Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of voting and
non-voting common equity held by non-affiliates as of the last business day of the Registrant’s most recently completed
second fiscal quarter (June 30, 2019) was $49,643,648, based upon the last price of the Registrant’s common stock as reported
on the Nasdaq Capital Market on such date. As of March 9, 2020, the registrant had outstanding 43,141,399 shares of common
stock.
The registrant has
incorporated by reference into Part III of this Form 10-K portions of its Proxy Statement for its 2020 Annual Meeting of Shareholders.
Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year
ended December 31, 2019.
PART I
Forward-Looking Statements
This report, including
sections entitled “Business,” “Risk Factors” and the “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future
results that are based on our current expectations, estimates, forecasts, and projections about our business, our results of operations,
the industry in which we operate and the beliefs and assumptions of our management. Words such as “may”, “will”,
“should”, “could”, “anticipate”, “believe”, “expect”, “intend”,
“plan”, “potential”, “continue” and similar expressions are intended to identify these forward-looking
statements. Examples of such forward-looking statements include statements regarding:
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our future results of operations
and financial position, business strategy, market size and potential growth opportunities:
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preclinical and clinical
development activities;
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efficacy and safety profiles
of our clinical candidates;
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the anticipated therapeutic
properties of our MBT drug development candidates;
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expectations regarding our
ability to effectively protect our intellectual property; and
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expectations regarding our
ability to attract and retain qualified employees and key personnel.
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These statements reflect
our current beliefs and are based on information currently available to us. Forward-looking statements involve significant risks
and uncertainties, including without limitation, those listed in the “Risk Factors” section. A number of factors could
cause actual results to differ materially from the results discussed in the forward-looking statements including, but not limited
to, changes in general economic and market conditions and the risk factors disclosed under “Risk Factors”. Although
the forward-looking statements contained in this report are based upon what we believe to be reasonable assumptions, we cannot
assure you that actual results will be consistent with these forward-looking statements. Investors should not place undue reliance
on forward-looking statements. These forward-looking statements are made as of the date hereof and we assume no obligation to
update or revise them to reflect new events or circumstances, except as required by applicable law.
Item 1. Business
OVERVIEW
CohBar
(“CohBar,” “we,” “us,” “our,” “its” or the “Company”)
is a clinical stage biotechnology company focused on the research and development of mitochondria based therapeutics (MBTs),
an emerging class of drugs for the treatment of chronic and age-related diseases. Mitochondria based therapeutics originate
from the discovery by CohBar’s founders of a novel group of naturally occurring mitochondrial-derived peptides within
the mitochondrial genome that regulate metabolism and cell death, and whose biological activity declines with age. To date,
the Company has discovered more than 100 mitochondrial-derived peptides. CohBar’s efforts focus on the development of
these peptides into therapeutics that offer the potential to address a broad range of diseases, including nonalcoholic
steatohepatitis (NASH), obesity, cancer, fibrotic diseases including idiopathic pulmonary fibrosis (IPF), type 2 diabetes (T2D), cardiovascular and neurodegenerative diseases. The
Company’s lead compound, CB4211, is in the phase 1b stage of a phase 1a/1b clinical trial for NASH and obesity. In
addition, CohBar has four preclinical programs, including two in cancer, one in fibrotic diseases and one in T2D.
We have
substantially expanded our preclinical pipeline in 2019. Our expanded pipeline greatly strengthens our belief that there are
potentially multiple novel therapeutics that can be developed from peptides encoded in the mitochondrial genome.
The application
of MBTs originates from almost two decades of research by our founders, resulting in their discovery of a novel group of
mitochondrial-derived peptides (MDPs) encoded within the mitochondrial genome. Some of these naturally occurring MDPs and
their analogs have demonstrated a range of biological activity and therapeutic potential in research models across multiple
diseases including NASH, obesity, cancer, fibrotic diseases including IPF, T2D, cardiovascular and neurodegenerative
diseases. Many chronic and age-related diseases are associated with a decrease in number and function of mitochondria.
Mitochondrial dysfunction
can result in decreased levels of mitochondrially encoded peptides, some of which are secreted and have been shown to regulate
cellular, metabolic, immunologic and other key processes, ranging from energy homeostasis to cytoprotection. We believe MBTs,
which are novel modified analogs of mitochondrially derived peptides, represent an entirely new frontier and an emerging new class
of potential drugs for the treatment of chronic and age-related diseases.
We believe CohBar
is the first mover in exploring the mitochondrial genome for therapeutically relevant peptides, and has developed a proprietary
MBT technology platform, using cell-based assays and animal models of disease, to rapidly identify naturally occurring MDPs with
promising biological activity. Once identified, we deploy optimization techniques to improve the drug-like properties of our MBT
candidates, enabling us to match the most biologically promising peptides to disease indications that have substantial unmet medical
needs. Our ongoing research and development activities focus on discovery and development of novel improved MDP analogs that have
the greatest therapeutic and commercial potential.
Our lead MBT candidate
for the potential treatment of NASH and obesity is CB4211, a novel refined analog of the MOTS-c MDP. In July 2018, we announced
the initiation of a Phase 1a/1b clinical study of CB4211. The double-blind, placebo-controlled clinical study is designed to initially
assess the safety, tolerability, and pharmacokinetics of CB4211 following single and multiple-ascending doses in healthy subjects.
The final Phase 1b stage of the study, which is currently in the recruitment phase, is designed to assess the safety, tolerability,
and activity of CB4211 in obese subjects with non-alcoholic fatty liver disease (NAFLD). Assessments will include changes in
liver fat assessed by MRI-PDFF, body weight, and biomarkers relevant to NASH and obesity.
In November 2018,
the Company announced a temporary suspension of our Phase 1 clinical study of CB4211 to address mild but persistent injection site reactions.
These injection site reactions, which were observed in the early Phase 1a dose escalation part of the study, were generally seen
as painless bumps at the injection site that could be felt under the skin, but in most cases were otherwise undetectable. We established,
based on the data accumulated and expert review, that some of the administered dose of CB4211 remained localized in the tissue
at the injection site, thereby causing these bumps to occur without any associated immune or inflammatory reactions. In May 2019,
we received regulatory feedback for our plan to address this issue.
In June 2019 we resumed the trial. Since the study resumed,
we have not observed any persistent injection site bumps. In November 2019, we announced the completion of the Phase 1a portion
of the clinical trial and the commencement of the recruiting phase of the final Phase 1b stage of the study.
While topline
data is expected in the third quarter of 2020, we cannot predict with certainty when such data will be available. We added additional
clinical sites to facilitate timely completion of the study.
Our internal discovery
efforts have resulted in the identification of more than 100 previously unidentified peptides encoded within the mitochondrial
genome. Many of these MDPs and their analogs have demonstrated various degrees of biological activity in cell based and/or animal
models relevant to a wide range of diseases, such as NASH, obesity, cancer, fibrotic diseases and T2D. Our research efforts have
further identified and focused on certain of these MDPs and their analogs that have demonstrated the greatest therapeutic potential
for treating indications related to those diseases. CohBar has four preclinical programs, including two in cancer, one in fibrotic
diseases and one in T2D.
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MBT5
Analogs (CXCR4 Antagonists) for Cancer and Other Disease Indications: Our discovery
efforts have resulted in the identification of a family of novel potent and selective
peptide inhibitors of CXCR4, MBT5 analogs, and we have demonstrated positive preclinical
effects of an MBT5 analog in combination with chemotherapy in a model of aggressive melanoma.
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MBT2
Analogs for Fibrotic Diseases: Our discovery efforts have resulted in
the identification of a family of novel peptides, MBT2 analogs, and we have demonstrated
anti-fibrotic and anti-inflammatory effects of an MBT2 analog in vitro in human cells
and in vivo in prophylactic and therapeutic models of IPF.
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MBT3
Analogs for Cancer Immunotherapy: Our discovery efforts have resulted
in the identification of a novel peptide family, MBT3 analogs, and we have demonstrated
the enhanced killing of cancer cells by human immune cells in the presence of an MBT3
analog.
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CB5064
Analogs for Type 2 Diabetes: Our discovery efforts have resulted in the
identification of a novel family of peptides, CB5064 analogs, some of which demonstrate
beneficial effects on glucose tolerance, insulin sensitivity, and weight loss in a diet
induced obese (DIO) mouse model of T2D.
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We Have a Seasoned
Management and Drug Development Team
Our Chief Executive
Officer, Steven Engle, has over two decades of experience leading public biotech companies in developing breakthrough products
for metabolic, inflammatory, autoimmune, and oncologic diseases. Mr. Engle served as Chairman and CEO of XOMA Corporation, a leader
in the development of therapeutic antibodies, and of La Jolla Pharmaceutical Company, which discovered the biology of B cell tolerance
and developed the first B cell toleragen candidate for lupus patients. Earlier, he helped to gain FDA approval and to launch Nicotrol
for smoking cessation while Vice President of Marketing for Cygnus. He has been a board member of several biotechnology companies,
and industry associations including Biotechnology Innovation Organization (BIO), BayBio Institute
and Biocom Company.
Our research and development
efforts are conducted under the leadership of our Chief Scientific Officer, Dr. Kenneth Cundy, former Chief Scientific Officer
at Xenoport, Inc. and Senior Director of Biopharmaceutics at Gilead Sciences, Inc. Dr. Cundy is the co-inventor of several approved
drugs, including tenofovir, an antiretroviral drug that is marketed globally in various combinations with other drugs for the
treatment of HIV infection (Atripla®, Viread®, Complera®, Stribild®, Truvada®), gabapentin enacarbil (Horizant®)
for the treatment of RLS and post-herpetic neuralgia, and Nanocrystal® technology, employed in several other approved drugs.
Our scientific
team also includes the expertise of our founders and co-founders who serve on our board of directors, Dr. Pinchas Cohen,
Dean of the Davis School of Gerontology at the University of Southern California, Dr. Nir Barzilai, Professor of
Medicine and Genetics and Director of the Institute for Aging Research at the Albert Einstein College of Medicine, and
Dr. John Amatruda, former Senior Vice President and Franchise Head for Diabetes and Obesity at Merck Research
Laboratories, as well as our co-founder and advisor Dr. David Sinclair, Professor of Genetics at
Harvard Medical School.
We have filed
more than 65 provisional patent applications with claims directed to both compositions comprising and methods of using our novel proprietary MDPs
and their analogs. We are the exclusive licensee from the Regents of the University of California and the Albert Einstein
College of Medicine of six issued U.S. Patents, three pending U.S. applications, five issued foreign patents, and four
pending foreign applications. Our licensed patents and patent applications
include claims that are directed to compositions comprising MDPs and their analogs and/or methods of their use in the
treatment of indicated diseases.
We believe that the
proprietary capabilities of our technology platform combined with our scientific expertise and intellectual property portfolio
provides a competitive advantage in our mission to treat chronic and age-related diseases through the advancement of MBTs as a
new class of transformative drugs.
We believe our technology
platform provides multiple opportunities for value creation. Our peptide optimization process is designed to discover numerous
potential drug candidate opportunities. These drug candidates may be internally developed by CohBar or advanced through strategic
partnerships with larger biopharmaceutical companies. Our strategy of capturing the most valuable MBT space by aggressively filing
for broad intellectual property coverage is designed to secure CohBar’s leadership role in the field and protect our ability
to create additional value in the future.
We were formed
as a limited liability company in the state of Delaware in 2007, and converted to a Delaware corporation in 2009. We completed
our initial public offering of common stock in January 2015 and our common stock is listed for trading on the Nasdaq Capital Market
(CWBR).
Our corporate headquarters
and laboratory are located in Menlo Park, California.
BUSINESS STRATEGY
Our strategic objective
is to secure, maintain and exploit a leading scientific, commercial and intellectual property position in the arena of mitochondria
based therapeutics, with best-in-class treatments for chronic and age-related diseases. The key elements of our strategy include:
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advancing CB4211 through clinical
trials;
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further evaluating and optimizing
analogs of MBT5, MBT2, MBT3 and CB5064 for potential clinical candidacy;
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developing strategic partnerships
with leading biopharmaceutical companies and other organizations to advance our research
programs and future development and commercialization efforts;
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maintaining sufficient financial
runway to fund our operations, research and clinical development programs;
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minimizing operating costs
and related funding requirements for our research and development activities through
careful program management and cost-efficient relationships with academic partners, consultants
and contract research organizations (CROs);
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continuing to strategically
expand our intellectual property portfolio to capture all novel therapeutically relevant
peptides encoded within the mitochondrial genome and improved analogs; and
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increasing awareness and recognition
of our team, assets, capabilities and opportunities within the investment and scientific
communities.
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OUR PIPELINE
Our research efforts
are focused on identifying, assessing and optimizing new analogs of biologically active MDPs and advancing those candidates with
the greatest therapeutic and commercial potential. Our pipeline includes a number of novel peptide analogs of MDPs in different
stages of research evaluation as potential MBTs, and one MBT currently in clinical development.
CB4211
In July 2018, we announced
the initiation of the Phase 1a stage of a double-blind, placebo-controlled Phase 1a/1b clinical study of our first lead MBT candidate,
CB4211, for the potential treatment of NASH and obesity. The Phase 1a stage of the clinical study is designed to initially assess
the safety, tolerability, and pharmacokinetics of CB4211 following single and multiple-ascending doses in healthy subjects. The
Phase 1b stage of the clinical study is an assessment of safety, tolerability, and activity in obese subjects with non-alcoholic
fatty liver disease (NAFLD). Assessments will include changes in liver fat assessed by MRI-PDFF, body weight, and biomarkers
relevant to NASH and obesity.
In November 2018,
the Company announced a temporary suspension of the Phase 1a stage of our Phase 1a/1b clinical study of CB4211 to address mild, but persistent
injection site reactions. These injection site reactions were generally seen as painless bumps at the injection site that can
be felt under the skin, but in most cases would be otherwise undetectable. Based on the data accumulated and expert review, we
believe that some of the administered dose of CB4211 remained localized in the tissue at the injection site, thereby causing these
bumps to occur. In May 2019, we received regulatory feedback for our plan to address this issue, and in June 2019, we resumed
the trial. Since the study resumed, we have not observed any persistent injection site bumps.
In
November 2019, we announced the completion of the Phase 1a portion of the clinical trial, with the drug being well-tolerated,
and the commencement of the recruiting phase of the final Phase 1b stage of the study. While topline data
is expected in the third quarter of 2020, we cannot predict with certainty when such data will be available.
CB4211 is our novel,
refined analog of MOTS-c, a naturally occurring mitochondrial peptide discovered by Dr. Pinchas Cohen and his academic collaborators
in 2012. Their research in cell-based assays and animal models indicated that MOTS-c plays a significant role in the regulation
of metabolism. Certain of the original MOTS-c studies were published in an article entitled “The Mitochondrial-Derived Peptide,
MOTS-c, Promotes Metabolic Homeostasis and Reduces Obesity and Insulin Resistance,” which appeared in the March 3, 2015
edition of the journal Cell Metabolism.
In preclinical
studies conducted by CohBar, CB4211 demonstrated significant therapeutic potential for the treatment of NASH, showing
improvements in triglyceride levels, as well as favorable effects on liver enzyme markers associated with NAFLD and NASH.
CB4211 also demonstrated significant therapeutic potential for the treatment of obesity, demonstrating significantly greater
weight loss together with more selective reduction of fat mass versus lean mass in comparison to a market-leading obesity
drug in DIO mice. The therapeutic effects of CB4211 have been further evaluated in the well-established Stelic Animal Model
(STAM™) of NASH. In this model, treatment with CB4211 resulted in a significant reduction of the non-alcoholic fatty
liver disease activity score, or NAS, a composite measure of steatosis (fat accumulation), inflammation and hepatocyte
ballooning (cellular injury). Data from these studies were presented at the American Association for the Study of Liver
Disease (AASLD) 2017 Liver Meeting® in October, 2017.
In addition to the
therapeutic potential indicated by the preclinical models described above, data were presented at the 2018 American
Diabetes Association meeting providing in vitro evidence that CB4211 inhibits adipocyte lipolysis, a process that is foundational
in the development of liver steatosis, through an insulin-dependent mechanism. This data provides a potential mechanistic explanation
for previous observations in vivo, including efficacy of CB4211 in animal models of NASH, and anti-steatotic effects on livers
of mice on a high fat diet, where a corresponding reduction in circulating fat and biomarkers of liver damage was also observed.
The activity of CB4211 appears to involve sensitizing insulin action on the insulin receptor.
Research Programs
Our research activities are focused on discovering, optimizing, and prioritizing MDP analogs
for development as potential MBTs. Our criteria include examining MDP analogs with the greatest commercial and therapeutic potential,
the most suitable development and clinical resources, and the broadest intellectual property protection and exploitation opportunities.
We have substantially
expanded our preclinical pipeline in the last year. This expanded pipeline greatly strengthens our belief that there are potentially
multiple novel therapeutics that can be developed from peptides encoded in the mitochondrial genome.
CohBar Discovered MDPs and Analogs
Our discovery
efforts have resulted in the identification of more than 100 previously unidentified peptides encoded within the
mitochondrial genome. Many of these MDPs and their analogs have demonstrated various degrees of biological activity in cell
based and/or animal models relevant to a wide range of diseases, such as NASH, obesity, cancer, fibrotic diseases including
IPF, T2D, cardiovascular and neurodegenerative diseases. Our research efforts have further identified and focused on certain
of these MDPs and their analogs that have demonstrated greatest therapeutic potential for treating indications related to
those diseases.
MBT5
Analogs (CXCR4 Antagonists) for Cancer and Other Disease Indications: Our discovery efforts have resulted in
the identification of a family of novel potent and selective peptide inhibitors of CXCR4, MBT5 analogs. Analogs of MBT5 have
demonstrated high potency at nanomolar levels in in vitro studies of CXCR4 inhibition in cultured cells. In a difficult to
treat in vivo animal model of melanoma, the B16F10 syngeneic tumor model, an analog of MBT5 showed enhanced antitumor
activity in combination with the chemotherapeutic agent temozolomide.
MBT2
Analogs for Fibrotic Diseases: Our discovery efforts have resulted in the identification of a family of novel
peptides, MBT2 analogs, and we have demonstrated anti-fibrotic and anti-inflammatory effects of an MBT2 analog in vitro in
human cells and in vivo in prophylactic and therapeutic models of IPF. In these models, an MBT2 analog treatment resulted in
the significant reduction in lung fibrosis, inflammation, and collagen levels. In in vitro cell cultures, an MBT2 analog also
decreased the production of pro-collagen in cultured human fibroblasts, and inhibited the process of conversion of healthy
lung epithelial cells to pathological pro-fibrotic cells.
MBT3 Analogs for
Cancer Immunotherapy: Our discovery efforts resulted in the identification of a novel family of peptides, MBT3 analogs,
that enhance the killing of cancer cells by human immune cells. An analog of MBT3 produced a highly significant reduction in the
number of cancer cells in the presence of peripheral blood mononuclear cells (PBMCs), including T cells, B cells and NK cells.
CB5064 Analogs
for Type 2 Diabetes: Our internal discovery efforts have resulted in the identification of a novel family of peptides,
CB5064 analogs, that demonstrates beneficial effects on glucose tolerance and weight loss in a DIO mouse model of T2D. The studies
demonstrated an interaction of these peptides with the apelin receptor, a key cell surface receptor that is involved in regulation
of glucose utilization, fluid homeostasis, and cardiovascular function. Data from these studies were presented at the 2019 American
Diabetes Association meeting.
CohBar Licensed MDPs and Analogs
SHLP Analogs:
Our founders and their academic collaborators discovered several MDPs encoded within the mitochondrial genome; we refer to these
as small humanin-like peptides, or SHLPs. In cancer treatment models in cell culture and in mice, SHLP-6 demonstrated suppression
of cancer progression via mechanisms involving both suppression of tumor angiogenesis (blood vessel development) and induction
of apoptosis (cancer cell death). There is also research evidence to suggest that SHLP-2 has protective effects against neuronal
toxicity.
Humanin Analogs:
Our founders and others have demonstrated the protective effects of the humanin MDP in various animal models of age-related diseases,
including Alzheimer’s disease, atherosclerosis, myocardial and cerebral ischemia and T2D. Humanin levels in humans have
been shown to decline with age, and elevated levels of humanin together with lower incidence of age-related diseases have been
observed in centenarians as well as their offspring.
All of our pipeline
peptides, except for CB4211, our clinical candidate, are in various stages of research. There is no guarantee that any additional
MDP analog will be advanced to clinical development, or that the activity demonstrated in preclinical research models will be
shown in human testing.
OUR TECHNOLOGY PLATFORM
Our proprietary technology platform is designed to rapidly identify
therapeutically relevant peptides encoded within the mitochondrial genome, to evaluate their biological activity, and to develop
these peptides into novel refined MBTs that have the potential to treat diseases with major unmet medical needs. We use a broad
range of proprietary activity screens to assess the therapeutic potential of our novel peptides and to prioritize our development
opportunities. Some of our novel peptides have demonstrated promising biological effects in a variety of in vitro and/or in vivo
models of age-related diseases. We are prioritizing the research and development of our novel peptides by assessing their activity
in a variety of areas such as metabolic regulation, oxidative stress, cellular energy levels, cell proliferation, cell death, cellular
protection, carbohydrate metabolism, lipid metabolism, body weight regulation, regulation of body fat, insulin sensitivity, regulation
of glucose, glucose tolerance, liver function, regulation of fibrotic processes, immunomodulatory effects, tumor growth, etc.
Disease Focus
Our research and
development focus is on chronic diseases. Our research to date suggests multiple potential therapeutic disease indications
for some of our pipeline MDPs. While we believe our current and future MBT drug candidates we identify would initially be
advanced against one of the following diseases as a primary indication, it is possible that we may determine to advance a
drug candidate for treatment of a different disease as a primary indication. We may determine to advance any future drug
candidate against an alternative primary disease indication if, for example, additional data suggests greater therapeutic
potential for the drug candidate against the alternative indication, or we determine that the development, approval or
commercialization pathway may be more favorable for a drug candidate targeted against the alternative indication.
NAFLD and NASH
– Non-alcoholic fatty liver disease (NAFLD) is the build-up of extra fat in liver cells that is not due to alcohol consumption
and tends to develop in people who are overweight or obese or have diabetes, high cholesterol or high levels of triglycerides.
Non-alcoholic steatohepatitis (NASH) is a more severe form of NAFLD characterized by swelling of the liver that eventually may
lead to scarring (cirrhosis) and over time to liver cancer or liver failure. NAFLD affects as much as 34% of the U.S. population
while as many as 12% of U.S. adults may have NASH. Currently, there are no FDA approved treatments for NAFLD/NASH.
Obesity
–– Obesity is now recognized as the most prevalent metabolic disease world-wide, reaching epidemic proportions in
both developed and developing countries and affecting all age groups. More than one-third of the U.S. adult population,
and over 40% of U.S. age groups between 45 and 75, have obesity. The prevalence of class III, or morbid, obesity (body
mass index ≥40) has increased dramatically in several countries and currently affects approximately 6% of adults in the
U.S., with an estimated increase of 130% over the next two decades. It is expected that by 2030 approximately 50% of the U.S.
adult population will be obese and one in four will have severe obesity. Obesity is a major risk factor for age-related
diseases such as heart disease, stroke, T2D and certain types of cancer.
Cancer –
Cancer is a generic term for a large group of diseases that can affect any part of the body. One defining feature of cancer is
the rapid creation of abnormal cells that grow beyond their usual boundaries, and which can then invade adjoining parts of the
body and spread to other organs. This process is referred to as metastasis. Metastases are a major cause of death from cancer.
Cancer is a leading cause of death worldwide. Cancer treatments such as chemotherapy, hormone therapy and other treatments are
used to destroy cancer cells. The goal of cancer drugs is to cure the disease or, when a cure is not possible, to prolong life
or improve quality of life for patients with incurable cancer.
Fibrotic
Diseases – Fibrosis describes the formation of fibrous connective tissue in an organ or tissue as a
reparative response to an injury or damage. “Scarring” is used when fibrosis occurs in response to injury.
Fibrotic diseases include lung or pulmonary fibrosis, liver fibrosis, cardiac fibrosis, skin fibrosis, scleroderma, and others.
Type 2 diabetes
mellitus – T2D is a chronic disease characterized by a relative deficiency in insulin production and secretion by the
pancreas and an inability of the body to respond to insulin normally, i.e. insulin resistance. Hyperglycemia, or raised blood
sugar, is a common effect of uncontrolled diabetes and over time leads to serious damage to many of the body’s systems,
especially the nerves, kidneys, eyes and blood vessels.
Other Potential Disease
Indications for MBTs
Previous
preclinical studies have demonstrated potential utility of certain MDPs or their analogs in models of the following
disease indications:
Neurodegenerative
disease – In the brain, neurons connect and communicate at synapses, where tiny bursts of chemicals called neurotransmitters
carry information from one cell to another. Alzheimer’s, a neurodegenerative disease, disrupts this process and eventually
destroys synapses and kills neurons, damaging the brain’s communication network. There is no cure, and medications on the
market today treat only the symptoms of Alzheimer’s disease and do not have the ability to stop its onset or its progression.
There is an urgent and unmet need for both a disease-modifying drug for Alzheimer’s disease as well as for better symptomatic
treatments.
Cardiovascular – Heart disease is a leading cause of death for both men and women
in the United States. Atherosclerosis is a cardiovascular disease commonly referred to as a “hardening” or
furring of the arteries. It is caused by the formation of multiple atheromatous plaques within the arteries. This process is
the major underlying risk for developing myocardial infarction (heart attack) as those plaques will either narrow the vessel
or rupture the vessel, preventing blood flow in the coronary artery to parts of the heart muscle. Cholesterol lowering drugs are considered the main
preventive approach to treat atherosclerosis, however these drugs are estimated to prevent only one-third of incidences of
myocardial infarction, and there is significant unmet need for additional therapeutic options.
COMPETITION
The biotechnology
and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis
on proprietary products. While we believe that our scientific knowledge, technology, and research and development experience
provide us with competitive advantages, we face potential competition from many different sources, including major
pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies, and
public and private research institutions. Many of our competitors may have significantly greater financial resources and
capabilities for research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining
regulatory approvals and marketing approved products than we do.
There are
numerous therapies currently marketed to treat obesity, cancer, fibrosis, and T2D. There are no currently approved therapies
for the treatment of NAFLD and NASH, but numerous therapies are in development for NASH. These therapies are varied in their design,
therapeutic application and mechanism of action and may provide significant competition for any of our product candidates for
which we obtain market approval. New products or therapies may also become available that provide efficacy, safety,
convenience and other benefits that are not provided by currently marketed products and therapies. As a result, they may
provide significant competition for any of our product candidates for which we obtain market approval.
If a CohBar MBT is developed and approved for the treatment
of patients with obesity, it may compete with products currently approved for obesity, such as Saxenda, Contrave, phentermine (Adipex)
and other sympathomimetic amines approved for short term use (a few weeks) such as benzphetamine (Didex), diethyoproprion (Tenuate)
and phendimetrazine (Bontril), Xenical and Alli, and Qsymia, as well as investigational therapies that are currently being
studied for the treatment of obesity, such as CB1-receptor-antagonists, 5-HT receptor agonists, SGLT-2 antagonists, GLP-1 agonists,
Adenylate Cyclase 3 activators, GLP1 and GIP co-agonists, GLP1 and Glucagon co-agonists and generic drugs plus other centrally
acting drugs, triple agonists, other gut hormone derived drugs, amylin mimetics such as davalintide, dual amylin and calcitonin
receptor agonists, peptide YY, leptin analogues such as combination pramlintide-metreleptin, and other products such as the
methionine aminopeptidase 2 inhibitor beloranib, the lipase inhibitor, cetilistat, the triple monoamine reuptake inhibitor, tesofensine,
fibroblast growth factor 21 and anti-obesity vaccines against ghrelin, somatostatin, and adenovirus36.
If a CohBar MBT is
developed and approved for treatment of patients with NASH, it may compete with several investigational therapies that are currently
being studied for the treatment of NAFLD/NASH including, for example, FXR activators, PXR activators, ACC1/2 inhibitors, PPAR-α,
-γ and -δ activators, SREBP2/MIR-33a inhibitors, DGAT1 or 2 inhibitors, CCR2/5 antagonists, TRbeta agonists, uncouplers,
GLP1 agonists and dual and triple incretin agonists, SGLT2 inhibitors, FGF19 and 21 analogs, galectin 3 antagonists, CXCR3
antagonists and numerous other potential therapeutics.
If a CohBar MBT is
developed and approved for the treatment of patients with cancer, it would compete with all approved therapies for the cancer
it is approved to treat. Since the specific cancer that these investigational therapies might be approved to treat is unknown,
and approved therapies for cancer are often studied in multiple other cancers for which the sponsor may seek approval, they
would theoretically compete with any pharmaceutical agent that is approved to treat cancer. Both new and existing drugs are being
studied for the treatment of cancer, and if these investigational indications were approved, they could also compete with
an MBT developed and approved for the treatment of cancer.
If a CohBar MBT is
developed and approved for the treatment of patients with a fibrotic disease, it would compete with all approved therapies for the fibrotic diseases
it is approved to treat. Since the specific fibrotic disease that these investigational therapies might be approved to treat is unknown,
and approved therapies for fibrotic diseases are often studied in other types of fibrotic disease for which the sponsor may seek approval, they
would theoretically compete with any pharmaceutical agent that is approved to treat fibrotic disease. Both new and existing drugs are
being studied for the treatment of fibrotic diseases, if these investigational indications were approved, they could also compete with
an MBT developed and approved for the treatment of fibrotic diseases.
If a CohBar MBT is
developed and approved for treatment of patients with T2D, it would compete with several classes of drugs for T2D that are approved
to improve glucose control, including sulfonylureas, glinides, PPAR gamma agonists, biguanides, alpha glucosidase inhibitors,
DPP IV inhibitors, GLP1 agonists, SGLT2 inhibitors, bromocriptine and insulin. Insulin sensitizing agents approved to treat T2D
are the PPAR gamma agonists pioglitazone and rosiglitazone. Some of these agents are not generic, are oral once-daily pills and
are effective in lowering glucose and A1C. Metformin is also sometimes called an insulin sensitizer. It is available as a generic
and comes in a once-daily formulation. Drugs approved for obesity may also be used to treat T2D. In addition, there are several
investigational drugs being studied to treat T2D, and if these investigational therapies were approved, they would also compete
with an MBT developed and approved for T2D.
If a CohBar MBT is
developed and approved for the treatment of patients with Alzheimer’s disease or other neurodegenerative diseases, it would
compete with all approved therapies to treat Alzheimer’s disease including donepezil (Aricept), galantamine (Razadyne),
memantine (Namenda), rivastigmine (Exelon) and tacrine (Cognex). In addition, there are several investigational drugs being studied
to treat Alzheimer’s and other neurodegenerative diseases that, if approved, would also compete with an MBT developed and
approved for the treatment of Alzheimer’s and other neurodegenerative diseases.
FINANCING
Our business strategy
and plans for research and development of our MDPs and MBT candidates includes periodic infusion of new capital to our Company.
We may seek to obtain funding for our business through partnership agreements with pharmaceutical and biotechnology companies
or through the issuance and sale of debt or equity securities in capital raising transactions.
PARTNERING
We believe our technology
platform provides multiple opportunities for value creation. Our multiplexed peptide optimization process is designed to discover
numerous potential drug candidate opportunities with near term value. These drug candidates can be internally developed by CohBar
or advanced through strategic partnerships with larger biopharmaceutical companies. At the same time, our strategy of capturing
the most valuable MBT space by aggressively filing for broad intellectual property coverage is designed to secure CohBar’s
leadership role in the field and protect our ability to create additional value in the future.
EMPLOYEES
As of March 9,
2020, we had 13 employees, twelve full-time and one part-time. In addition to our employees, our founders consult directly with
our employees and scientific staff from time to time to advance our research programs. Our founders provide advisory services
in the areas of peptide research, genetics, aging and age-related diseases, drug discovery, development and commercialization,
and other areas relevant to our business. Additionally, from time to time we engage other subject-matter experts on a consulting
basis in specific areas of our research and development efforts. None of our employees are represented by a labor union or covered
by a collective bargaining agreement. We have not experienced any work stoppages and we consider our relations with our employees
to be good.
RESEARCH AND DEVELOPMENT
Research and development
activities are central to our business model. Our research programs include activities related to discovery of novel MDPs, investigational
research to evaluate the potential therapeutic effects of certain discovered MDPs in research and preclinical studies and engineering
novel, improved analogs of certain discovered MDPs with characteristics suitable for further development as potential MBT drug
candidates and advancing our identified MBT candidate through clinical studies. Depending on factors of capability, cost, efficiency
and intellectual property rights, we conduct our research programs independently at our laboratory facility, pursuant to contractual
arrangements with CROs or under collaborative arrangements with academic institutions.
INTELLECTUAL PROPERTY
Patents
Our commercial success
depends in part on our ability to obtain and maintain proprietary protection for our novel biological discoveries and therapeutic
methods, to operate without infringing on the proprietary rights of others and to prevent others from infringing our proprietary
rights. We seek to protect our proprietary position by, among other methods, licensing and/or filing patent applications related
to our proprietary technology, inventions and improvements that are important to the development and implementation of our business.
Our intellectual property
and patent strategy is focused on our MDPs, their analogs and our MBT candidates. Our strategy is generally to seek patent protection
in the United States and, where applicable, in those international jurisdictions we identify as holding significant potential
market opportunity for any drug we may develop and in which patent protection is available. We also rely on trade secrets, know-how,
continuing technological innovation and potential in-licensing opportunities to develop and maintain our proprietary position.
With respect to new biologically active MDPs that we identify within the mitochondrial genome we typically file provisional patent
applications and seek composition-of-matter and method-of-treatment patents for our MDPs, their analogs, and prospective MBTs
based on research and preclinical evaluation of therapeutic potential. We intend to file non-provisional patent applications
for those MDPs and analogs within our pipeline based on further assessment of their therapeutic and commercial potential, as well
as strategic and competitive considerations. We believe that the opportunity to engineer analogs or create combination therapies
will afford us the opportunity to strengthen IP protection for our drug development candidates as they advance through our development
pipeline and to broaden our IP protection internationally.
We are the exclusive
worldwide licensee from the Regents of the University of California (the Regents) of eleven issued patents, that will expire between
2028 and 2034, along with seven pending patent applications. Additionally, CohBar has filed a PCT patent application with claims
directed to both composition-of-matter and methods-of-use of novel proprietary MDP analogs. The PCT has been filed in Europe and
nationalized in the U.S. and several foreign countries.
Terms for individual patents extend for varying periods of time
depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries
in which they are obtained. Generally, patents issued from applications filed in the United States are effective for twenty years
from the earliest non-provisional filing date. In addition, in certain instances, a patent term can be extended to recapture a
portion of the term effectively lost as a result of the FDA regulatory review period, however, the restoration period cannot be
longer than five years and the total patent term, including the restoration period, must not exceed fourteen years following FDA
approval. The duration of foreign patents varies in accordance with provisions of applicable local law, but typically is also twenty
years from the earliest international filing date.
National and international
patent laws concerning peptide therapeutics remain highly unsettled. Policies regarding the patent eligibility or breadth of claims
allowed in such patents are currently in flux in the United States and other countries. Changes in either the patent laws or in
interpretations of patent laws in the United States and other countries can diminish our ability to protect our inventions and
enforce our intellectual property rights. Accordingly, we cannot predict the breadth or enforceability of claims that may be granted
in our patents or in third-party patents. The biotechnology and pharmaceutical industries are characterized by extensive litigation
regarding patents and other intellectual property rights. Our ability to maintain and solidify our proprietary position for our
drugs and technology will depend on our success in obtaining effective claims and enforcing those claims once granted. We do not
know whether any of the patent applications that we may file or license from third parties will result in the issuance of any
patents. The issued patents that we license, or may license or own in the future, may be challenged, invalidated or circumvented,
and the rights granted under any issued patents may not provide us with sufficient protection or competitive advantages against
competitors with similar technology. Furthermore, our competitors may be able to independently develop and commercialize similar
drugs or duplicate our technology, business model or strategy without infringing our patents. Because of the extensive time required
for clinical development and regulatory review of a drug we may develop, it is possible that, before any of our drugs can be commercialized,
any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage
of any such patent.
The patent positions
for our research peptides are described below:
MOTS-c Patent Coverage
We are the exclusive
licensee from the Regents to intellectual property rights related to MOTS-c, including U.S. Patent No. 10,064,914, issued on September
4, 2018, U.S. Patent No. 10,391,143 issued on August 27, 2019, one patent application filed in the United States (U.S. Application
No. 14/213,617) and corresponding foreign applications and granted foreign patents filed in multiple countries and regions.
These applications include composition of matter claims directed to MOTS-c and certain analogs of MOTS-c, as well as methods-of-use
claims for MOTS-c or certain analogs of MOTS-c as a treatment for type 1 diabetes, T2D, fatty liver, obesity and cancer.
MOTS-c Analog Patent Coverage
CohBar has filed PCT,
U.S., and foreign patent applications directed to novel refined analogs of MOTS-c with improved properties, including claims directed
to composition-of-matter and methods-of-use. PCT Applications directed to this technology were filed in September 2017 and March
2019. The PCT filed in September 2017 has been filed in Europe and nationalized in the U.S. and several foreign countries.
SHLP-2 and SHLP-6 Patent Coverage
We are the exclusive
licensee from the Regents to intellectual property for SHLP-2 and SHLP-6 and their analogs. This intellectual property includes
an issued U.S. patent and pending application with terms expiring on May 1, 2029.
We are pursuing coverage related to certain analogs
of these peptides.
Humanin and Humanin Analogs Patent
Coverage
We are the exclusive
licensee from the Regents and the Albert Einstein College of Medicine of Yeshiva University of two U.S. issued patents covering
humanin and humanin analogs for treatment of disease.
CohBar Identified MDPs and Analog
Coverage
CohBar has also filed
more than 65 provisional patent applications that cover CohBar-identified MDPs and their novel, improved analogs, including claims
directed to composition-of-matter and methods-of-use. Provisional patent applications are not publicly available and information
regarding the specific MDPs and analogs identified in the provisional applications, and related claims, are held confidential.
We intend to file non-provisional patent applications for those MDPs and analogs within our pipeline based on further assessment
of their therapeutic and commercial potential, as well as strategic and competitive considerations.
Trade Secrets
In addition to patents,
we rely upon unpatented trade secrets, know-how and continuing technological innovation to develop and maintain our competitive
position. We seek to protect our proprietary information, in part, using confidentiality agreements with our commercial partners,
collaborators, employees and consultants and invention assignment agreements with our employees. These agreements are designed
to protect our proprietary information and, in the case of the invention assignment agreements, to grant us ownership of technologies
that are developed through a relationship with a third party. These agreements may be breached, and we may not have adequate remedies
for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the
extent that our commercial partners, collaborators, employees and consultants use intellectual property owned by others in their
work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
Trademarks
We consider
COHBARTM to be our common law trademark and are pursuing registration in the United
States Patent & Trademark Office.
In-licenses
MOTS-c Exclusive License
On August 6, 2013, we entered
into an exclusive license agreement with the Regents of the University of California (the “Regents”) to obtain
worldwide, exclusive rights under patent filings and other intellectual property rights in inventions developed by
Dr. Cohen and academic collaborators at the University of California, Los Angeles. The intellectual property includes
the U.S. and foreign patents and patent applications described above under “MOTS-c Patent Coverage”.
We agreed to pay the
Regents specified development milestone payments aggregating up to $765,000 for the first product sold under the license. Milestone
payments for additional products developed and sold under the license are reduced by 50%. We are also required to pay annual maintenance
fees to the licensors. Aggregate maintenance fees for the first three years following execution of the agreement were $7,500. Thereafter,
we are required to pay maintenance fees of $5,000 annually until the first sale of a licensed product. In addition, we are required
to pay the Regents royalties equal to 2% of our worldwide net sales of drugs, therapies or other products developed from claims
covered by the licensed patent, subject to a minimum royalty payment of $75,000 annually, beginning after the first commercial
sale of a licensed product. We are required to pay the Regents royalties ranging from 8% of worldwide sublicense sales of covered
products (if the sublicense is entered after commencement of phase II clinical trials) to 12% of worldwide sublicense sales (if
the sublicense is entered prior to commencement of phase I clinical trials). The agreement also requires us to meet certain diligence
and development milestones, including filing of an Investigational New Drug (IND) Application for a product covered by the agreement
on or before the seventh anniversary of the agreement date.
Under the agreement,
the license rights granted to us are subject to any rights the U.S. Government may have in such licensed rights due to its sponsorship
of research that led to the creation of the licensed rights. The agreement also provides that if the Regents become aware of a
third-party’s interest in exploiting the licensed technologies in a field that we are not actively pursuing, then we may
be obligated either to issue a sublicense for use in the unexploited field to the third-party on substantially similar terms or
to actively pursue the unexploited field subject to appropriate diligence milestones. The agreement terminates upon the expiration
of the last valid claim of the licensed patent rights. We may terminate the agreement at any time by giving the Regents advance
written notice. The agreement may also be terminated by the Regents in the event of our continuing material breach after notice
of such breach and the opportunity to cure.
Humanin and SHLPs Exclusive License
On
November 30, 2011, we entered into an exclusive license agreement with the Regents and the Albert Einstein College of
Medicine at Yeshiva University to obtain worldwide, exclusive rights under patent filings and other intellectual property
rights in inventions developed by Drs. Cohen and Barzilai and their academic collaborators. The intellectual property
includes the U.S. patents and patent applications described above under “Humanin and Humanin Analogs Patent
Coverage” and “SHLP-2 and SHLP-6 Patent Coverage”.
We agreed to pay the
licensors specified development milestone payments aggregating up to $765,000 for the first product sold under the license. Milestone
payments for additional products developed and sold under the license are reduced by 50%. We are also required to pay annual maintenance
fees to the licensors. Aggregate maintenance fees for the first five years following execution of the agreement were $80,000. Thereafter,
we are required to pay maintenance fees of $50,000 annually until the first sale of a licensed product. In addition, we are required
to pay the licensors royalties equal to 2% of our worldwide net sales of drugs, therapies or other products developed from claims
covered by the licensed patents, subject to a minimum royalty payment of $75,000 annually, beginning after the first commercial
sale of a licensed product. We are required to pay royalties ranging from 8% of worldwide sublicense sales of covered products
(if the sublicense is entered after commencement of phase II clinical trials) to 12% of worldwide sublicense sales (if the sublicense
is entered prior to commencement of phase I clinical trials). The agreement also requires us to meet certain diligence and development
milestones, including filing of an IND for a product covered by the agreement on or before the seventh anniversary of the agreement
date.
Under the agreement,
the license rights granted to us are subject to any rights the U.S. Government may have in such licensed rights due to its sponsorship
of research that led to the creation of the licensed rights. The agreement terminates upon the expiration of the last valid claim
of the licensed patent rights. We may terminate the agreement at any time by giving the Regents advance written notice. The agreement
may be modified or terminated on a product by product basis by the Regents if we materially fail to meet certain diligence requirements
and development milestones. The agreement may also be terminated by the Regents in the event of our continuing material breach
after notice of such breach and the opportunity to cure. In October 2019, the Regents accepted our payment for an additional year
of license maintenance.
ENVIRONMENTAL AND OTHER REGULATORY
MATTERS
Government Regulation
The preclinical studies
and clinical testing, manufacture, labeling, storage, record keeping, advertising, promotion, export, marketing and sales, among
other things, of our therapeutic candidates and future products, are subject to extensive regulation by governmental authorities
in the United States and other countries. In the United States, pharmaceutical products are regulated by the Food and Drug Administration
(the “FDA”) under the Federal Food, Drug, and Cosmetic Act (the “FDCA”) and other laws. Biologics are
subject to regulation by the FDA under the FDCA, the Public Health Service Act, and related regulations, and other federal, state
and local statutes and regulations. Biological products include, among other things, viruses, therapeutic serums, vaccines and
most protein products. Product development and approval within these regulatory frameworks takes a number of years, and involves
the expenditure of substantial resources.
Regulatory approval
will be required in all major markets in which we, or our licensees, seek to test our products in development. At a minimum, such
approval requires evaluation of data relating to quality, safety and efficacy of a product for its proposed use. The specific
types of data required and the regulations relating to these data differ depending on the territory, the drug involved, the proposed
indication and the stage of development.
In general, new
chemical entities are tested in animal models to determine whether the product is reasonably safe for initial human testing.
Additional preclinical testing continues during the clinical development stage. Clinical trials for new products are
typically conducted in three sequential phases that may overlap. Phase 1 trials typically involve the initial introduction of
the pharmaceutical into healthy human volunteers and focus on testing for safety, dosage tolerance, metabolism, distribution,
excretion and clinical pharmacology. In the case of serious or life-threatening diseases, such as cancer, initial Phase 1
trials are often conducted in patients directly, with preliminary exploration of potential efficacy. Phase 2 trials involve
clinical trials to evaluate the effectiveness of the drug for a particular disease indication or indications in patients with
the disease or condition under study and to determine appropriate dosages and dose regimens and the common short-term side
effects and risks associated with the drug. Phase 2 trials are typically closely monitored and conducted in a relatively
small number of patients, usually involving no more than several hundred subjects. Phase 3 trials are generally expanded,
well-controlled clinical trials. They are performed after preliminary evidence suggesting effectiveness, as well as the
appropriate dose and dose ranges of the drug, have been obtained, and are intended to gather the additional information about
effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of the drug and to provide an
adequate basis for physician labeling.
In the United States,
specific research and preclinical data, chemical data and a proposed clinical study protocol, as described above, must be submitted
to the FDA as part of an Investigational New Drug application, or IND, which, unless the FDA objects, will become effective 30
days following receipt by the FDA. Phase 1 trials may commence only after the IND application becomes effective. Following completion
of Phase 1 trials, further submissions to regulatory authorities are necessary in relation to Phase 2 and 3 trials to update the
existing IND. Authorities may require additional data before allowing the trials to commence and could demand discontinuation
of studies at any time if there are significant safety issues. In addition to regulatory review, a clinical trial involving human
subjects has to be approved by an independent body. The exact composition and responsibilities of this body differ from country
to country. In the United States, for example, each clinical trial is conducted under the auspices of an Institutional Review
Board for any institution at which the clinical trial is conducted. This board considers among other factors, the design of the
clinical trial, ethical factors, the safety of the human subjects and the possible liability risk for the institution.
Information generated
in this process is susceptible to varying interpretations that could delay, limit, or prevent regulatory approval at any stage
of the approval process. Failure to demonstrate adequately the quality, safety and efficacy of a therapeutic drug under development
would delay or prevent regulatory approval of the product.
In order to gain marketing
approval, we must submit a new drug application, or NDA, for review by the FDA. The NDA must include a substantial amount of data
and other information concerning safety and effectiveness of the drug compound from laboratory, animal and clinical testing, as
well as data and information on manufacturing, product stability, and proposed product labeling.
There can be no
assurance that if clinical trials are completed that we or any future collaborative partners will submit an NDA or similar
applications outside of the United States for required authorizations to manufacture or market potential products, or that
any such applications will be reviewed or approved in a timely manner. Approval of an NDA, if granted at all, can take
several months to several years, and the approval process can be affected by a number of factors. Additional studies or
clinical trials may be requested during the review and may delay marketing approval and involve unbudgeted costs. Regulatory
authorities may conduct inspections of relevant facilities and review manufacturing procedures, operating systems and
personnel qualifications. In addition to obtaining approval for each product, in many cases each drug manufacturing facility
must be approved. Further, inspections may occur over the life of the product. An inspection of the clinical investigation
sites by a competent authority may be required as part of the regulatory approval procedure. As a condition of marketing
approval, the regulatory agency may require post-marketing surveillance to monitor adverse effects, or other additional
studies as deemed appropriate. After approval for the initial disease indication, further clinical studies are usually
necessary to gain approval for additional indications. The terms of any approval, including labeling content, may be more
restrictive than expected and could affect product marketability.
Holders of an approved
NDA are required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with certain requirements
concerning advertising and promotional labeling for their products. Moreover, quality control and manufacturing procedures must
continue to conform to cGMP after approval, and the FDA periodically inspects manufacturing facilities to assess cGMP compliance.
Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain
compliance with cGMP and other aspects of regulatory compliance. We expect to continue to rely upon third-party manufacturers
to produce commercial supplies of any products which are approved for marketing. We cannot be sure that those manufacturers will
remain in compliance with applicable regulations, or that future FDA inspections will not identify compliance issues at the facilities
of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct.
Any of our future
products approved by the FDA will likely be purchased principally by patients through a pharmacy benefit plan or by pharmacies
that typically bill various third-party payers, such as governmental programs (e.g., Medicare and Medicaid), private insurance
plans and managed care plans, for the pharmaceuticals provided to patients. The ability of customers to obtain appropriate reimbursement
for the products they purchase is crucial to the success of new drug and biologic products. The availability of reimbursement
affects which products customers purchase and the prices they are willing to pay. Reimbursement varies from country to country
and can significantly impact the acceptance of new products. Even if we were to develop a promising new product, we may find limited
demand for the product unless reimbursement approval is obtained from private and governmental third-party payers.
In the United States
and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding
the health care system and efforts to control health care costs, including drug prices, that could significantly affect the development
of our business, including preventing, limiting or delaying regulatory approval of our drug candidates and reducing the sales
and profits derived from our products once they are approved. For example, in the United States, the Patient Protection and Affordable
Care Act of 2010 (“ACA”) substantially changed the way health care is financed by both governmental and private insurers
and significantly affects the pharmaceutical industry. There is continued uncertainty about the implementation of ACA, including
the potential for further amendments to the ACA and legal challenges to or efforts to repeal the ACA. We cannot be sure whether
additional legislative changes will be enacted, or whether government regulations, guidance or interpretations will be changed,
or what the impact of such changes would be on the marketing approvals, sales, pricing, or reimbursement of our drug candidates
or products, if any, may be.
If the FDA approves
any of our future products and reimbursement for those products is approved by any federal or state healthcare programs, then
we will be subject to federal and state laws, such as the Federal False Claims Act, state false claims acts, the illegal remuneration
provisions of the Social Security Act, and federal and state anti-kickback laws that govern financial and other arrangements among
drug manufacturers and developers and the physicians and other practitioners or facilities that purchase or prescribe products.
Among other things, these laws prohibit kickbacks, bribes and rebates, as well as other direct and indirect payments that are
intended to induce the use or prescription of medical products or services payable by any federal or state healthcare program,
and prohibit presenting a false or misleading claim for payment under a federal or state program. Possible sanctions for violation
of any of these restrictions or prohibitions include loss of eligibility to participate in federal and state reimbursement programs
and civil and criminal penalties. If we fail to comply, even inadvertently, with any of these requirements, we could be required
to alter our operations, enter into corporate integrity, deferred prosecution or similar agreements with state or federal government
agencies, and could become subject to significant civil and criminal penalties.
AVAILABLE INFORMATION
Our common stock is
listed on the Nasdaq Capital Market and trades under the symbol “CWBR.” Our principal executive offices are located
at 1455 Adams Drive, Suite 2050, Menlo Park, California 94025, and our telephone number is (650) 446-7888. The internet address
of our corporate website is http://www.cohbar.com.
We file annual reports,
quarterly reports, current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”)
under the Securities Exchange Act of 1934, as amended. Our filings with the SEC are available free of charge on the SEC’s
website at www.sec.gov and on our website under the “Investors” tab as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the SEC.
The contents of our
corporate website are not incorporated into, or otherwise to be regarded as part of, this Annual Report on Form 10-K.
Item 1A. Risk Factors
CohBar operates in
an environment that involves a number of risks and uncertainties. The risks and uncertainties described in this Annual Report
on Form 10-K are not the only risks and uncertainties that we face. Additional risks and uncertainties that presently are not
considered material or are not known to us, and therefore are not mentioned herein, may impair our business operations. If any
of the risks described in this Annual Report on Form 10-K actually occur, our business, operating results and financial position
could be adversely affected.
We will need
additional funding and may be unable to raise additional capital when needed, which would force us to delay, reduce or eliminate
our research and development activities.
Our operations to
date have consumed substantial amounts of cash, and we expect our capital and operating expenditures to continue to increase in
the next few years. We may not be able to generate significant revenues for several years, if at all. Until we can generate significant
revenues, if ever, we expect to satisfy our future cash needs through equity or debt financing, and/or through any future development
collaborations with commercial partners. We cannot be certain that additional funding will be available on acceptable terms, or
at all. We have no committed source of additional capital and, in light of our current market capitalization, it may be more difficult
to raise the amount of capital needed to support planned development of our product candidates. If we are unable to raise additional
capital in sufficient amounts or on terms acceptable to us, we may be required to significantly delay, reduce the scope of, or
eliminate one or more of our research and development activities. If we are unable to secure additional capital, a Phase 2 clinical
trial of CB4211 will be delayed or discontinued. We could also be required to seek collaborators for our product candidate at
an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish
or license on unfavorable terms our rights to such product candidates.
We have had
a history of losses and no revenue.
We have generated
substantial accumulated losses since our inception. We have not generated any revenues from our operations to date and do not
expect to generate any revenue in the near future. As a result, our management expects the business to continue to experience
negative cash flow for the foreseeable future. We can offer no assurance that we will ever operate profitably or that we will
generate positive cash flow in the future.
Until we can generate
significant revenues, if ever, we expect to satisfy our future cash needs through equity or debt financing. We will need to raise
additional funds, and such funds may not be available on commercially acceptable terms, if at all. If we are unable to raise funds
on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive
pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations.
In the event we are not able to continue operations investors will likely suffer a complete loss of their investments in our securities.
We are an early-stage
biotechnology company and may never be able to successfully develop marketable products or generate any revenue. We have a very
limited relevant operating history upon which an evaluation of our performance and prospects can be made. There is no assurance
that our future operations will result in profits. If we cannot generate sufficient revenues, we may suspend or cease operations.
We are an
early-stage company. Our operations to date have been limited to organizing and staffing our Company, business planning,
raising capital, identifying MDPs for further research, developing our intellectual property portfolio, performing research
on identified MDPs and advancing our lead MBT candidate into and through clinical studies. We have not generated any revenues
to date. All of our MBTs are in the concept, research or early clinical stages. Moreover, we cannot be certain that our
research and development efforts will be successful or, if successful, that our MBTs will ever be approved by the United
States Food and Drug Administration (“FDA”). Typically, it takes 10-12 years to develop one new medicine from the
time it is discovered to when it is available for treating patients, and longer timeframes are not uncommon. Even if
approved, our products may not generate commercial revenues. We have no relevant operating history upon which an evaluation
of our performance and prospects can be made. We are subject to all of the business risks associated with a new enterprise,
including, but not limited to, risks of unforeseen capital requirements, failure of potential drug candidates either in
research, preclinical testing or in clinical trials, failure to establish business relationships and competitive
disadvantages against other companies. If we fail to become profitable, we may be forced to suspend or cease operations.
If
we fail to demonstrate efficacy or safety in our research and clinical trials, our
future business prospects, financial condition and operating results will be materially adversely affected.
The
success of our research and development efforts will greatly depend on our ability to demonstrate efficacy of MBTs in non-clinical
studies, as well as in clinical trials. Non-clinical studies involve testing potential MBTs in appropriate non-human disease models
to demonstrate efficacy and safety. Regulatory agencies evaluate these data carefully before they will approve clinical testing
in humans. If certain non-clinical data reveals potential safety issues or the results are inconsistent with an expectation of
the potential drug’s efficacy in humans, the program may be discontinued or the regulatory agencies may require additional
testing before allowing human clinical trials. This additional testing will increase program expenses and extend timelines. We
may decide to suspend further testing on our potential drugs if, in the judgment of our management and advisors, the non-clinical
test results do not support further development.
Moreover,
success in research, preclinical testing and early clinical trials does not ensure that later clinical trials will be
successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical
trials and non-clinical testing. The clinical trial process may fail to demonstrate that our potential drug candidates are
safe for humans and effective for indicated uses. This failure would cause us to abandon a drug candidate and may delay
development of other potential drug candidates. Any delay in, or termination of, our non-clinical testing or clinical trials
will delay the filing of an investigational new drug application and new drug application with the FDA or the equivalent
applications with pharmaceutical regulatory authorities outside the United States and, ultimately, our ability to
commercialize our potential drugs and generate product revenues. In addition, we expect that our early clinical trials will
involve small patient populations. Because of the small sample size, the results of these early clinical trials may not be
indicative of future results.
If
our current and any future clinical trials are delayed, suspended or terminated, we may be unable to develop our product candidates
on a timely basis, which would adversely affect our ability to obtain regulatory approvals, increase our development costs and
delay or prevent commercialization of any approved products.
We
cannot predict whether we will encounter problems with our ongoing, planned or any future clinical trials that will cause
regulatory agencies, institutional review boards, or us to suspend or delay a trial. For example, in November 2018, the
Company announced the temporary suspension of the Phase 1 clinical trial for CB4211, our lead MBT candidate, in order to
address injection site reactions and we resumed the trial in June 2019. In November 2019, we announced the completion of the
Phase 1a portion of the clinical trial and the commencement of the recruiting phase of the final Phase 1b stage of the study.
Clinical trials and clinical data collection protocols can be delayed for a variety of reasons, including:
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unanticipated
consequences of the formulation of the product candidate requiring us to pause the trial to investigate alternative formulations;
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the
occurrence of unacceptable drug-related side effects or adverse events experienced by participants in our clinical trials;
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discussions
with the FDA regarding the scope or design of our clinical trials and clinical data collection protocols;
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delays
or the inability to obtain required approvals from institutional review boards or other responsible entities at clinical sites
selected for participation in our existing or future clinical trials;
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adverse
findings in clinical or nonclinical studies related to the safety of our product candidates in humans;
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the
amendment of clinical trial or data collection protocols to reflect changes in regulatory requirements and guidance or other reasons,
as well as subsequent re-examination of amendments of clinical trial or data collection protocols by institutional review boards
or other responsible bodies; and
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the
need to repeat or conduct additional clinical trials as a result of inconclusive or negative results, failure to replicate positive
early clinical data in subsequent clinical trials, failure to deliver an efficacious dose of a product candidate, poorly executed
testing, a failure of a clinical site to adhere to the clinical protocol, an unacceptable study design or other problems.
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In
addition, a clinical trial or development program may be suspended or terminated by us, institutional review boards, the FDA or
other responsible bodies due to a number of factors, including:
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failure
to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;
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inspection
of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical
hold;
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inability
to resume a suspended trial in a timely manner (which we cannot predict with certainty), if at all;
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unforeseen
safety issues or any determination that a trial presents unacceptable health risks;
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inability
to deliver an efficacious dose of a product candidate; and
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lack
of adequate funding to continue the clinical trial.
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If
the results of our clinical trials are not available when we expect or if we encounter any delay in the analysis of data from
our clinical trials, we may be unable to conduct additional clinical trials on the schedule we anticipate. Many of the factors
that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of
regulatory approval of a product candidate. Any delays in completing a clinical trial could increase our development costs, delay
or prevent the availability of topline data expected to be available from the trial, delay our product development and regulatory
submission process or make it difficult to raise additional capital.
Interim
and preliminary or topline data from our clinical trials that we announce or publish from time to time may change as more patient
data become available and are subject to audit and verification procedures that could result in material changes in the final
data.
From
time to time, we may publish interim topline or preliminary data from our clinical trials. Interim data from clinical trials that
we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment
continues and more patient data become available. Preliminary or topline data also remain subject to audit and verification procedures
that may result in the final data being materially different from the preliminary or topline data we previously published. As
a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between
interim or preliminary or topline data and final data could significantly harm our reputation and business prospects.
Our
future success depends on key members of our scientific team and our ability to attract, retain and motivate qualified personnel.
Recruiting
and retaining qualified senior management and scientific, clinical, and operations management and personnel will be critical to
our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous
pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific
and clinical personnel from universities and research institutions.
We
are highly dependent on our key management and scientific teams, including our Chief Executive Officer, Chief Operating Officer
and Chief Scientific Officer who are all employed “at will,” meaning they may terminate the employment relationship
at any time. We do not maintain “key person” insurance for any of the key members of our team. The loss of the services
of any of these persons could impede the achievement of our research, development and commercialization objectives.
Our
consultants and advisors, including our founders, may be employed by employers other than us and may have commitments under consulting
or advisory contracts with other entities that may limit their availability to us. Our founders, Dr. Pinchas Cohen and Dr. Nir
Barzilai, are members of our board of directors and provide oversight and guidance on scientific, research and development topics
in that capacity. In addition, we rely on other consultants and advisors from time to time, including drug discovery and development
advisors, to assist us in formulating our research and development strategy. Agreements with these advisors typically may be terminated
by either party, for any reason, on relatively short notice.
We
may seek to establish development and commercialization collaborations, and, if we are not able to establish them on commercially
reasonable terms, we may have to alter our development and commercialization plans.
Our
potential drug development programs and the potential commercialization of our drug candidates will require substantial additional
cash to fund expenses. We may decide to collaborate with pharmaceutical or biotechnology companies in connection with the development
or commercialization of our potential drug candidates.
We
face significant competition in seeking appropriate collaborators. Whether we reach a definitive collaboration agreement will
depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions
of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may
include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities
outside the United States, the potential market for the subject product candidate, the costs and complexities of
manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of
uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without
regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider
alternative product candidates or technologies for similar disease indications on which to collaborate, and whether such
alternative collaboration project could be more attractive than one with us for our product candidate.
There
are a limited number of large pharmaceutical companies with whom we could potentially collaborate, and collaborations are complex
and time-consuming to negotiate and document. We may not be able to negotiate collaborations on a timely basis, on acceptable
terms or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking
to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential
commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development
or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization
activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all.
If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate
product revenue.
We
may not be successful in our efforts to identify or discover potential drug development candidates.
A
key element of our strategy is to identify and test MDPs that play a role in cellular processes underlying our targeted
disease indications. A significant portion of the research that we are conducting involves emerging scientific knowledge and
drug discovery methods. Our drug discovery efforts may not be successful in identifying MBTs that are useful in treating
disease. Our research programs may initially show promise in identifying potential drug development candidates, yet fail to
yield candidates for preclinical and clinical development for a number of reasons, including:
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the
research methodology used may not be successful in identifying appropriate potential drug development candidates; or
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potential
drug development candidates may, on further study, be shown not to be effective in humans, or to have unacceptable toxicities,
harmful side effects or other characteristics that indicate that they are unlikely to be medicines that will receive marketing
approval and achieve market acceptance.
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Research
programs to identify new product candidates require substantial technical, financial and human resources. We may choose to
focus our efforts and resources on a potential product candidate that ultimately proves to be unsuccessful. As a result, we
may forego or delay pursuit of opportunities with other product candidates or for other disease indications that later prove
to have greater commercial potential. Our resource allocation decisions may cause us to fail to timely capitalize on viable
commercial products or profitable market opportunities. If we are unable to advance our lead MBT candidate through clinical
development or identify other MBTs that are suitable for preclinical and clinical development, we will not be able to obtain
product revenues in future periods, which likely would result in significant harm to our financial position and negatively
affect our ability to continue our operations.
Our
research and development plans will require substantial additional future funding which could impact our operational and financial
condition. Without the required additional funds, we will likely cease operations.
It
will take several years before we are able to develop potentially marketable products, if at all. Our research and development
plans will require substantial additional capital to:
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conduct
research, preclinical testing and human studies;
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manufacture
any future drug development candidate or product at pilot and commercial scale; and
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establish
and develop quality control, regulatory, and administrative capabilities to support these programs.
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Our
future operating and capital needs will depend on many factors, including:
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the
pace of scientific progress in our research programs and the magnitude of these programs;
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the
scope and results of preclinical testing and human studies;
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the
time and costs involved in obtaining regulatory approvals;
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the
time and costs involved in preparing, filing, prosecuting, securing, maintaining and enforcing intellectual property rights;
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competing
technological and market developments;
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our
ability to establish additional collaborations;
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changes
in any future collaborations;
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the
cost of manufacturing our drug products; and
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the
effectiveness of efforts to commercialize and market our products.
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We
base our outlook regarding the need for funds on many uncertain variables. Such uncertainties include the success of our research
and development initiatives, regulatory approvals, the timing of events outside our direct control such as negotiations with potential
strategic partners, and other factors. Any of these uncertain events can significantly change our cash requirements as they determine
such one-time events as the receipt or payment of major milestones and other payments.
Additional
funds will be required to support our operations and if we are unable to obtain them on favorable terms, we may be required to
cease or reduce further research and development of our drug product programs, sell or abandon some or all of our intellectual
property, merge with another entity or cease operations.
Even
if we are able to develop our potential drugs, we may not be able to obtain regulatory approval, or if approved, we may not be
able to generate significant revenues or successfully commercialize our products, which will adversely affect our financial results
and financial condition and we will have to delay or terminate some or all of our research and development plans, which may force
us to cease operations.
All
our potential drug candidates will require extensive additional research and development, including preclinical testing and
clinical trials, as well as regulatory approvals, before we can market them. We cannot predict if or when any potential drug
candidate we intend to develop will be approved for marketing. There are many reasons that we may fail in our efforts to
develop our potential drug candidates. These include:
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the possibility
that preclinical testing or clinical trials may show that our potential drugs are ineffective and/or cause harmful side
effects or toxicities;
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our
potential drugs may prove to be too expensive to manufacture or administer to patients;
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our
potential drugs may fail to receive necessary regulatory approvals from the FDA or foreign regulatory authorities in a timely
manner, or at all;
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even
if our potential drugs are approved, we may not be able to produce them in commercial quantities or at reasonable costs;
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even
if our potential drugs are approved, they may not achieve commercial acceptance;
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regulatory
or governmental authorities may apply restrictions to any of our potential drugs, which could adversely affect their commercial
success; and
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the
proprietary rights of other parties may prevent us or our potential collaborative partners from marketing our potential drugs.
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If
we fail to develop our potential drug candidates, our financial results and financial condition will be adversely affected, we
will have to delay or terminate some or all of our research and development plans and may be forced to cease operations.
If
we do not maintain the support of qualified scientific collaborators, our revenue, growth and profitability will likely be limited,
which would have a material adverse effect on our business.
We
will need to maintain our existing relationships with leading scientists and/or establish new relationships with scientific
collaborators. We believe that such relationships are pivotal to establishing products using our technologies as a standard
of care for various disease indications. There is no assurance that our founders, scientific advisors or research partners
will continue to work with us or that we will be able to attract additional research partners. If we are not able to
establish scientific relationships to assist in our research and development, we may not be able to successfully develop our
potential drug candidates. If this happens, our business will be adversely affected.
We
expect to rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing.
These third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials,
research or preclinical testing.
We
currently rely on third parties to conduct some aspects of our research and expect to continue to rely on third parties to
conduct additional aspects of our research and preclinical testing, as well as any future clinical trials. Any of these third
parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it would
delay our product research and development activities.
Our
reliance on these third parties for research and development activities will reduce our control over these activities but will
not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials
is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to
comply with standards, commonly referred to as Good Clinical Practices, for conducting, recording and reporting the results of
clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality
of trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed
clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result
in fines, adverse publicity and civil and criminal sanctions.
Furthermore,
these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties
do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with
regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals
for our drug candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our medicines.
We
currently rely, and expect to continue to rely, on other third parties to store and distribute drug supplies for our clinical
trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our
drug candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue.
We
contract with third parties for the manufacture of our peptide materials for research and preclinical testing and expect to
continue to do so for any future product candidate advanced to clinical trials and commercialization. This reliance on third
parties increases the risk that we will not have sufficient quantities of our research peptide materials, product candidates
or medicines, or that such supply will not be available to us at an acceptable cost, which could delay, prevent or impair our
research, development or commercialization efforts.
We
do not have manufacturing facilities adequate to produce our research peptide materials or supplies of any future product
candidate. We currently rely, and expect to continue to rely, on third-party manufacturers for the manufacture of our peptide
materials, our current and any future product candidates for preclinical and clinical testing, and for commercial supply of
any of these product candidates for which we or future collaborators obtain marketing approval. We do not have long term
supply agreements with any third-party manufacturers, and we purchase our research peptides on a purchase order
basis.
We
may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able
to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:
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reliance
on the third party for producing the peptide materials or product candidates according to the detailed specifications;
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reliance
on the third party for regulatory compliance and quality assurance;
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the
possible breach of the manufacturing agreement by the third party;
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the
possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; and
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reliance
on the third party for regulatory compliance, quality assurance, and safety and pharmacovigilance reporting.
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Third-party
manufacturers may not be able to comply with current good manufacturing practices (“cGMP”), regulations or similar
regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with
applicable regulations could result in us being subject to sanctions, including fines, injunctions, civil penalties, delays, suspension
or withdrawal of approvals, license revocation, seizures or recalls of product candidates or medicines, operating restrictions
and criminal prosecutions, any of which could significantly and adversely affect supplies of our medicines and harm our business
and results of operations.
Any
drug candidate that we may develop may compete with other drug candidates and products for access to manufacturing facilities.
There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for
us.
Our
current and anticipated future dependence upon others for the manufacture of our investigational materials or future product candidates
or medicines may adversely affect our future profit margins and our ability to commercialize any medicines that receive marketing
approval on a timely and competitive basis.
We
may not be able to develop drug candidates, market or generate sales of our products to the extent anticipated. Our business may
fail and investors could lose all of their investment in our Company.
Assuming
that we are successful in developing our potential drug candidates and receiving regulatory clearances to market our potential
products, our ability to successfully penetrate the market and generate sales of those products may be limited by a number of
factors, including the following:
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if
our competitors receive regulatory approvals for and begin marketing similar products in the United States, the European Union
(“EU”), Japan and other territories before we do, greater awareness of their products as compared to ours will cause
our competitive position to suffer;
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information
from our competitors or the academic community indicating that current products or new products are more effective or offer compelling
other benefits than our future products could impede our market penetration or decrease our future market share; and
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the
pricing and reimbursement environment for our future products, as well as pricing and reimbursement decisions by our competitors
and by payers, may have an effect on our revenues.
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If
any of these occur, our business could be adversely affected.
Any
product candidate we are able to develop and commercialize would compete in the marketplace with existing therapies and new therapies
that may become available in the future. These competitive therapies may be more effective, less costly, more easily administered
or offer other advantages over any product we seek to market.
Although
there are no currently approved therapies for the treatment of NAFLD and NASH, there are numerous therapies in development,
including those in clinical trials that are more advanced than ours. Additionally, there are numerous therapies currently
marketed to treat diabetes, cancer, Alzheimer’s disease and other diseases for which our potential product candidates
may be indicated. For example, if we develop an approved treatment for T2D, it would compete with several
classes of drugs for T2D that are approved to improve glucose control. These include the insulin sensitizers pioglitazone
(Actos) and rosiglitazone (Avandia), which are administered as oral once daily pills, and metformin, which is sometimes
called an insulin sensitizer and is available as a generic once daily formulation. If we develop an approved treatment for
Alzheimer’s disease, it would compete with approved therapies such as donepezil (Aricept), galantamine (Razadyne),
memantine (Namenda), rivastigmine (Exelon) and tacrine (Cognex). These therapies are varied in their design, therapeutic
application and mechanism of action and may provide significant competition for any of our product candidates for which we
obtain market approval. New products may also become available that provide efficacy, safety, convenience and other benefits
that are not provided by currently marketed therapies. As a result, they may provide significant competition for any of our
product candidates for which we obtain market approval. Our commercial opportunity could be reduced or eliminated if our
competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are
more conveniently administered or stored or are less expensive than any products that we may develop. Our competitors also
may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could
result in our competitors establishing a strong market position before we are able to enter the market. In addition, our
ability to compete may be affected in many cases by insurers’ or other third-party payers’ reimbursement polices
seeking to encourage the use of existing products which are generic or are otherwise less expensive to provide.
Our
future success depends on key members of our scientific team and our ability to attract, retain and motivate qualified personnel.
We
are highly dependent on our founders, Dr. Pinchas Cohen and Dr. Nir Barzilai, and the other principal members of our
management and scientific teams. Drs. Cohen and Barzilai are members of our board of directors and provide oversight and guidance
on scientific, research and development topics in that capacity. Other members of our key management and scientific teams, including
our Chief Scientific Officer, Dr. Kenneth Cundy, are employed “at will,” meaning we or they may terminate the employment
relationship at any time. Our consultants and advisors, including our founders, may be employed by employers other than us and
may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. In addition,
we rely on other consultants and advisors from time to time, including drug discovery and development advisors, to assist us in
formulating our research and development strategy. Agreements with these advisors typically may be terminated by either party,
for any reason, on relatively short notice. We do not maintain “key person” insurance for any of the key members of
our team. The loss of the services of any of these persons could impede the achievement of our research, development and commercialization
objectives.
Recruiting
and retaining qualified scientific, clinical, and managerial personnel will also be critical to our success. We may not be able
to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology
companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities
and research institutions.
We
expect to expand our clinical development research, development and regulatory capabilities, and as a result, we may encounter
difficulties in managing our growth, which could disrupt our operations.
We
expect to experience significant growth in the scope of our operations, particularly in the areas of clinical development research,
drug development and regulatory affairs. To manage our anticipated future growth, we must continue to implement and improve our
managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.
We expect that if our drug candidates continue to progress in development, we may require significant additional investment in
personnel, management systems and resources, particularly in the build out of our commercial capabilities. Over the next several
years, we may experience significant growth in the number of our employees and the scope of our operations, particularly in the
areas of drug development, regulatory affairs and sales and marketing. Due to our limited financial resources and our limited
operating history, we may not be able to effectively manage the expected expansion of our operations. The physical expansion of
our operations may lead to significant costs and may divert our management and business development resources. Any inability to
manage growth could delay the execution of our business plans or disrupt our operations.
The
use of any of our products in clinical trials may expose us to liability claims, which may cost us significant amounts of money
to defend against or pay out, causing our business to suffer.
The
nature of our business exposes us to potential liability risks inherent in the testing, manufacturing and marketing of our products.
Our leading product candidate, CB4211, is currently in clinical trials, and if any of our drug candidates enter into clinical
trials, or if any of our drug candidates become marketed products, they could potentially harm people or allegedly harm people,
possibly subjecting us to costly and damaging product liability claims. Some of the patients who participate in clinical trials
are already ill when they enter a trial or may intentionally or unintentionally fail to meet the exclusion criteria. The waivers
we obtain may not be enforceable and may not protect us from liability or the costs of product liability litigation. Though we
obtained product liability insurance, which we believe is adequate, we are subject to the risk that our insurance will not be
sufficient to cover claims. We anticipate that we will need to increase our insurance coverage if we successfully commercialize
any product candidate. The insurance costs along with the defense or payment of liabilities above the amount of coverage could
cost us significant amounts of money and management distraction from other elements of the business, decrease demand for any product
candidates that we may develop, injure our reputation and attract significant negative media attention, and lead to the withdrawal
of clinical trial participants, causing our business to suffer. We may not be able to maintain insurance coverage at a reasonable
cost or in an amount adequate to satisfy any liability that may arise.
Compliance with laws and
regulations pertaining to the privacy and security of health information may be time consuming, difficult and costly, particularly
in light of increased focus on privacy issues in countries around the world, including the United States and the EU.
We
are subject to various domestic and international privacy and security regulations. The confidentiality, collection, use and disclosure
of personal data, including clinical trial patient-specific information, are subject to governmental regulation generally in the
country that the personal data were collected or used. In the United States, we are subject, or expect to be subject, to various
state and federal privacy and data security regulations, including but not limited to the Health Insurance Portability and Accountability
Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009. HIPAA mandates,
among other things, the adoption of uniform standards for the electronic exchange of information in common health care transactions,
as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption
of administrative, physical and technical safeguards to protect such information. In the EU, personal data includes any information
that relates to an identified or identifiable natural person with health information carrying additional obligations, including
obtaining the explicit consent from the individual for collection, use or disclosure of the information. In addition, the protection
of and cross-border transfers of such data out of the EU has become more stringent with the EU’s General Data Protection
Regulation which came into effect in May 2018. Furthermore, the legislative and regulatory landscape for privacy and data protection
continues to evolve, and there has been an increasing amount of focus on privacy and data protection issues. The United States
and the EU and its member states continue to issue new privacy and data protection rules and regulations that relate to personal
data and health information. Compliance with these laws may be time consuming, difficult and costly. If we fail to comply with
applicable laws, regulations or duties relating to the use, privacy or security of personal data we could be subject to the imposition
of significant civil and criminal penalties, be forced to alter our business practices and suffer reputational harm.
Any
product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and
could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to
comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of
them are approved.
Our
product candidates and the activities associated with their development and potential commercialization, including their testing,
manufacturing, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive
regulation by the FDA and other U.S. and international regulatory authorities. These requirements include submissions of safety
and other post-marketing information and reports, registration and listing requirements, requirements relating to manufacturing,
including current cGMPs, quality control, quality assurance and corresponding maintenance of records and documents, including periodic
inspections by the FDA and other regulatory authorities and requirements regarding the distribution of samples to providers and
recordkeeping.
The
FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety
or efficacy of any approved product. The FDA closely regulates the post-approval marketing and promotion of drugs and
biologics to ensure drugs and biologics are marketed only for the approved disease indications and in accordance with the
provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding
use of their products. If we promote our product candidates in a manner inconsistent with FDA-approved labeling or
otherwise not in compliance with FDA regulations, we may be subject to enforcement action. Violations of the Federal Food,
Drug, and Cosmetic Act relating to the promotion of prescription drugs may lead to investigations alleging violations of
federal and state healthcare fraud and abuse laws, as well as state consumer protection laws and similar laws in
international jurisdictions.
In
addition, later discovery of previously unknown adverse events or other problems with our product candidates, manufacturers or
manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:
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restrictions on such product candidates, manufacturers or manufacturing processes;
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restrictions on the labeling or marketing of a product;
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restrictions on product distribution or use;
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requirements to conduct post-marketing studies or clinical trials;
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warning or untitled letters;
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withdrawal of any approved product from the market;
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refusal to approve pending applications or supplements to approved applications that we submit;
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recall of product candidates;
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restrictions on product distribution or use;
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fines, restitution or disgorgement of profits or revenues;
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suspension or withdrawal of marketing approvals;
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refusal to permit the import or export of our product candidates;
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injunctions or the imposition of civil or criminal penalties.
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Non-compliance with European requirements regarding safety
monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can
also result in significant financial penalties. Similarly, failure to comply with the EU’s requirements regarding the protection
of personal information can also lead to significant penalties and sanctions.
The
patent positions of biopharmaceutical products are complex and uncertain and we may not be able to protect our patented or other
intellectual property. If we cannot protect this property, we may be prevented from using it, or our competitors may use it, and
our business could suffer significant harm. Also, the time and money we spend on acquiring and enforcing patents and other intellectual
property will reduce the time and money we have available for our research and development, possibly resulting in a slow down
or cessation of our research and development.
We
own or exclusively license patents and patent applications related to our MDPs and potential MBTs and we anticipate continuing
to develop our intellectual property portfolio. However, neither patents nor patent applications ensure the protection of our
intellectual property for a number of reasons, including the following:
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The
United States Supreme Court rendered a decision in Molecular Pathology vs. Myriad Genetics, Inc., 133 S.Ct. 2107 (2013) (“Myriad”),
in which the court held that naturally occurring DNA segments are products of nature and not patentable as compositions of matter.
On March 4, 2014, the U.S. Patent and Trademark Office (“USPTO”) issued guidelines for examination of such claims
that, among other things, extended the Myriad decision to any natural product. Since MDPs are natural products isolated from cells,
the USPTO guidelines may affect allowability of some of our patent claims (pertaining to natural MDP sequences) that are filed
in the USPTO but are not yet issued. Further, while the USPTO guidelines are not binding on the courts, it is likely that as the
law of subject matter eligibility continues to develop, Myriad will be extended to natural products other than DNA. Thus, our
issued U.S. patent claims directed to MDPs as compositions of matter may be vulnerable to challenge by competitors who seek to
have our claims rendered invalid. While Myriad and the USPTO guidelines described above will affect our patents only in the United
States, there is no certainty that similar laws or regulations will not be adopted in other jurisdictions.
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Competitors
may interfere with our patenting process in a variety of ways. Competitors may claim that they invented the claimed invention
prior to us. Competitors may also claim that we are infringing their patents and restrict our freedom to operate. Competitors
may also contest our patents and patent applications, if issued, by showing in various patent offices that, among other reasons,
the patented subject matter was not original, was not novel or was obvious. In litigation, a competitor could claim that our patents
and patent applications are not valid or enforceable for a number of reasons. If a court agrees, we would lose some or all of
our patent protection.
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As
a company, we have no meaningful experience with competitors interfering with our patents or patent applications. In order to
enforce our intellectual property, we may need to file a lawsuit against a competitor. Enforcing our intellectual property in
a lawsuit can take significant time and money. We may not have the resources to enforce our intellectual property if a third party
infringes an issued patent claim. Infringement lawsuits may require significant time and money resources. If we do not have such
resources, the licensor is not obligated to help us enforce our patent rights. If the licensor does take action by filing a lawsuit
claiming infringement, we will not be able to participate in the suit and therefore will not have control over the proceedings
or the outcome of the suit.
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Because
of the time, money and effort involved in obtaining and enforcing patents, our management may spend less time and resources on
developing potential drug candidates than they otherwise would, which could increase our operating expenses and delay product
programs.
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Our
licensed patent applications directed to the composition and methods of using MOTS-c, an MDP, and SHLP-6, which we consider as
a research peptide for the potential treatment of cancer, have not yet been issued. There can be no assurance that these or our
other licensed patent applications will result in the issuance of patents, and we cannot predict the breadth of claims that may
be allowed in our currently pending patent applications or in patent applications we may file or license from others in the future.
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Issuance
of a patent may not provide much practical protection. If we receive a patent of narrow scope, then it may be easy for competitors
to design products that do not infringe our patent(s).
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We
have limited ability to expand coverage of our licensed patent related to SHLP-2 and our licensed patent application related to
SHLP-6 outside of the United States. The lack of patent protection in international jurisdictions may inhibit our ability to advance
MBT drug candidates in these markets.
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If
a court decides that the method of manufacture or use of any of our drug candidates infringes on a third-party patent, we may
have to pay substantial damages for infringement.
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A
court may prohibit us from making, selling or licensing a potential drug candidate unless the patent holder grants a license.
A patent holder is not required to grant a license. If a license is available, we may have to pay substantial royalties or grant
cross licenses to our patents, and the license terms may be unacceptable.
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Redesigning
our potential drug candidates so that they do not infringe on other patents may not be possible or could require substantial funds
and time.
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It
is also unclear whether our trade secrets are adequately protected. While we use reasonable efforts to protect our trade secrets,
our employees or consultants may unintentionally or willfully disclose our information to competitors. Enforcing a claim that
someone illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. In
addition, courts outside the United States are sometimes less willing to protect trade secrets. Our competitors may independently
develop equivalent knowledge, methods and know-how. We may also support and collaborate in research conducted by government organizations,
hospitals, universities or other educational institutions. These research partners may be unable or unwilling to grant us exclusive
rights to technology or products derived from these collaborations prior to entering into the relationship.
If
we do not obtain required intellectual property rights, we could encounter delays in our drug development efforts while we attempt
to design around other patents or even be prohibited from developing, manufacturing or selling potential drug candidates requiring
these rights or licenses. There is also a risk that disputes may arise as to the rights to technology or potential drug candidates
developed in collaboration with other parties.
Significant
disruptions of information technology systems or security breaches could adversely affect our business.
We
are increasingly dependent upon information technology systems, infrastructure and data to operate our business. In the ordinary
course of business, we collect, store and transmit large amounts of confidential information (including, among other things, trade
secrets or other intellectual property, proprietary business information and personal information). It is critical that we do
so in a secure manner to maintain the confidentiality and integrity of such confidential information. We also have outsourced
elements of our operations to third parties, and as a result we manage a number of third-party vendors who may or could have access
to our confidential information. Attacks on information technology systems are increasing in their frequency, levels of persistence,
sophistication and intensity, and they are being conducted by increasingly sophisticated and organized groups and individuals
with a wide range of motives and expertise. The size and complexity of our information technology systems, and those of third-party
vendors with whom we contract, and the large amounts of confidential information stored on those systems, make such systems vulnerable
to service interruptions or to security breaches from inadvertent or intentional actions by our employees, third-party vendors,
and/or business partners, or from cyber-attacks by malicious third parties. Cyber-attacks could include the deployment of harmful
malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten
the confidentiality, integrity and availability of information.
Significant
disruptions of our information technology systems, or those of our third-party vendors, or security breaches could adversely affect
our business operations and/or result in the loss, misappropriation and/or unauthorized access, use or disclosure of, or the prevention
of access to, confidential information, including, among other things, trade secrets or other intellectual property, proprietary
business information and personal information, and could result in financial, legal, business and reputational harm to us.
Any
failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with
our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security
breaches that result in the unauthorized access, release or transfer of sensitive information, including personally identifiable
information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements
against us, could cause third parties to lose trust in us or could result in claims by third parties asserting that we have breached
our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation,
business, financial condition or results of operations. Moreover, data security incidents and other security breaches can be difficult
to detect, and any delay in identifying them may lead to increased harm. While we have implemented data security measures intended
to protect our information technology systems and infrastructure, there can be no assurance that such measures will successfully
prevent service interruptions or data security incidents.
Because
of our status as an emerging growth company, our independent registered public accountants are not required to provide an attestation
report as to our internal control over financial reporting for several years.
Our independent registered public accounting firm will not be
required to attest formally to the effectiveness of our internal control over financial reporting pursuant to Section 404
of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act) until we are no longer an “emerging growth company” as defined
in the Jumpstart our Business Startups Act of 2012 (JOBS Act). We will be an emerging growth company until December 31, 2020, although
circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates
exceeds $700 million as of any June 30th before that time, in which case we would no longer be an emerging growth company as of
the following December 31st. Accordingly, you will not likely be able to depend on any attestation concerning our internal control
over financial reporting from our independent registered public accountants until we file our annual report on Form 10-K for the
year ending December 31, 2020.
If
we fail to establish and maintain proper and effective internal control over financial reporting in the future, our ability to
produce accurate and timely financial statements could be impaired, which could harm our operating results, investors’ views
of us and, as a result, the value of our common stock.
While
we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial
reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the
prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which
is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside
consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue
steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement
a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a
risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial
reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an
adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements.
In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on The Nasdaq Capital
Market (Nasdaq).
As
we continue to grow, we expect to hire additional personnel and may utilize external temporary resources to implement, document
and modify policies and procedures to maintain effective internal controls. However, it is possible that we may identify deficiencies
and weaknesses in our internal controls. If material weaknesses or deficiencies in our internal controls exist and go undetected
or unremediated, our consolidated financial statements could contain material misstatements that, when discovered in the future,
could cause us to fail to meet our future reporting obligations and cause the price of our common stock to decline
If
securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or
if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The
trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish
about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding
our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline.
If any analysts who may cover us were to cease coverage of our Company or fail to regularly publish reports on us, we could lose
visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
The
market price of our common stock may be highly volatile.
The
market for our common stock has been characterized by significant price volatility when compared to more established issuers
and we expect that it will continue to be so for the foreseeable future. The market price of our common stock is likely to be
volatile for a number of reasons. First, our common stock is likely to be sporadically and/or thinly traded. As a consequence
of this lack of liquidity, the trading of relatively small quantities of common stock by our stockholders may disproportionately
influence the price of the common stock in either direction. The price of the common stock could, for example, decline precipitously
if even a relatively small number of shares are sold on the market without commensurate demand, as compared to a market for shares
of an established issuer which could better absorb those sales without adverse impact on its share price. Second, we are a speculative
investment due to our lack of profits to date and substantial uncertainty regarding our ability to develop and commercialize a
drug product from our new or existing technologies. As a consequence of this enhanced risk, more risk-adverse investors may, under
the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell
their shares on the market more quickly and at greater discounts than would be the case with the shares of an established issuer.
We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time
or as to what effect the sale of common stock or the availability of common stock for sale at any time will have on the prevailing
market price.
Our
management owns, and could acquire, a significant percentage of our outstanding common stock. If the ownership of our common stock
continues to be highly concentrated in management, it may prevent other stockholders from influencing significant corporate decisions.
As
of December 31, 2019, our executive officers and directors own, as a group, approximately 32.5% of the outstanding shares of our
common stock. Additionally, our executive officers and directors own, as a group, options and warrants exercisable for approximately
10.9% of our outstanding common stock, assuming exercise of such options and warrants. As a result, our management could exert
significant influence over matters requiring stockholder approval, including the election of our board of directors, the approval
of mergers and other extraordinary transactions, as well as the terms of any of these transactions. This concentration of ownership
could have the effect of delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting
to obtain control of us, which could in turn have an adverse effect on the fair market value of our Company and our common stock.
These actions may be taken even if they are opposed by our other stockholders.
The
requirements of being a public company may strain our resources, divert management’s attention and require us to disclose
information that is helpful to competitors, make us more attractive to potential litigants and make it more difficult to attract
and retain qualified personnel.
As
a public company, we are subject to the reporting requirements of the Securities Act of 1933, as amended, the Exchange Act, the
Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and applicable Canadian securities
rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations creates
significant legal and financial compliance costs and makes some activities difficult, time-consuming or costly. The Exchange Act
and applicable Canadian provincial securities legislation require, among other things, that we file annual, quarterly and current
reports with respect to our business and operating results.
Additionally,
the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Nasdaq Capital Market require us to implement
particular corporate governance practices and adhere to a variety of reporting requirements and complex accounting rules. Among
other things, we are subject to rules regarding the independence of the members of our board of directors and committees of the
board and their experience in finance and accounting matters and certain of our executive officers are required to provide certifications
in connection with our quarterly and annual reports filed with the SEC. The perceived personal risk associated with these rules
may deter qualified individuals from accepting these positions. Accordingly, we may be unable to attract and retain qualified
officers and directors. If we are unable to attract and retain qualified officers and directors, our business and our ability
to maintain the listing of our shares of common stock on the Nasdaq or another stock exchange could be adversely affected.
Changes
in U.S. federal income and other tax laws could adversely affect us.
New
U.S. legislation or regulations which could affect our tax burden could be enacted by the U.S. government. We cannot predict the
timing or extent of such tax-related developments which could have a negative impact on our financial results.
Additionally, we use our best judgment in attempting to quantify and reserve for these tax obligations. However, a challenge by
a taxing authority, our ability to utilize tax benefits such as carryforwards or tax credits, or a deviation from other tax-related assumptions could
have a material adverse effect on our business, results of operations, or financial condition.
Unfavorable
global economic conditions could adversely affect our business, financial condition or results of operations.
Our
results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.
For example, the global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe
or prolonged economic downturn, such as a global financial crisis, could result in a variety of risks to our business, including,
weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at
all. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruptions. Any of the foregoing
could harm our business, and we cannot anticipate all of the ways in which the current economic climate and financial market conditions
could adversely impact our business.
We
or the third parties upon whom we depend may be adversely affected by natural disasters, and our business continuity and disaster
recovery plans may not adequately protect us from a serious disaster.
Natural
disasters could severely disrupt our operations and have a material adverse effect on our business, results of operations, financial
condition and prospects. If a natural disaster, power outage or other event occurred that prevented us from using all or a significant
portion of our headquarters, that damaged critical infrastructure or that otherwise disrupted operations, it may be difficult
or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business
continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial
expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material
adverse effect on our business.
Our
employees, principal investigators, CROs and consultants may engage in misconduct or other improper activities, including non-compliance
with regulatory standards and requirements and insider trading.
We
are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and commercial partners.
Misconduct by these parties could include intentional failures to comply with the regulations of FDA and non-U.S. regulators,
provide accurate information to the FDA and non-U.S. regulators, comply with healthcare fraud and abuse laws and regulations in
the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. In particular,
sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to
prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit
a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business
arrangements. Such misconduct could also involve the improper use of information obtained in the course of clinical studies, which
could result in regulatory sanctions and cause serious harm to our reputation. We have adopted a code of ethics, but it is not
always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may
not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other
actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against
us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on
our business, including the imposition of significant fines or other sanctions.
Our business is
subject to risks arising from epidemic diseases, such as the recent outbreak of the COVID-19 illness.
The recent outbreak
in China of the Coronavirus Disease 2019, or COVID-19, which has been declared by the World Health Organization to be
a “public health emergency of international concern,” has spread across the globe and is impacting worldwide economic
activity. A public health epidemic, including COVID-19, poses the risk that we or our employees, contractors, suppliers, and
other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns
that may be requested or mandated by governmental authorities. While it is not possible at this time to estimate the impact that COVID-19
could have on our business, the continued spread of COVID-19 and the measures taken by the governments of countries affected
could disrupt the supply chain and the manufacture or shipment of both drug substance and finished drug product for our product
candidates for preclinical testing and clinical trials; impede our clinical trial recruitment, testing, monitoring, data collection
and analysis and other related activities; and adversely impact our business, financial condition or results of operations. The
COVID-19 outbreak and mitigation measures may also have an adverse impact on global economic conditions which could have an adverse
effect on our business and financial condition. The extent to which the COVID-19 outbreak impacts our results will depend on future
developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity
of the virus and the actions to contain its impact.
Item
1B. Unresolved Staff Comments
None.
Item
2. Properties
We
are a party to a lease agreement for laboratory space leased on a month-to month basis that is part of a shared facility in Menlo
Park, California. In September 2019, we renewed our lease for office space in Fairfield, New Jersey for an additional year at
the same annual cost of $13,080 per annum.
Rent
expense amounted to $350,979 and $298,972 for the years ended December 31, 2019 and 2018, respectively.
Item
3. Legal Proceedings
From
time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently a party
to any material legal proceedings, and to our knowledge none is threatened. There can be no assurance that future legal proceedings
arising in the ordinary course of business or otherwise will not have a material adverse effect on our financial position, results
of operations or cash flows.
Item
4. Mine Safety Disclosures
Not
applicable.