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
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report. ☐
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, 2020) was $50,525,285 based upon the last price of the Registrant’s common stock as reported on
the Nasdaq Capital Market on such date. As of March 25, 2021, the registrant had outstanding 61,788,325 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 2021 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,
2020.
PART I
Forward-Looking Statements
This report, including
the sections entitled “Business,” “Risk Factors” and “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, fibrotic diseases
including idiopathic pulmonary fibrosis (IPF), acute respiratory distress syndrome (ARDS) including COVID-19 associated ARDS,
cancer, 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
one in fibrotic diseases, one in ARDS and two in cancer.
We substantially
expanded our preclinical pipeline in 2020. 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, ARDS, 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 powerful development 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 first clinical
candidate, CB4211, is a potential treatment for NASH and obesity. It is a novel peptide initially developed from a MOTS-c MDP.
In July 2018, we initiated a Phase 1a/1b clinical study of CB4211, which was designed to initially assess the safety, tolerability
and pharmacokinetics of CB4211 following single and multiple-ascending doses in healthy subjects.
In November 2019,
the double-blind, placebo-controlled Phase 1a stage was completed and the blinded safety and tolerability data supported advancement
to the Phase 1b stage of the study.
In November 2019,
we initiated recruitment for the Phase 1b stage, which 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. On March 30, 2020, we announced a delay in the completion of our
Phase 1b study due to the COVID-19 pandemic. The delay was a result of a pause by some of our clinical research organization partners
in all of their activities related to the study in response to COVID-19. On July 7, 2020, we announced the resumption of our Phase
1b study. In March 2021, we completed the enrollment for the Phase 1b clinical
trial. Based on positive clinical results and additional funding from potential partnerships and general fundraising, we plan to initiate preparations for a Phase 2 study of CB4211 in 2021 and initiate a Phase 2 study in 2022.
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, fibrotic diseases, ARDS, cancer 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: CB5138 Analogs for IPF and other Fibrotic Diseases; CB5064 Analogs for ARDS, including COVID-19
Associated ARDS; CB5046 Analogs for Cancer and Other Disease Indications and MBT3 Analogs for Cancer Immunotherapy.
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 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.
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 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, as well as our co-founders and advisors Dr. David
Sinclair, Professor of Genetics at Harvard Medical School and Dr. John Amatruda, former Senior Vice President and Franchise
Head for Diabetes and Obesity at Merck Research Laboratories.
We have filed
more than 65 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 provide 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 CB5138 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,
we 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 on 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. On March 30, 2020, we announced a delay in the
completion of our Phase 1b study due to the COVID-19 pandemic. The delay was a result of a pause by some of our clinical
research organization partners in all of their activities related to the study in response to COVID-19. On July 7, 2020, we
announced the resumption of our Phase 1b study. In March 2021, we completed the enrollment for the Phase 1b clinical trial.
While topline data is expected at the end of the second quarter of 2021, it is dependent upon a number of factors such as the
last patient visit, and therefore, we cannot predict with certainty when such data will be available.
CB4211, discovered by CohBar, is a novel,
enhanced 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. These data provide 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, developing 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, fibrotic diseases including IPF, ARDS, cancer, 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.
CB5138
Analogs for IPF and other Fibrotic Diseases: Our discovery efforts have identified CB5138 Analogs, a family of
novel peptides with potential for use as treatments for fibrotic diseases. In co-cultures of human lung cells, CB5138-1
decreased the expression of key fibrosis biomarkers, including alpha smooth muscle actin (αSMA), and collagen types I
and III. CB5138-1 also decreased the transformation of healthy lung cells into fibrotic cells after induction by TGF-beta1,
resulting in reduced production of the fibrotic components αSMA and pro-collagen I alpha 1. In vivo, CB5138-1 decreased
lung fibrosis and inflammation in both the prophylactic mouse model of IPF, initiating treatment with the peptide immediately
after fibrosis induction by bleomycin, and in the therapeutic mouse model of IPF, starting peptide treatment one week after
induction. In addition, using the more exacting therapeutic model of IPF, two new analogs of CB5138 (CB5138-2 and CB5138-3)
significantly reduced lung fibrosis assessed by the Ashcroft Score, reduced inflammation, and decreased fibrosis-related
changes in lung weight, collagen deposition in lung tissue, and collagen secretion into lung fluid. In addition, we have
demonstrated that a CB5138 Analog has enhanced effects when combined with nintedanib, the leading treatment for Idiopathic
Pulmonary Fibrosis (IPF), suggesting potential utility for combination therapy in IPF. In the first quarter of 2021, we
identified CB5138-3 as the lead clinical candidate in this program and our goal is to initiate IND-enabling activities with the
potential to file an IND in 2022.
CB5064
Analogs for COVID-19 Associated Acute Respiratory Distress Syndrome (ARDS) and ARDS: Our internal
discovery efforts have identified CB5064 Analogs, a family of peptides that are agonists of the apelin receptor with
potential for use as therapeutics for COVID-19 associated ARDS and ARDS in general. In May 2020, we initiated testing of
CB5064 Analogs in preclinical models of ARDS. In the preclinical studies, acute lung injury was induced in mice by
administration of lipopolysaccharide (LPS), a bacterial toxin that produces similar symptoms to other causes of ARDS,
including fluid accumulation and cytokine secretion. A single dose of CB5064 Analog was administered one hour prior to the
LPS exposure, and effects on lung weight and levels of pro-inflammatory cytokines were measured at 4 hours after LPS
exposure. Treatment with CB5064 Analogs reduced fluid accumulation in the lungs and a corresponding broad reduction in levels
of key pro-inflammatory cytokines secreted into the lung fluid, when compared to treatment with a placebo control. We
previously demonstrated the beneficial effects of this novel family of peptides on glucose tolerance, insulin sensitivity,
and weight loss in an obese mouse model of T2D, as presented at the American Diabetes Association in 2019. In January 2021,
we signed a Non-Clinical Evaluation Agreement (NCEA) with the National Institute of Allergy and Infectious Diseases (NIAID)
initiating a collaboration to evaluate the potential of CB5064 Analogs for the treatment of COVID-19 associated Acute
Respiratory Distress Syndrome (ARDS). In parallel with the work being conducted by NIAID, we are currently performing the
required studies in this program to select a candidate. Based on successful outcomes of those studies and additional funding, we will nominate a
clinical candidate followed by initiation of pre-IND work in 2021, with the longer-term goal of initiating a Phase 1
study.
CB5046 Analogs
for Cancer and Other Disease Indications: Our internal discovery efforts have identified CB5046 Analogs, a family of novel
potent and selective peptide inhibitors of CXCR4, a key chemokine receptor involved in tumor growth, metastasis and avoidance
of immune surveillance that is overexpressed in 75% of human tumors. CXCR4 is also involved in localization of healthy stem cells
and in certain genetic diseases. We have demonstrated positive effects of one of the CB5046 Analogs when administered in combination
with chemotherapy in an animal model of aggressive melanoma. We are screening multiple peptide analogs for in vitro activity and
plan to explore the potential for use initially in stem cell mobilization and hematologic cancers.
MBT3 Analogs
for Cancer Immunotherapy: Our discovery efforts identified a novel peptide family, MBT3 Analogs. We have demonstrated
the enhanced killing of cancer cells by human immune cells in the presence of an MBT3 Analog, and plan to further explore the
therapeutic potential of this analog family for treatment of cancer, subject to resource availability and the requirements of
our more-advanced programs.
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 in vivo 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 first clinical candidate and CB5138-3, our second 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 between 30-40%
of the U.S. adult 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 45% 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 8% 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.
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” occurs when fibrosis develops in response to injury. Fibrotic diseases include diseases
that result in fibrosis, such as lung or pulmonary fibrosis, liver fibrosis, cardiac fibrosis, skin fibrosis, systemic sclerosis
and others.
Acute Respiratory
Distress Syndrome - ARDS can be triggered by viral or bacterial pneumonia, sepsis, trauma or other events and represents a
major cause of morbidity and mortality. There is a high unmet need for a safe and effective treatment of ARDS due to its high
mortality rate and lack of effective drug treatments, affecting three million patients annually. ARDS also prolongs hospital stays
and requires convalescence in the hospital and rehabilitation. An effective therapy would reduce time on ventilators and in the
ICU, reduce mortality, and improve quality of life.
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.
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.
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.
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 no approved
therapies for the treatment of NAFLD and NASH, but numerous therapies are in development for NASH. These potential therapies are
varied in modality and mechanism of action and may provide significant competition, if approved, for any of our product candidates
for which we obtain market approval. Competitive products or therapies for NASH that are in development may become available and
provide efficacy, safety, convenience and other benefits that could 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 several investigational therapies that are currently being studied for the treatment of obesity. The list of investigational
therapies, while not exhaustive, includes such potential therapies as CB1-receptor-antagonists, 5-HT receptor agonists, SGLT-2
antagonists, GLP-1 agonists, Adenylate Cyclase 3 activators, GLP1 and GIP co-agonists, GLP1, Glucagon co-agonists and activin
II receptor antibodies, 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 inhibitors, 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 a fibrotic disease, it would compete with all approved therapies for
the disease 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 the fibrotic disease.
If a CohBar MBT is
developed and approved for treatment of patients with IPF, it would compete with drugs that are approved to treat IPF, including
nintedanib (Ofev) and Pirfenidone (Esbriet). In addition, there are several classes of investigational drugs being studied to
treat IPF, and if these investigational therapies were approved, they would also compete with an MBT developed and approved for
IPF.
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 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.
If a CohBar MBT is
developed and approved for treatment of patients with T2DM, it would compete with several classes of drugs for T2DM that are approved
to improve glucose control, including sulfonylureas, glinides, PPAR gamma agonists, biguanides including metformin, 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 the agents approved to treat T2DM are not generic,
are oral once-daily pills and are effective in lowering glucose and A1C. Drugs approved for obesity as well as surgical management
of obesity and approved and investigational devices used in GI tract 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.
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 AND HUMAN CAPITAL RESOURCES
As of March 25, 2021,
we had 12 employees, eleven 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.
Our human capital
resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and
additional employees. The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees,
consultants and directors through the granting of stock-based compensation awards and cash-based performance bonus awards.
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. We also outsource
some research and development activities 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 as well as methods of use 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.
As of December 31, 2020, CohBar has filed more than 65 patent applications,
including 8 international Patent Cooperation Treaty (PCT) applications, with claims directed to both composition of matter and
methods of use of novel proprietary MDP analogs. Our patent applications include filings in the United States, Europe and a number
of other foreign countries, with projected expiration dates ranging from 2037 to 2041. Additionally, we are the exclusive worldwide
licensee from the Regents of the University of California (the Regents) of twelve issued patents that will expire between 2028
and 2034, along with six pending patent applications. Other licensed intellectual property is described below.
Terms for
individual patents extend for varying periods of time generally depending on the date of filing of the patent application 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. In certain instances, extension of patent term due to regulatory
approval activities is available in foreign countries.
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 own, 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.
Summaries of our owned and licensed patent positions are described
below.
CohBar Owned IP
As of December 31,
2020, CohBar has filed more than 65 patent applications, including applications relating to CB4211, CB5138 Analogs and other CohBar-identified
MDPs and Analogs.
MOTS-c Analog Patent Coverage
CohBar has filed over
20 U.S. and foreign patent applications, including in Europe and Asia, directed to novel refined analogs of MOTS-c with improved
properties, including claims directed to composition of matter and methods of use as well as to formulations containing these peptides.
These applications also cover our lead product candidate CB4211. If issued, these patents would expire in 2037 and 2039.
CB5138 Analog Patent Coverage
CohBar has filed an
international PCT application covering a CohBar-identified MDP (CB5138) and novel, improved analogs, including claims directed
to composition of matter and methods of use, with a projected expiration date of 2040.
Other CohBar Identified MDPs and
Analog Coverage
CohBar has also
filed more than 45 patent applications that cover additional CohBar-identified MDPs and their novel, improved analogs,
including claims directed to composition of matter and methods of use, with expiration dates of 2040 and 2041. A number of
these filings relate to our programs and, in particular, MBT programs, including CB5064 analogs, and CB5046 analogs. The
applications also include 8 international PCT applications. We intend to file additional non-provisional patent applications
for MDPs and analogs within our pipeline based on further assessments of their therapeutic and commercial potential, as well
as strategic and competitive considerations.
CohBar Licensed IP
MOTS-c Patent Coverage
We are the
exclusive licensee from the Regents to intellectual property rights related to MOTS-c, including two issued U.S. patents
corresponding foreign applications and granted foreign patents filed in multiple countries and regions. These issued patents
and 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.
Patents related to these filings have been granted in the United States, Europe, Japan and several other 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 a term expiring in 2029.
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 which expire in 2028 and 2029.
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 2020, 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 current good manufacturing practices (“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
Summary of Risk Factors
An investment
in our common stock involves various risks, and prospective investors are urged to carefully consider the matters discussed in
the section titled “Risk Factors” prior to making an investment in our common stock. These risks include, but are
not limited to, the following:
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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.
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The outbreak of the novel strain of coronavirus, SARS-CoV-2,
which causes COVID-19, could adversely impact our business, including our clinical trials and preclinical studies.
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We have had a history of losses and no revenue.
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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.
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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.
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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.
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If we do not achieve our projected development goals
in the time frames we announce and expect, the commercialization of our products may be delayed and, as a result, our stock price
may decline.
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Our future success depends on key members of our scientific
team and our ability to attract, retain and motivate qualified personnel.
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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.
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We may not be successful in our efforts to identify
or discover potential drug development candidates.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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We expect to expand our drug development and regulatory
capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
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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.
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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.
Risks Related to Our Financial Position
and Need for Additional Capital
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. In addition, the ongoing COVID-19
pandemic has led to, and may continue to create, global economic disruption, uncertainty and volatility in the global financial
markets. These effects may make it increasingly difficult to raise additional capital. 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.
The
outbreak of the novel strain of coronavirus, SARS-CoV-2, which causes COVID-19, could adversely impact our
business, including our clinical trials and preclinical studies.
Public health crises
such as pandemics or similar outbreaks could adversely impact our business. In response to the global COVID-19 pandemic,
we have modified our business practices by restricting nonessential travel, implementing a partial work from home policy for our
employees and instituting new safety protocols for our lab to enable essential on-site work to continue. We continue to monitor
the impact of COVID-19 on ongoing activities at our external research and development partner sites.
Timely enrollment
in our clinical trials is dependent upon global clinical trial sites, which may be adversely affected by global health matters,
such as pandemics. We are currently conducting a clinical trial for our lead product candidate in the United States, which is
currently, and may continue to be, affected by COVID-19. For example, enrollment for our CB4211 Phase 1b study was delayed due
to suspension of study activities at some of our clinical sites. Although enrollment resumed, we have experienced delays and withdrawals
in enrollment due to COVID-19. These and any additional delays in our CB4211 Phase 1b study 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, result in the termination of the trial or make it difficult to raise additional
capital.
As a result of the COVID-19 outbreak,
or similar pandemics, we may experience disruptions that could severely impact our business, clinical trials and preclinical studies,
including:
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delays or difficulties in enrolling patients in our
clinical trials;
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delays or difficulties in clinical site initiation,
including difficulties in recruiting clinical site investigators and clinical site staff;
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delays or disruptions in non-clinical experiments
and investigational new drug application-enabling good laboratory practice standard toxicology studies due to unforeseen circumstances
in the supply chain;
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increased rates of patients withdrawing from our clinical
trials following enrollment as a result of contracting COVID-19, being forced to quarantine or not accepting home health
visits;
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diversion of healthcare resources away from the conduct
of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the
conduct of our clinical trials;
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interruption of key clinical trial activities, such
as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers
and others or interruption of clinical trial subject visits and study procedures (particularly any procedures that may be deemed non-essential), which
may impact the integrity of subject data and clinical study endpoints;
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interruption or delays in the operations of the U.S.
Food and Drug Administration (“FDA”) and comparable foreign regulatory agencies, which may impact approval timelines;
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limitations on employee resources that would otherwise be focused on
the conduct of our preclinical studies and clinical trials, including because of sickness of employees or their families,
the desire of employees to avoid contact with large groups of people, an increased reliance on working from home or mass transit
disruptions;
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disruptions in 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
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interruption of, or delays in
receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing shortages,
production slowdowns or stoppages and disruptions in delivery systems; and
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reduced ability to engage with the medical and investor communities due
to the cancellation of conferences scheduled throughout the year.
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In addition, the
trading prices for our common stock and other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic
and the resulting impact on economic activity. As a result, we may face difficulties raising capital through sales of our common
stock or other equity-linked securities, and any such sales may be on unfavorable terms to us and potentially dilutive to existing
stockholders.
The extent to which
the pandemic may impact our business, clinical trials and preclinical studies will depend on future developments, which are highly
uncertain and cannot be predicted with confidence, such as the duration of the pandemic, the impact of vaccinations, travel restrictions
and actions to contain the virus or treat its impact, such as social distancing and quarantines or lock-downs in the United States
and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and
other countries to contain and treat the disease.
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 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, and failure to establish business relationships and competitive advantages 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.
Risks Related to Discovery, Development
and Commercialization
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. However, in March 2020, we announced a
delay in the completion of our Phase 1b study for NASH and obesity. The delays were caused by a pause by some of our clinical
research organization partners in all of their activities related to the study in response to developments relating to the COVID-19
pandemic. We announced the resumption of our Phase 1b study in July 2020. In response to a routine annual development safety update
report (the “DSUR”) we submitted to the FDA on August 6, 2020, the FDA requested additional details regarding injection
site reaction safety data presented in the DSUR. The additional information was provided to the FDA. FDA’s review of such
information could result in the delay or suspension of our Phase 1b study to address any concerns. 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.
If we do not
achieve our projected development goals in the time frames we announce and expect, the commercialization of our products may be
delayed and, as a result, our stock price may decline.
From time to time,
we estimate the timing of the anticipated accomplishment of various scientific, clinical, regulatory and other product development
goals, which we sometimes refer to as milestones. These milestones may include the commencement or completion of scientific studies
and clinical trials and the submission of regulatory filings. From time to time, we may publicly announce the expected timing
of some of these milestones. All of these milestones are and will be based on numerous assumptions, including positive clinical
and preclinical results, the addition of a corporate partner for the CB4211 program, and sufficient funding from partnering and
general fundraising. The actual timing of these milestones can vary dramatically compared to our estimates, in some cases for
reasons beyond our control. If we do not meet these milestones as publicly announced, or at all, our revenue may be lower than
expected, the commercialization of our products may be delayed or never achieved and, as a result, our stock price may decline.
Our
future success depends on key members of our management and scientific teams 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 Financial 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.
Risks Related to Our Reliance on Third
Parties
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, 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.
Risks Related to Product Development
and Regulatory Approval
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.
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.
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.
We expect to
expand our drug 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 drug development and commercialization 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 into and in development, we may require significant additional investment in personnel, management systems
and resources, particularly in the build out of our clinical and 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. Although 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 (“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.
General Risk Factors
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.
The
Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure
controls and procedures and that we furnish a report by management on, among other things, the effectiveness of our internal control
over financial reporting. This assessment needs to include disclosure of any material weaknesses identified by our management
in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or
interim financial statements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also generally
requires an attestation from our independent registered public accounting firm on the effectiveness of our internal control over
financial reporting. However, for as long as we are not an accelerated filer or large accelerated filer, we intend to take advantage
of the exemption permitting us not to comply with the independent registered public accounting firm attestation requirement.
Our
compliance with Section 404 will require us 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 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.
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.
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,
2020, our executive officers and directors own, as a group, approximately 22% 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% 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.
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 2020, 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 $403,449 and $350,979 for the years ended December 31, 2020 and 2019, 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.