the
treatment of a rare pediatric disease, the sponsor of such application could be eligible for a Rare Pediatric Disease Priority
Review Voucher that can be used to obtain priority review for a subsequent NDA or BLA. There is no assurance we will receive a
Rare Pediatric Disease Priority Review Voucher or that it will result in a faster development process, review or approval for a
subsequent marketing application. Also, although Priority Review Vouchers may be sold or transferred to third parties, there is
no guaranty that we will be able to realize any value if we were to sell a Priority Review Voucher. In December 2020, the Priority
Review Voucher Program was extended by the FDA permitting additional grants through September 2026 for rare pediatric diseases.
It is possible that even if we obtain approval for CLR 131 and qualify for a priority review voucher, the program may no longer
be in effect at the time of such approval.
Clinical studies involve a
lengthy and expensive process with an uncertain outcome, and results of earlier studies may not be predictive of future study results.
In order to obtain regulatory approval
for the commercialization of our product candidates, we must conduct, at our own expense, extensive clinical studies to demonstrate
safety and efficacy of these product candidates. Clinical testing is expensive, it can take many years to complete, and its outcome
is uncertain. Failure can occur at any time during the clinical study process.
We may experience delays in clinical testing
of our product candidates. We do not know whether planned clinical studies will begin on time, need to be redesigned, or be completed
on schedule, if at all. Clinical studies can be delayed for a variety of reasons, including delays in obtaining regulatory approval
to commence a study, reaching agreement on acceptable clinical study terms with prospective sites, obtaining institutional review
board approval to conduct a study at a prospective site, recruiting patients to participate in a study, or obtaining sufficient
supplies of clinical study materials. Many factors affect patient enrollment, including the size of the patient population, the
proximity of patients to clinical sites, the eligibility criteria for the study, competing clinical studies, and new drugs approved
for the conditions we are investigating. Prescribing physicians will also have to decide to use our product candidates over existing
drugs that have established safety and efficacy profiles or other drugs undergoing development in clinical studies. Any delays
in completing our clinical studies will increase our costs, slow down our product development and approval process, and delay our
ability to generate revenue.
In addition, the results of preclinical
studies and early clinical studies of our product candidates do not necessarily predict the results of later-stage clinical studies.
Product candidates in later stages of clinical studies may fail to show the desired safety and efficacy traits despite having progressed
through initial clinical testing. The data collected from clinical studies of our product candidates may not be sufficient to support
the submission of an NDA or to obtain regulatory approval in the U.S. or elsewhere. Because of the uncertainties associated with
drug development and regulatory approval, we cannot determine if or when we will have an approved product for commercialization
or will achieve sales or profits.
Our clinical studies may not demonstrate
sufficient levels of efficacy necessary to obtain the requisite regulatory approvals for our drugs, and our proposed drugs may
not be approved for marketing.
We may be required to suspend or discontinue
clinical studies due to unexpected side effects or other safety risks that could preclude approval of our product candidates.
Our clinical
studies may be suspended at any time for a number of reasons. For example, we may voluntarily suspend or terminate our
clinical studies if at any time we believe that they present an unacceptable risk to the clinical study patients. In
addition, regulatory agencies may order the temporary or permanent discontinuation of our clinical studies at any time if
they believe that the clinical studies are not being conducted in accordance with applicable regulatory requirements or that
they present an unacceptable safety risk to the clinical study patients.
Administering any product candidates to
humans may produce undesirable side effects. These side effects could interrupt, delay or halt clinical studies of our product
candidates and could result in the FDA or other regulatory authorities denying further development or approval of our product candidates
for any or all targeted indications. Ultimately, some or all of our product candidates may prove to be unsafe for human use. Moreover,
we could be subject to significant liability if any volunteer or patient suffers, or appears to suffer, adverse health effects
as a result of participating in our clinical studies.
Risks Related to Legal Compliance and Litigation
Controls we or our third-party collaborators
have in place to ensure compliance with all applicable laws and regulations may not be effective.
We and our third-party collaborators are
subject to federal, state and local laws and regulations governing the storage, use and disposal of hazardous materials and waste
products. Current or future regulations may impair our research, development, manufacturing and commercialization efforts. The
inability of our third-party collaborators to maintain the required licenses and permits for any reason will negatively impact
our manufacturing, research and development activities. In addition, we may be required to indemnify third-party collaborators
against certain liabilities arising out of any failure by them to comply with such regulations and/or laws. If we or our third
party collaborators fail to comply with any of these regulations and/or laws, a range of consequences could result, including the
suspension or termination of clinical studies, failure to obtain approval of a product candidate, restrictions on our products
or manufacturing processes, withdrawal of our products from the market, significant fines, exclusion from government healthcare
programs, or other sanctions or litigation.
We are exposed to product, clinical and preclinical
liability risks that could create a substantial financial burden should we be sued.
Our
business exposes us to potential product liability and other liability risks that are inherent in the testing, manufacturing and
marketing of pharmaceutical products. In addition, the use in our clinical studies of pharmaceutical products that we, or our current
or potential collaborators, may develop and then subsequently sell, may cause us to bear a portion of, or all, product liability
risks. While we carry an insurance policy covering up to $5,000,000 per occurrence and $5,000,000 in the aggregate for liability
incurred in connection with such claims should they arise, there can be no assurance that our insurance will be adequate to cover
all situations. Moreover, there can be no assurance that such insurance, or additional insurance if required, will be available
or, if available, will be available on commercially reasonable terms. Furthermore, our current and potential partners with whom
we have collaborative agreements, or our future licensees, may not be willing to indemnify us against these types of liabilities
and may not themselves be sufficiently insured or have a net worth sufficient to satisfy any product liability claims. A successful
product liability claim or series of claims brought against us could have a material adverse effect on our business, prospects,
financial condition and results of operations.
Risks
Related to Intellectual Property
We expect to rely on our patents as well as
specialized regulatory designations such as orphan drug classification for our product candidates, but regulatory drug designations
may not confer marketing exclusivity or other expected commercial benefits.
We expect to
file for ODD or other regulatory designations (fast track, break-through, priority review, etc.) as appropriate for our
product candidates. Orphan drug status confers seven years of marketing exclusivity under the Federal Food, Drug, and
Cosmetic Act in the U.S., and up to ten years of marketing exclusivity in Europe for a particular product in a specified
indication. We have been granted ODD in the U.S. for CLR 131 as a therapeutic for the treatment of multiple myeloma,
neuroblastoma, osteosarcoma, rhabdomyosarcoma, Ewing’s sarcoma and lymphoplasmacytic lymphoma/Waldenstrom’s
macroglobulinemia. Additionally, we have been granted ODD in Europe for CLR 131 as a therapeutic for the treatment of
multiple myeloma and Waldenstrom’s macroglobulinemia. While we have been granted this orphan designation, we will not
be able to rely on it to exclude other companies from manufacturing or selling products using the same principal molecular
structural features for the same indication beyond these timeframes without our patent portfolio. For any product candidate
for which we have been or will be granted ODD in a particular indication, it is possible that another company also holding
ODD for the same product candidate will receive marketing approval for the same indication before we do. If that were to
happen, our applications for that indication may not be approved until the competing company’s period of exclusivity
expires. Even if we were the first to obtain marketing authorization for an orphan drug indication, there are circumstances
under which a competing product may be approved for the same indication during the seven-year period of marketing
exclusivity, such as if the later product is shown to be clinically superior to the orphan product or deemed a different
product than ours. Further, the seven-year marketing exclusivity would not prevent competitors from obtaining approval of the
same product candidate as ours for indications other than those in which we have been granted ODD, or for other indications
if not for our patent portfolio, or for the use of other types of products in the same indications as our orphan product.
Furthermore, although the ODD and exclusivity are in effect right now, the FDA has the authority to modify this assessment at
any time.
We may face litigation from third parties
claiming our products infringe on their intellectual property rights, particularly because there is often substantial uncertainty
about the validity and breadth of medical patents.
We may be exposed to future litigation
by third parties based on claims that our technologies, products or activities infringe on the intellectual property rights of
others or that we have misappropriated the trade secrets of others. This risk is exacerbated by the fact that the validity and
breadth of claims covered in medical technology patents, and the breadth and scope of trade-secret protection, involve complex
legal and factual questions for which important legal principles are unresolved. Any litigation or claims against us, whether valid
or not, could result in substantial costs, place a significant strain on our financial and managerial resources, and harm our reputation.
License agreements that we may enter into in the future would likely require that we pay the costs associated with defending this
type of litigation. In addition, intellectual property litigation or claims could force us to do one or more of the following:
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cease selling, incorporating or using any of our technologies and/or products that incorporate the challenged intellectual property, which would adversely affect our ability to generate revenue;
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obtain a license from the holder of the infringed intellectual property right, which license may be costly or may not be available on reasonable terms, if at all; or
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redesign our products, which would be costly and time-consuming.
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If we are unable to adequately protect or enforce
our rights to intellectual property or to secure rights to third-party patents, we may lose valuable rights, experience reduced
market share, assuming any, or incur costly litigation to protect our intellectual property rights.
Our ability to obtain licenses to patents,
maintain trade-secret protection, and operate without infringing the proprietary rights of others will be important to commercializing
any products under development. Therefore, any disruption in access to the technology could substantially delay the development
of our technology.
The patent positions of biotechnology and
pharmaceutical companies, such as ours, for products that involve licensing agreements are frequently uncertain and involve complex
legal and factual questions. In addition, the coverage claimed in a patent application can be significantly reduced before the
patent is issued or in subsequent legal proceedings. Consequently, our patent applications and any issued and licensed patents
may not provide protection against competitive technologies or may be held invalid if challenged or circumvented. To the extent
we license patents from third parties, the early termination of any such license agreement would result in the loss of our rights
to use the covered patents, which could severely delay, inhibit or eliminate our ability to develop and commercialize compounds
based on the licensed patents. Our competitors may also independently develop products similar to ours or design around or otherwise
circumvent patents issued or licensed to us. In addition, the laws of some foreign countries may not protect our proprietary rights
to the same extent as U.S. law.
We also rely on
trade secrets, technical know-how and continuing technological innovation to develop and maintain our competitive position.
Although we generally require our employees, consultants, advisors and collaborators to execute appropriate confidentiality
and assignment-of-inventions agreements, our competitors may independently develop substantially equivalent proprietary
information and techniques, reverse engineer our information and techniques, or otherwise gain access to our proprietary
technology. We may be unable to meaningfully protect our rights in trade secrets, technical know-how and other nonpatented
technology.
We may have to resort to litigation to
protect our rights for certain intellectual property or to determine the scope, validity or enforceability of our intellectual
property rights. Enforcing or defending our rights would be expensive, could cause diversion of our resources, and may not prove
successful. Any failure to enforce or protect our rights could cause us to lose the ability to exclude others from using our technology
to develop or sell competing products.
Risks Related to Our Employees
We rely on
a small number of key personnel who may terminate their employment with us at any time, and our success will depend on our ability
to hire additional qualified personnel.
Our success depends to a significant degree
on the continued services of our executive officers, including our Chief Executive Officer, James V. Caruso. Our management and
other employees may voluntarily terminate their employment with us at any time, and there can be no assurance that these individuals
will continue to provide services to us. Our success will depend on our ability to attract and retain highly skilled personnel.
We may be unable to recruit such personnel on a timely basis, if at all. The loss of services of key personnel, or the inability
to attract and retain additional qualified personnel, could result in delays in development or approval of our products, loss of
sales and diversion of management resources.
Confidentiality agreements with employees and
others may not adequately prevent disclosure of our trade secrets and other proprietary information and may not adequately protect
our intellectual property, which could limit our ability to compete.
We operate in the highly technical field
of research and development of small-molecule drugs and rely, in part, on trade-secret protection in order to protect our proprietary
trade secrets and unpatented know-how. However, trade secrets are difficult to protect, and we cannot be certain that our competitors
will not develop the same or similar technologies on their own. We have taken steps, including entering into confidentiality agreements
with our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors, to protect our trade
secrets and unpatented know-how. These agreements generally require that the other party keep confidential and not disclose to
third parties all confidential information developed by the party or made known to the party by us during the course of the party’s
relationship with us. Also, we typically obtain agreements from these parties that inventions conceived by them in the course of
rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign
intellectual property rights to us. Enforcing a claim that a party has illegally obtained, and is using our trade secrets or know-how,
is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, courts outside the U.S. may be less
willing to protect trade secrets or know-how. The failure to obtain or maintain trade-secret protection could adversely affect
our competitive position.
We may be subject to claims that our employees
have wrongfully used or disclosed alleged trade secrets of their current or former employers.
As is common in the biotechnology and pharmaceutical
industry, we engage individuals who were previously employed at other biotechnology or pharmaceutical companies, including our
competitors or potential competitors or who are employed by academic research institutions. Although no claims against us are currently
pending, we may be subject to claims that we, or these employees, have used or disclosed trade secrets or other proprietary information
of their current or former employers, either inadvertently or otherwise. Litigation may be necessary to defend against these claims.
Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction
to management.
Risks
Related to Commercialization of our Products
Acceptance of our products in the marketplace
is uncertain and failure to achieve market acceptance will prevent or delay our ability to generate revenues.
Our future financial performance will depend,
at least in part, on the introduction and customer acceptance of our proposed products. Even if approved for marketing by the necessary
regulatory authorities, our products may not achieve market acceptance. The degree of market acceptance will depend on a number
of factors including:
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receiving regulatory clearance of marketing claims for the uses that we are developing;
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establishing and demonstrating the advantages, safety and efficacy of our technologies;
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pricing and reimbursement policies of government and third-party payors such as insurance companies, health maintenance organizations and other health plan administrators;
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attracting corporate partners, including pharmaceutical companies, to assist in commercializing our intended products; and
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marketing our products.
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Physicians, patients, payors or the medical
community, in general, may be unwilling to accept, use or recommend any of our products. If we are unable to obtain regulatory
approval or commercialize and market our proposed products as planned, we may not achieve any market acceptance or generate revenue.
The market for our proposed products is rapidly
changing and competitive, and new therapeutics, drugs and treatments that may be developed by others could impair our ability to
develop our business or become competitive.
The pharmaceutical and biotechnology industries
are subject to rapid and substantial technological change. Developments by others may render our technologies and proposed products
noncompetitive or obsolete, or we may be unable to keep pace with technological developments or other market factors. Technological
competition from pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying into the
field is intense and expected to increase. Most of these entities have significantly greater research and development capabilities
and budgets than we do, as well as substantially more marketing, manufacturing, financial and managerial resources. These entities
represent significant competition for us. Acquisitions of, or investments in, competing pharmaceutical or biotechnology companies
by large corporations could increase our competitors’ financial, marketing, manufacturing and other resources.
Our resources are limited, and we may experience
management, operational or technical challenges inherent in our activities and novel technologies. Competitors have developed,
or are in the process of developing, technologies that are, or in the future may be, the basis for competition. Some of these technologies
may accomplish therapeutic effects similar to those of our technology, but through different means. Our competitors may develop
drugs and drug delivery technologies that are more effective than our intended products and, therefore, present a serious competitive
threat to us.
The potential widespread acceptance of
therapies that are alternatives to ours may limit market acceptance of our products even if they are commercialized. Many of our
targeted diseases and conditions can also be treated by other medication or drug delivery technologies. These treatments may be
widely accepted in medical communities and have a longer history of use. The established use of these competitive drugs may limit
the potential for widespread acceptance of our technologies and products if commercialized.
Due to continued changes in marketing, sales
and distribution, we may be unsuccessful in our efforts to sell our proposed products, develop a direct sales organization, or
enter into relationships with third parties.
We have not
established marketing, sales or distribution capabilities for our proposed products. Until such time as our proposed products
are further along in the development process, we will not devote any meaningful time and resources to this effort. At the
appropriate time, we will determine whether we will develop our own sales and marketing capabilities or enter into agreements
with third parties to sell our products.
We have limited experience in developing,
training or managing a sales force. If we choose to establish a direct sales force, we may incur substantial additional expenses
in developing, training and managing such an organization. We may be unable to build a sales force on a cost-effective basis or
at all. In addition, we will compete with many other companies that currently have extensive marketing and sales operations. Our
marketing and sales efforts may be unable to compete against these other companies. We may be unable to establish a sufficient
sales and marketing organization on a cost-effective or timely basis, if at all.
If we choose to enter into agreements with
third parties to sell our proposed products, we may be unable to establish or maintain third-party relationships on a commercially
reasonable basis, if at all. In addition, these third parties may have similar or more established relationships with our competitors.
We may be unable to engage qualified distributors.
Even if engaged, these distributors may:
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fail to adequately market our products;
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fail to satisfy financial or contractual obligations to us;
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offer, design, manufacture or promote competing products; or
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cease operations with little or no notice.
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If we fail to develop sales, marketing
and distribution channels, we would experience delays in product sales and incur increased costs, which would have a material adverse
effect on our business, prospects, financial condition and results of operation.
If we are unable to convince physicians of
the benefits of our intended products, we may incur delays or additional expense in our attempt to establish market acceptance.
Achieving use of our products in the target
market of cancer diagnosis and treatment may require physicians to be informed regarding these products and their intended benefits.
The time and cost of such an educational process may be substantial. Inability to successfully carry out this physician education
process may adversely affect market acceptance of our proposed products. We may be unable to educate physicians, in sufficient
numbers, in a timely manner regarding our intended proposed products to achieve our marketing plans and product acceptance. Any
delay in physician education may materially delay or reduce demand for our proposed products. In addition, we may expend significant
funds towards physician education before any acceptance or demand for our proposed products is created, if at all.
If users of our products are unable to obtain
adequate reimbursement from third-party payors, or if additional healthcare reform measures are adopted, it could hinder or prevent
the commercial success of our product candidates.
The continuing efforts of government and
insurance companies, health maintenance organizations and other payors of healthcare costs to contain or reduce costs of healthcare
may adversely affect our ability to generate future revenues and achieve profitability, including by limiting the future revenues
and profitability of our potential customers, suppliers and collaborative partners. For example, in certain foreign markets pricing
or profitability of prescription pharmaceuticals are subject to government control. The U.S. government is implementing, and other
governments have shown significant interest in pursuing, healthcare reform. Any government-adopted reform measures could adversely
affect the pricing of healthcare products and services in the U.S. or internationally and the amount of reimbursement available
from governmental agencies or other third-party payors. The continuing efforts of the U.S. and foreign governments, insurance companies,
managed care organizations, and other payors of healthcare services to contain or reduce healthcare costs may adversely affect
our ability to set prices for our products, should we be successful in commercializing them, and this would negatively affect our
ability to generate revenues and achieve and maintain profitability.
New laws, regulations and judicial decisions,
or new interpretations of existing laws, regulations and decisions, that relate to healthcare availability, methods of delivery
or payment for healthcare products and services, or sales, marketing or pricing of healthcare products and services may also limit
our potential revenue and may require us to revise our research and development programs. The pricing and reimbursement environment
may change in the future and become more challenging for several reasons, including policies advanced by the current or future
executive administrations in the U.S., new healthcare legislation, or fiscal challenges faced by government health administration
authorities. Specifically, in both the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory
proposals to change the healthcare system in ways that could affect our ability to sell our products profitably. In the U.S., changes
in the federal healthcare policy were enacted in 2010 and are being implemented. Some reforms could result in reduced reimbursement
rates for our product candidates, which would adversely affect our business strategy, operations and financial results. Our ability
to commercialize our products will depend in part on the extent to which appropriate reimbursement levels for the cost of our products
and related treatment are obtained by governmental authorities, private health insurers, and other organizations such as health
maintenance organizations (“HMOs”). Third-party payors are increasingly challenging the prices charged for medical
drugs and services. Also, the trend toward managed healthcare in the U.S. and the concurrent growth of organizations such as HMOs
that could control or significantly influence the purchase of healthcare services and drugs, as well as legislative proposals to
reform healthcare or change government insurance programs, may all result in lower prices for or rejection of our drugs. The cost
containment measures that healthcare payors and providers are instituting, and the effect of any healthcare reform, could materially
harm our ability to operate profitably.
Risks Related to Internal Controls
Failure to maintain effective internal controls
could adversely affect our ability to meet our reporting requirements.
We are required to establish and maintain
appropriate internal controls over financial reporting. Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley
Act of 2002 require an annual assessment of internal controls over financial reporting and for certain issuers an attestation of
this assessment by the issuer’s independent registered public accounting firm. The standards to assess that our internal
controls over financial reporting are effective are evolving and complex, require significant documentation and testing, and may
require remediation if they are not met. We expect to incur significant expenses and to devote resources to Section 404 compliance
on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to complete the assessment of
the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal
control over financial reporting. As a result, we may not be able to complete the assessment and remediation process on a timely
basis. In addition, although attestation requirements by our independent registered public accounting firm are not presently applicable
to us, we could become subject to these requirements in the future, and we may encounter problems or delays in completing the implementation
of any resulting changes to internal controls over financial reporting.
Effective internal controls are necessary
for us to provide reasonable assurance with respect to our financial reports and to effectively prevent fraud. Failure to maintain
effective internal controls could adversely affect our public disclosures regarding our business, prospects, financial condition
or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify
weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may
raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control
over financial reporting or disclosure of management’s assessment of our internal controls over financial reporting our business
and results of operations could be harmed, we could fail to meet our reporting obligations, and there could be a material adverse
effect on our common stock price.
Risks Related to Our Equity Securities
Our stock price has experienced price fluctuations.
There can be no assurance that the market
price for our common stock will remain at its current level, and a decrease in the market price could result in substantial losses
for investors. The market price of our common stock may be significantly affected by one or more of the following factors:
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announcements or press releases relating to the biopharmaceutical sector or to our own business or prospects;
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regulatory, legislative or other developments affecting us or the healthcare industry generally;
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sales by holders of restricted securities pursuant to effective registration statements or exemptions from registration;
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market conditions specific to biopharmaceutical companies, the healthcare industry and the stock market generally; and
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our ability to maintain our listing on the Nasdaq exchange.
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Our common stock could be further diluted as
the result of the issuance of additional shares of common stock, convertible securities, warrants or options.
In the past, we have issued common stock,
convertible securities (such as convertible preferred stock and notes) and warrants in order to raise capital. We have also issued
equity as compensation for services and incentive compensation for our employees and directors. We have shares of common stock
reserved for issuance upon the exercise of certain of these securities and may increase the shares reserved for these purposes
in the future. Our issuance of additional common stock, convertible securities, options and warrants could dilute our common stock,
affect the rights of our stockholders, reduce the market price of our common stock, result in adjustments to exercise prices of
outstanding warrants (resulting in these securities becoming exercisable for, as the case may be, a greater number of shares of
our common stock), or obligate us to issue additional shares of common stock to certain of our stockholders.
Provisions of our certificate of incorporation,
by-laws, and Delaware law may make an acquisition of us or a change in our management more difficult.
Certain provisions of our certificate of
incorporation and by-laws could discourage, delay or prevent a merger, acquisition or other change in control that stockholders
may consider favorable, including transactions in which an investor might otherwise receive a premium for its shares. These provisions
also could limit the price that investors might be willing to pay in the future for shares of our common stock or warrants, thereby
depressing the market price of our common stock. Stockholders who wish to participate in these transactions may not have the opportunity
to do so.
Furthermore, these provisions could prevent
or frustrate attempts by our stockholders to replace or remove our management. These provisions:
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provide for the division of the Board into three classes as nearly equal in size as possible with staggered three-year terms and further limit the removal of directors and the filling of vacancies;
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authorize our Board to issue without stockholder approval blank-check preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our Board;
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require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent;
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establish advance notice requirements for stockholder nominations to our Board or for stockholder proposals that can be acted on at stockholder meetings;
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limit who may call stockholder meetings; and
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require the approval of the holders of 75% of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our certificate of incorporation and by-laws.
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In addition, because we are incorporated
in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain
criteria are met, prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging
or combining with us for a prescribed period of time.