The following information sets forth
risk factors that could cause our actual results to differ materially from those contained in forward-looking statements we have
made in this Quarterly Report on Form 10-Q and those we may make from time to time. You should carefully consider the risks
described below, in addition to the other information contained in this Quarterly Report on Form 10-Q and our other public
filings. Our business, financial condition or results of operations could be harmed by any of these risks. The risks and uncertainties
described below are not the only ones we face. Additional risks not presently known to us or other factors not perceived by us
to present significant risks to our business at this time also may impair our business operations.
Risks Related to our Business and Intellectual
Property
We are a development stage company
with a history of operating losses.
We are a clinical-stage
immunotherapy company with a history of losses, and we may always operate at a loss. We expect that we will continue to operate
at a loss throughout our development stage, and as a result, we may exhaust our financial resources and be unable to complete the
development of our products. We anticipate that our ongoing operational costs will increase significantly as we continue conducting
our clinical development program. Our deficit will continue to grow during our drug development period. We have no sources of revenue
to provide incoming cash flows to sustain our future operations. As outlined above, our ability to pursue our planned business
activities depends upon our successful efforts to raise additional financing.
We have sustained
losses from operations in each fiscal year since our inception, and we expect losses to continue for the indefinite future due
to the substantial investment in research and development. As of September 30, 2019, we had an accumulated deficit of $322.5
million since inception. We expect to spend substantial additional sums on the continued administration and research and development
of licensed and proprietary products and technologies with no certainty that our approach and associated technologies will become
commercially viable or profitable as a result of these expenditures. If we fail to raise a significant amount of capital, we may
need to significantly curtail operations, allocate limited financial resources among our product candidates, or cease operations
in the near future. If any of our product candidates fail in clinical trials or does not gain regulatory approval, we may never
generate revenue. Even if we generate revenue in the future, we may not be able to become profitable or sustain profitability in
subsequent periods.
Our future success is highly dependent
upon our key personnel, and our ability to attract, retain, and motivate additional qualified personnel.
Our ability to
compete in the highly competitive biotechnology and pharmaceutical industries depends upon our ability to attract and retain
highly qualified managerial, scientific, and medical personnel. We are highly dependent on our management, scientific, and
medical personnel and consultants, including Peter Hoang, our President and Chief Executive Officer, Ann Leen, Ph.D., our
Chief Scientific Officer, Juan Vera, M.D., our Chief Development Officer, and Mythili Koneru, M.D., Ph.D. our Senior Vice
President, Clinical Development, as well as others. The loss of the services of any of our executive officers, other key
employees, and other scientific and medical advisors, and our inability to find suitable replacements could result in delays
in product development and harm to our business. We have a priority to quickly train additional qualified scientific and
medical personnel to ensure the ability to maintain business continuity. Any delays in training such personnel could delay
the development, manufacture, and clinical trials of our product candidates.
Our ability to attract
and retain highly skilled personnel is critical to our operations and expansion. We face competition for these types of personnel
from other biotechnology companies and more established organizations, many of which have significantly larger operations and greater
financial, technical, human and other resources than us. We may not be successful in attracting and retaining qualified personnel
on a timely basis, on competitive terms, or at all. If we are not successful in attracting and retaining these personnel, or integrating
them into our operations, our business, prospects, financial condition and results of operations will be materially adversely affected.
In such circumstances, we may be unable to conduct certain research and development programs, unable to adequately manage our clinical
trials and other products, and unable to adequately address our management needs.
Our strategic relationship with Baylor
College of Medicine, or BCM, is dependent, in part, upon our relationship with key medical and scientific personnel and advisors.
Our MultiTAA T cell
therapy has been developed through our collaboration with the Center for Cell and Gene Therapy at BCM, founded by Malcolm K. Brenner,
M.D., Ph.D., a recognized pioneer in immuno-oncology. In addition to Dr. Brenner, Marker Cell’s founders include Ann
Leen, Ph.D., Juan Vera, M.D., Helen Heslop, M.D., DSc (Hon) and Cliona Rooney, Ph.D., who all have significant experience in this
field and are all affiliated with the Center for Cell and Gene Therapy at BCM. Dr. Leen and Dr. Vera are our Chief Scientific
Officer and Chief Development Officer, respectively. In addition, Dr. Brenner, Dr. Heslop and Dr. Rooney have joined
our newly-formed Scientific Advisory Board.
Our strategic relationship
with BCM is dependent, in part, on our relationship with these key employees and advisors, and in particular Dr. Leen and
Dr. Vera, who are also employed with the Center for Cell and Gene Therapy at BCM. If we lose Dr. Leen or Dr. Vera,
or if either leaves their position at BCM, our relationship with BCM may deteriorate, and our business could be harmed.
We, and certain of our key medical
and scientific personnel, will need additional agreements in place with BCM to expand our development, manufacture, and clinical
trial efforts.
Although we have an
exclusive license agreement with BCM under which we received a worldwide, exclusive license to BCM’s rights in and to three
patent families to develop and commercialize the MultiTAA product candidates, we will need to enter into additional agreements
with BCM with respect to (i) a strategic alliance to advance pre-clinical research, early stage clinical trials, and Phase
II clinical trials with respect to our product candidates, as well as continued access to our clinical data, and (ii) product
manufacturing and support, including personnel and space at the institution for the foreseeable future. Any delays in entering
into new strategic agreements with BCM related to our product candidates could delay the development, manufacture, and clinical
trials of our product candidates.
The multiple roles of certain of
our officers and directors could limit their time and availability to us, and create, or appear to create, conflicts of interest.
Dr. Leen is an
employee of BCM and is contractually obligated to spend a significant portion of her time with BCM. In addition, Dr. Leen
and Dr. Vera are co-founders and members of Allovir and perform services from time to time for Allovir LLC (“Allovir”).
Allovir is owned by the same principal stockholder group as Marker Cell prior to the Merger and has technology which is being developed
under a license agreement with BCM by the same research group at BCM. Allovir is a clinical-stage biopharmaceutical company, which
is investigating and developing virus-specific T cell therapy technology for the prevention and/or treatment of viral infections.
Accordingly, Dr. Leen and Dr. Vera may have other commitments that would, at times, limit their availability to us. Other
research being conducted by Dr. Leen and Dr. Vera may, at times, receive higher priority than research on our programs,
which may, in turn, delay the development or commercialization of our product candidates.
In addition, John
Wilson is a co-founder, member and director of Allovir and is a director of the Company. Dr. Leen and Dr. Vera are also
co-founders, members and officers of Allovir, and perform services for Allovir from time to time, and Dr. Vera is a director of
Allovir and of the Company. All of these individuals have certain fiduciary or other obligations to us and certain fiduciary or
other obligations to Allovir and, in the case of Dr. Leen and Dr. Vera, to BCM. Such multiple obligations may in the future result
in a conflict of interest with respect to presenting other potential business opportunities to us or to Allovir. A conflict of
interest also may arise concerning the timing of the parties’ planned and ongoing clinical trials, investigational new drug
application filings and the parties’ opportunities for marketing their respective product candidates. In addition, they may
be faced with decisions that could have different implications for us than for Allovir. Consequently, there is no assurance that
these members of our board and management will always act in our best interests in all situations should a conflict arise.
We have not yet sold any products
or received regulatory approval to sell our products.
We have no approved
products or products pending approval. As a result, we have not derived any revenue from the sales of products and have not yet
demonstrated ability to obtain regulatory approval, formulate and manufacture commercial-scale products, or conduct sales and marketing
activities necessary for successful product commercialization. Without revenue, we can only finance our operations through debt
and equity financings.
Product development involves a lengthy
and expensive process with an uncertain outcome, and results of earlier pre-clinical and clinical trials may not be predictive
of future clinical trial results.
Clinical testing is
expensive and generally takes many years to complete, and the outcome is inherently uncertain. Failure can occur at any time during
the clinical trial process. The results of pre-clinical testing and early clinical trials of our product candidates may not be
predictive of the results of larger, later-stage controlled clinical trials. Product candidates that have shown promising results
in early-stage clinical trials may still suffer significant setbacks in subsequent clinical trials. Our clinical trials to date
have been conducted on a small number of patients in a single academic clinical site for a limited number of indications. We will
have to conduct larger, well-controlled trials in our proposed indications at multiple sites to verify the results obtained to
date and to support any regulatory submissions for further clinical development of our product candidates. Our assumptions related
to our products, such as with respect to lack of toxicity and manufacturing cost estimates, are based on early limited clinical
trials and current manufacturing processes at BCM and may prove to be incorrect. In addition, the initial estimates of the clinical
cost of development may prove to be inadequate, particularly if clinical trial timing or outcome is different than predicted or
regulatory agencies require further testing before approval. A number of companies in the biopharmaceutical industry have suffered
significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles despite promising results in
earlier, smaller clinical trials. Moreover, clinical data are often susceptible to varying interpretations and analyses. We do
not know whether any Phase II, Phase III, or other clinical trials we may conduct will demonstrate consistent or adequate efficacy
and safety with respect to the proposed indication for use sufficient to receive regulatory approval or market our product candidates.
The biotechnology and immunotherapy
industries are characterized by rapid technological developments and a high degree of competition. We may be unable to compete
with more substantial enterprises.
The biotechnology
and biopharmaceutical industries are characterized by rapid technological developments and a high degree of competition. As a result,
our actual or proposed immunotherapies could become obsolete before we recoup any portion of our related research and development
and commercialization expenses. Competition in the biopharmaceutical industry is based significantly on scientific and technological
factors. These factors include the availability of patent and other protection for technology and products, the ability to commercialize
technological developments and the ability to obtain governmental approval for testing, manufacturing and marketing. We compete
with specialized biopharmaceutical firms in the United States, Europe and elsewhere, as well as a growing number of large pharmaceutical
companies that are applying biotechnology to their operations. Many biopharmaceutical companies have focused their development
efforts in the human therapeutics area, including cancer. Many major pharmaceutical companies have developed or acquired internal
biotechnology capabilities or made commercial arrangements with other biopharmaceutical companies. These companies, as well as
academic institutions, governmental agencies and private research organizations, also compete with us in recruiting and retaining
highly qualified scientific personnel and consultants. Our ability to compete successfully with other companies in the pharmaceutical
field will also depend to a considerable degree on the continuing availability of capital to us.
We are aware of certain
investigational new drugs under development or approved products by competitors that are used for the prevention, diagnosis, or
treatment of certain diseases we have targeted for drug development. Various companies are developing biopharmaceutical products
that have the potential to directly compete with our immunotherapies even though their approach may be different. The competition
comes from both biotechnology firms and from major pharmaceutical companies. Many of these companies have substantially greater
financial, marketing, and human resources than us. We also experience competition in the development of our immunotherapies from
universities, other research institutions and others in acquiring technology from such universities and institutions.
In addition, certain
of our immunotherapies may be subject to competition from investigational new drugs and/or products developed using other technologies,
some of which have completed numerous clinical trials.
We are subject to numerous risks
inherent in conducting clinical trials.
We outsource some
of the management of our clinical trials to third parties. Agreements with clinical investigators and medical institutions
for clinical testing and with other third parties for data management services, place substantial responsibilities on these
parties that, if unmet, could result in delays in, or termination of, our clinical trials. If any of our clinical trial sites
fail to comply with FDA-approved good clinical practices, we may be unable to use the data gathered at those sites. If these
clinical investigators, medical institutions or other third parties do not carry out their contractual duties or obligations
or fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to
their failure to adhere to our clinical protocols or for other reasons, our clinical trials may be extended, delayed or
terminated, and we may be unable to obtain regulatory approval for, or successfully commercialize, agents. We cannot be
certain that we will successfully recruit enough patients to complete our clinical trials nor that we will reach our primary
endpoints. Delays in recruitment, lack of clinical benefit or unacceptable side effects would delay our clinical trials.
We, or our
regulators, may suspend or terminate our clinical trials for a variety of reasons. For example,
in the third quarter of 2019, we filed our planned IND with the FDA with respect to our MultiTAA therapy in anticipation of commencing
a Phase 2 clinical trial of our MultiTAA therapy for the treatment of patients with post-transplant AML. The FDA requested additional
information regarding certain quality and technical specifications for two reagents supplied by third party vendors that are used
in our manufacturing process but not present in the final product infused to patients. Because the FDA requires these data before
allowing the planned trial under the IND to proceed, the IND has been placed on clinical hold until our complete response to the
technical questions is satisfactory to the FDA. We have worked with the regulatory and quality groups at the respective manufacturers
to address the FDA’s request and submitted a complete response to the issues raised by the FDA on October 28, 2019. However,
FDA may not agree that our response addresses all of their concerns and the clinical hold may remain in place and further delay
the initiation of the trial.
We may voluntarily
suspend or terminate our clinical trials at any time if we believe they present an unacceptable risk to the patients enrolled in
our clinical trials or do not demonstrate clinical benefit. For example, in October 2019 we elected to suspend our Phase 2 clinical
trial of TPIV200 for the treatment of platinum-sensitive advanced ovarian cancer because it did not meet our threshold for probability
of success based upon our pre-specified criteria. In addition, regulatory agencies may order the temporary or permanent discontinuation
of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable
regulatory requirements or that they present an unacceptable safety risk to the patients enrolled in our clinical trials.
Our clinical trial
operations are subject to regulatory inspections at any time. If regulatory inspectors conclude that we or our clinical trial sites
are not in compliance with applicable regulatory requirements for conducting clinical trials, we may receive reports of observations
or warning letters detailing deficiencies, and we will be required to implement corrective actions. If regulatory agencies deem
our responses to be inadequate, or are dissatisfied with the corrective actions we or our clinical trial sites have implemented,
our clinical trials may be temporarily or permanently discontinued, and we may be fined, we or our investigators may be precluded
from conducting any ongoing or any future clinical trials, the government may refuse to approve our marketing applications or allow
us to manufacture or market our products, and we may be criminally prosecuted.
The lengthy approval
process, as well as the unpredictability of future clinical trial results, may result in us failing to obtain regulatory approval
for our product candidates, which would materially harm our business, results of operations and prospects.
The successful development of immunotherapies
is highly uncertain.
Successful development
of biopharmaceuticals is highly uncertain and depends on numerous factors, many of which are beyond our control. Immunotherapies
that appear promising in the early phases of development may fail to reach the market for several reasons including:
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clinical study results that may show the immunotherapy to be less effective than expected (e.g.,
the study failed to meet its primary endpoint) or to have unacceptable side effects;
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failure to receive the necessary regulatory approvals or a delay in receiving such approvals. Among
other things, such delays may be caused by slow enrollment in clinical studies, length of time to achieve study endpoints, additional
time requirements for data analysis, or Biologics License Application (“BLA”) preparation, discussions with the FDA,
an FDA request for additional preclinical or clinical data, or unexpected safety or manufacturing issues;
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manufacturing costs, formulation issues, pricing or reimbursement issues, or other factors that
make the immunotherapy uneconomical; and
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the proprietary rights of others and their competing products and technologies that may prevent
the immunotherapy from being commercialized.
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Success in preclinical
and early clinical studies does not ensure that large-scale clinical studies will be successful. Clinical results are frequently
susceptible to varying interpretations that may delay, limit or prevent regulatory approvals. The length of time necessary to complete
clinical studies and to submit an application for marketing approval for a final decision by a regulatory authority varies significantly
from one immunotherapy to the next and may be difficult to predict.
Even if we are successful
in getting market approval, commercial success of any of our product candidates will also depend in large part on the availability
of coverage and adequate reimbursement from third-party payors, including government payors such as the Medicare and Medicaid programs
and managed care organizations, which may be affected by existing and future health care reform measures designed to reduce the
cost of health care. Third-party payors could require us to conduct additional studies, including post-marketing studies related
to the cost effectiveness of a product, to qualify for reimbursement, which could be costly and divert our resources. If government
and other health care payors were not to provide adequate coverage and reimbursement levels for any of our products once approved,
market acceptance and commercial success would be reduced.
In addition, if one
of our products is approved for marketing, we will be subject to significant regulatory obligations regarding the submission of
safety and other post-marketing information and reports and registration, and will need to continue to comply (or ensure that our
third-party providers comply) with current Good Manufacturing Practices (“cGMPs”) and current Good Clinical Practices
(“cGCPs”) for any clinical trials that we conduct post-approval. In addition, there is always the risk that we or a
regulatory authority might identify previously unknown problems with a product post-approval, such as adverse events of unanticipated
severity or
frequency. Compliance with these requirements
is costly, and any failure to comply or other issues with our product candidates’ post-market approval could have a material
adverse effect on our business, financial condition and results of operations.
It may take longer and cost more
to complete our clinical trials than we project, or we may not be able to complete them at all.
For budgeting and
planning purposes, we have projected the dates for the commencement, continuation, and completion of our various clinical trials.
However, a number of factors, including scheduling conflicts with participating clinicians and clinical institutions, difficulties
in identifying and enrolling patients who meet trial eligibility criteria, and competition for such eligible patents from other
clinical trials, may cause significant delays. We may not commence or complete clinical trials involving any of our products as
projected or may not conduct them successfully.
We may experience
difficulties in patient enrollment in our future clinical trials for a variety of reasons. The timely completion of clinical trials
in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain
in the study until its conclusion. In addition, our clinical trials will compete with other clinical trials for product candidates
that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients
available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being
conducted by one of our competitors. Accordingly, we cannot guarantee that our clinical trials will progress as planned or as scheduled.
Delays in patient enrollment may result in increased costs or may affect the timing or outcome of our ongoing clinical trial and
planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development
of our product candidates.
We rely on medical
institutions, academic institutions, and clinical research organizations to conduct, supervise, or monitor some or all aspects
of clinical trials involving our products. We may have less control over the timing and other aspects of these clinical trials
than if we conducted them entirely on our own. If we fail to commence or complete, or experiences delays in, any of our planned
clinical trials, we may experience delays in our clinical development and/or commercialization plans.
In particular, while
BCM will continue to support our trials with production of MAPP and LAPP T cells under contract, we anticipate that we will have
to rely on third parties (contract manufacturing organizations or “CMOs”) or internal facilities yet to be developed
for the commercial manufacture of our multi-antigen specific T cell therapy products for clinical trials and eventual licensure.
If they fail to commence or complete, or experience delays in, manufacturing our multi-antigen specific T cell therapy products,
our planned clinical trials with respect to such products will be delayed, and we may experience delays in our clinical development
and/or commercialization plans.
Clinical trials are expensive, time-consuming,
and difficult to design and implement, and our clinical trial costs may be higher than for more conventional therapeutic technologies
or drug products.
Clinical trials are
expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. Because
our product candidates are based on new technologies and manufactured on a patient-by-patient basis for our MultiTAA T cell product
candidates we expect that they will require extensive research and development and have substantial manufacturing costs. In addition,
costs to treat patients with relapsed/refractory cancer and to treat potential side effects that may result from our product candidates
can be significant. Some clinical trial sites may not bill, or obtain coverage from, Medicare, Medicaid, or other third-party payors
for some or all of these costs for patients enrolled in our clinical trials, and we may be required by those trial sites to pay
such costs. Accordingly, our clinical trial costs may be significantly higher per patient than those of more conventional therapeutic
technologies or drug products. In addition, our proposed personalized product candidates involve several complex manufacturing
and processing steps, the costs of which will be borne by us. Depending on the number of patients we ultimately enroll in our trials,
and the number of trials we may need to conduct, our overall clinical trial costs may be higher than for more conventional treatments.
Our clinical trials may fail to demonstrate
adequately the safety and efficacy of our product candidates, which would prevent or delay regulatory approval and commercialization.
The clinical
trials of our product candidates are, and the manufacturing and marketing of our products will be, subject to extensive and
rigorous review and regulation by numerous government authorities in the United States and in other countries where we intend
to test and market our product candidates. Before obtaining regulatory approvals for the commercial sale of any of our
product candidates, we must demonstrate through lengthy, complex, and expensive preclinical testing and clinical trials that
our product candidates are both safe and effective for use in each target indication. In particular, because our product
candidates are subject to regulation as biological drug products, we will need to demonstrate that they are safe, pure and
potent for use in their target indications. Each product candidate must demonstrate an adequate risk versus benefit profile
in its intended patient population and for its intended use. The risk/benefit profile required for product licensure will
vary depending on these factors and may include not only the ability to show tumor shrinkage, but also adequate duration of
response, a delay in the progression of the disease, and/or an improvement in survival. For example, response rates from the
use of our product candidates may not be sufficient to obtain regulatory approval unless we can also show an adequate
duration of response. Clinical testing is expensive and can take many years to complete, and its outcome is inherently
uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early
clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. The results of
studies in one set of patients or line of treatment may not be predictive of those obtained in another. In addition, we
expect that there may be greater variability in results for products processed and administered on a patient-by-patient
basis, as anticipated for our MultiTAA T cell product candidates, than for “off-the-shelf” products, like many
other drugs. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through
clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and
efficacy profile despite having progressed through preclinical studies and initial clinical trials. A number of companies in
the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or
unacceptable safety issues, notwithstanding promising results in earlier trials. Most product candidates that begin clinical
trials are never approved by regulatory authorities for commercialization.
In addition, even
if such trials are successfully completed, we cannot guarantee that the FDA or foreign regulatory authorities will interpret the
results as we do, and more trials could be required before we submit our product candidates for approval. To the extent that the
results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application,
we may be required to expend significant resources, which may not be available to us, to conduct additional trials in support of
potential approval of our product candidates.
Our product candidates may cause
undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval,
limit their commercial potential, or result in significant negative consequences.
Undesirable side effects
caused by our product candidates could cause us or regulatory authorities to interrupt, delay, or halt clinical trials and could
result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory
authorities. Results of our trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics.
If unacceptable toxicities
arise in the development of our product candidates, we or the FDA or comparable foreign regulatory authorities could order us to
cease clinical trials or deny approval of our product candidates for any or all targeted indications. Treatment-related side effects
could also affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product
liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff,
as toxicities resulting from personalized cell therapy, as with our MultiTAA T cell therapy products, are not normally encountered
in the general patient population and by medical personnel. Any of these occurrences may harm our business, financial condition
and prospects significantly.
Our MultiTAA T cell therapy research
and development efforts are to a large extent dependent upon BCM’s investigators.
It will take time
to fully develop our research and development infrastructure. We currently depend upon and will continue to depend upon independent
investigators and collaborators, such as BCM, and which in the future may include other universities, medical institutions, and
strategic partners, to conduct our preclinical studies and clinical trials. If we need to enter into alternative arrangements,
our product development activities would be delayed. Agreements with such third parties might terminate for a variety of reasons,
including a failure to perform by the third parties.
We expect to use the
results of BCM’s research to support the filing with the FDA of IND applications to conduct more advanced clinical trials
of our products. However, we have limited control over the nature or timing of BCM’s clinical trials and limited visibility
into their day-to-day activities. The research we are funding constitutes only a small portion of BCM’s overall research.
Other research being conducted by Dr. Ann Leen and Dr. Juan Vera may at times receive higher priority than research on
our programs. These factors could adversely affect the timing of our IND filings and our ability to conduct future planned clinical
trials.
We will be unable to commercialize
our products if our trials are not successful.
Our research and development
programs are at an early stage. We must demonstrate our products’ safety and efficacy in humans through extensive clinical
testing. We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent
commercialization of our products, including but not limited to the following:
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safety and efficacy results in various human clinical trials reported in scientific and medical
literature may not be indicative of results we obtain in our clinical trials;
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after reviewing trial results, we or our collaborators may abandon products that we might previously
have believed to be promising;
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we, our collaborators or regulators, may suspend or terminate clinical trials if the participating
subjects or patients are being exposed to unacceptable health risks; and
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the effects our potential products have may not be the desired effects or may include undesirable
side effects or other characteristics that preclude regulatory approval or limit their commercial use if approved.
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Clinical testing is
very expensive, can take many years, and the outcome is uncertain. For example, it can take as much as 12 months or more before
we learn the results from any clinical trial using our MultiTAA T cell therapy. The data collected from our clinical trials may
not be sufficient to support approval by the FDA of our MultiTAA T cell therapy-based product candidates for the treatment of hematological
malignancies, or our Folate Receptor Alpha (TPIV200) product for breast and ovarian cancers, HER2/neu peptide antigen product (TPIV100/110)
or possible future clinical trials utilizing our DNA expression PolyStart™ product. The clinical trials for our products
under development may not be completed on schedule and the FDA may not ultimately approve any of our product candidates for commercial
sale. If we fail to adequately demonstrate the safety and efficacy of any product candidate under development, we may not receive
regulatory approval for those products, which would prevent us from generating revenues or achieving profitability.
We may not be able to expand our
manufacturing processes to other third-party manufacturing facilities or successfully create our own manufacturing infrastructure
for supply of our requirements of product candidates for use in clinical trials and for commercial sale.
We do not own any
facility that may be used as our clinical-scale manufacturing and processing facility. We currently rely on third-party Contract
Manufacturing Organizations, or CMOs, for manufacture of our vaccine products. We anticipate we will initially rely solely on the
Good Manufacturing Practices (“cGMP”) manufacturing facility within BCM for the manufacturing of our MultiTAA T cell
therapy-based product candidates. If the cGMP manufacturing facility of BCM, which does manufacture for itself and other parties,
experiences capacity constraints, disruptions, or delays in manufacturing our MultiTAA T cell therapy-based product candidate products,
our planned clinical trials and necessary manufacturing capabilities will be disrupted or delayed, which will adversely affect
our ability to conduct and further develop our business as currently planned. Further, the cGMP manufacturing facility is most
likely too small to conduct the pivotal clinical studies being planned by us, so we will need to develop our own cGMP manufacturing
capacity that will be adequate for such clinical trials with respect to our MultiTAA T cell therapy-based product candidates.
In 2020, we intend
to begin developing additional cGMP manufacturing capacity of our own that would be capable of supporting our manufacturing needs
with respect to our clinical trials, particularly with respect to pivotal studies. Our manufacturing strategy going forward will
involve the use of one or more CMOs or we will establish our own capabilities and infrastructure, including a manufacturing facility.
Establishment of our own manufacturing facility is subject to many risks. For example, the establishment of a cell-therapy manufacturing
facility is a complex endeavor requiring knowledgeable individuals. Creating an internal manufacturing infrastructure will rely
upon building out a complex facility and finding personnel with an appropriate background and training to staff and operate the
facility. Should we be unable to find these individuals, we may need to rely on external contractors or train additional personnel
to fill needed roles. There are a small number of individuals with experience in cell therapy, and the competition for these individuals
is high.
We expect that development
of our own manufacturing facility could provide us with enhanced control of material supply for both clinical trials and the commercial
market, enable the more rapid implementation of process changes, and allow for better long-term margins. However, we do not have
any experience in developing a manufacturing facility and may never be successful in developing our own manufacturing facility
or capability. We may establish multiple manufacturing facilities as we expand our commercial footprint to multiple geographies,
which may lead to regulatory delays or prove costly. Even if we are successful, our manufacturing capabilities could be affected
by cost-overruns, unexpected delays, equipment failures, labor shortages, natural disasters, power failures, transportation difficulties
and numerous other factors that could prevent us from realizing the intended benefits of our manufacturing strategy and have a
material adverse effect on our clinical development and/or commercialization plans.
In addition, the manufacturing
process for any products that we may develop is subject to the FDA and foreign regulatory authority approval process, and we will
need to contract with manufacturers who can meet all applicable FDA and foreign regulatory authority requirements on an ongoing
basis. If we or our CMOs are unable to reliably produce products to specifications acceptable to the FDA, or other regulatory authorities,
we may not obtain or maintain the approvals we need to commercialize such products. Even if we obtain regulatory approval for any
of our product candidates, there is no assurance that either we or our CMOs will be able to manufacture the approved product to
specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities to meet the requirements
for the potential launch of the product, or to meet potential future demand. Any of these challenges could delay completion of
clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs,
delay approval of our product candidate, impair commercialization efforts, increase our cost of goods, and have an adverse effect
on our clinical development and/or commercialization plans.
Regardless of
whether we engage additional CMOs to manufacture our products or establish our own manufacturing facility, in order to
transfer our MultiTAA T cell manufacturing from or expand our manufacturing capabilities beyond BCM pursuant to our
development plans, whether through additional third parties or by developing our own manufacturing capabilities, we will need
access to the Standard Operating Procedures (“SOPs”) and the specific Batch Production Records that are used to
manufacture the product candidates. If BCM fails to transfer our manufacturing processes or impedes our ability to transfer
the manufacturing processes of its products to us or third-party manufacturers, our planned clinical trials and additional
necessary manufacturing capabilities will be delayed, which will adversely affect our ability to conduct and further develop
our business as currently planned.
We will be dependent on third-party
vendors to design, build, maintain and support our manufacturing and cell processing facilities.
As a result of our
strategy to outsource our manufacturing, we will rely very heavily on BCM and other third-party manufacturers to perform the manufacturing
of our products for our clinical trials. We license our technology from others. We intend to rely on our contract manufacturers
to produce large quantities of materials needed for clinical trials and potential product commercialization. Third-party manufacturers
may not be able to meet our needs concerning timing, quantity, or quality. If we are unable to contract for a sufficient supply
of needed materials on acceptable terms, or if we should encounter delays or difficulties in our relationships with manufacturers,
our clinical trials may be delayed, thereby delaying the submission of products for regulatory approval or the market introduction
and subsequent sales of our products. Any such delay may lower our revenues and potential profitability. If any third party breaches
or terminates its agreement with us or fails to conduct its activities in a timely manner, the commercialization of our products
under development could be slowed down or blocked completely. It is possible that third parties relied upon by us will change their
strategic focus, pursue alternative technologies, or develop alternative products, either on their own or in collaboration with
others, as a means for developing treatments for the diseases targeted by our collaborative programs, or for other reasons. The
effectiveness of these third parties in marketing their own products may also affect our revenues and earnings.
We intend to continue
to enter into additional third-party agreements in the future. However, we may not be able to negotiate any additional agreements
successfully. Even if established, these relationships may not be scientifically or commercially successful.
Our manufacturing process is reliant
upon the specialized equipment, and other specialty materials, which may not be available to us on acceptable terms or at all.
For some of this equipment and materials, we rely or may rely on sole-source vendors or a limited number of vendors, which could
impair our ability to manufacture and supply our products.
We will depend on
a limited number of vendors for supply of certain materials and equipment used in the manufacture of our MultiTAA T cell therapy-based
product candidates. For example, we will purchase equipment and reagents critical for the manufacture of our product candidates
from Wilson Wolf (a company controlled by John Wilson, who is a director of the Company), JPT Peptide Technologies and other suppliers.
Some of our suppliers may not have the capacity to support commercial products manufactured under cGMP by biopharmaceutical firms
or may otherwise be ill-equipped to support our needs. We also may not have supply contracts with many of these suppliers and may
not be able to obtain supply contracts with them on acceptable terms or at all. Accordingly, we may not be able to obtain key materials
and equipment to support clinical or commercial manufacturing.
For some of this equipment
and materials, we may rely, and may now and/or in the future rely, on sole-source vendors or a limited number of vendors. An inability
to continue to source product from any of these suppliers, which could be due to regulatory actions or requirements affecting the
supplier, adverse financial, or other strategic developments experienced by a supplier, labor disputes or shortages, unexpected
demands, or quality issues, could adversely affect our ability to satisfy demand for our product candidates, which could adversely
and materially affect our operating results or our ability to conduct clinical trials, either of which could significantly harm
our business.
As we continue to
develop and scale our manufacturing process, we may need to obtain rights to and supplies of specific materials and equipment to
be used as part of that process. For example, our MultiTAA T cell manufacturing process is based, in part, upon the G-Rex®
cell culture device manufactured by Wilson Wolf, which is used by many cell therapy developers, both in commercial and academic
settings. Although we do hold the license to patents from Baylor College of Medicine that could be used to prevent third parties
from developing similar and competing processes, we do not own any exclusive rights to the G-Rex®. We may not be able to obtain
rights to such materials and equipment on commercially reasonable terms, or at all, and if we are unable to alter our process in
a commercially viable manner to avoid the use of such materials or find a suitable substitute, it would have a material adverse
effect on our business.
The manufacture of our product candidates
is complex, and we may encounter difficulties in production, particularly with respect to process development or scaling up of
our manufacturing capabilities. If we, or any of our third-party manufacturers encounter such difficulties, our ability to supply
our product candidates for clinical trials, or our products for patients, if approved, could be delayed or stopped, or we may be
unable to maintain a commercially viable cost structure.
Our product
candidates are biologics, and the process of manufacturing our products is complex, highly regulated and subject to multiple
risks. For example, the manufacture of our MultiTAA T cell therapy-based product candidates involves complex processes,
including drawing blood from patients/donors, manufacturing the clinical product, and ultimately infusing the product into a
patient. As a result of the complexities, the cost to manufacture biologics is generally higher than traditional small
molecule chemical compounds, and the manufacturing process is less reliable and is more difficult to reproduce. Our
manufacturing processes will be susceptible to product loss or failure due to any of the following: logistical issues
associated with the collection of blood cells, or starting material, from the patient or a donor, shipping such material to
the manufacturing site, shipping the final product back to the patient, and infusing the patient with the product;
manufacturing issues associated with the differences in patients’ or donor’s starting cells; interruptions in the
manufacturing process; contamination; equipment failure; improper installation or operation of equipment, vendor or operator
error; inconsistency in cell growth; and variability in product characteristics. Even minor deviations from normal
manufacturing processes could result in reduced production yields, product defects, and other supply disruptions. If for any
reason we lose a patient’s or a donor’s cells, or later-developed product at any point in the process, the
manufacturing process for that patient will need to be restarted and the resulting delay may adversely affect that
patient’s outcome and/or the results of clinical trials. If microbial, viral, or other contaminations are discovered in
our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing
facilities may need to be closed for an extended period of time to investigate and remedy the contamination.
Because our MultiTAA
T cell therapy-based product candidates are manufactured for each particular patient, we will be required to maintain a chain of
identity with respect to the patient’s/donor’s blood cells as it moves from the patient to the manufacturing facility,
through the manufacturing process, and back to the patient. Maintaining such a chain of identity is difficult and complex, and
failure to do so could result in adverse patient outcomes, loss of product, or regulatory action including withdrawal of our products
from the market. Further, as product candidates are developed through preclinical to late stage clinical trials towards approval
and commercialization, it is common that various aspects of the development program, such as manufacturing methods, are altered
along the way in an effort to optimize processes and results. Such changes carry the risk that they will not achieve these intended
objectives, and any of these changes could cause our product candidates to perform differently and affect the results of planned
clinical trials or other future clinical trials.
Currently, our product
candidates are manufactured using processes developed by BCM, our third-party research institution collaborator. Although we are
working to develop our own commercially viable processes, doing so is a difficult and uncertain task, and there are risks associated
with scaling to the level required for advanced clinical trials or commercialization, including, among others, cost overruns, potential
problems with process scale up, process reproducibility, stability issues, lot consistency, and timely availability of raw materials.
As a result of these challenges, we may experience delays in our clinical development and/or commercialization plans. We may ultimately
be unable to reduce the cost of goods for our product candidates to levels that will allow for an attractive return on investment
if and when those product candidates are commercialized.
No assurance can be given that we
will be able to develop a new, FDA-compliant, more efficient, lower cost manufacturing process upon which our business plan to
commercialize MultiTAA-based products is dependent.
In cooperation with
our potential contract manufacturers, we intend to develop improved methods for generating and selecting T cells, and to develop
methods for large-scale production of our current product candidates that are in accordance with current cGMP procedures. Developing
a new, scaled-up, pharmaceutical manufacturing process that can more efficiently and cost effectively, and in a more automated
manner produce, measure and control the physical and/or chemical attributes of our products in a cGMP facility is subject to many
uncertainties and difficulties. We have never manufactured our adoptive T cell therapy product candidate on any scale, commercially
or otherwise. As a result, we cannot give any assurance that we will be able to establish a manufacturing process that can produce
our products at a cost or in quantities necessary to make them commercially viable. Moreover, our third-party manufacturers will
have to continually adhere to current cGMP regulations enforced by the FDA through its facilities inspection program. If the facilities
of these manufacturers cannot pass a pre-approval plant inspection, the FDA premarket approval of our products will not be granted.
In complying with cGMP and foreign regulatory requirements, we and any of our third-party manufacturers will be obligated to expend
time, money and effort in production, record-keeping and quality control to assure that our products meet applicable specifications
and other requirements. If we or any of our third-party manufacturers fail to comply with these requirements, we may be subject
to regulatory action. No assurance can be given that we will be able to develop such manufacturing process, or that our partners
will thereafter be able to establish and operate such a production facility.
The deviations in our proposed new
MultiTAA-based products from existing products may require us to perform additional testing, which will increase the cost, and
extend the time for obtaining approval.
Our MultiTAA T
cell therapy platform is based on the adoptive T cell therapy technology that we licensed from BCM and that is presently
available as a physician-sponsored investigational therapy at BCM for the treatment of lymphoma, AML/MDS, multiple myeloma
and select solid tumors in the U.S. The current method of treatment is labor intensive and expensive. We are performing
process optimization that we anticipate will enable more efficient manufacturing of our products. We may have difficulty
demonstrating that the products produced from our new processes are identical to the existing products. The FDA may require
additional clinical testing before permitting a larger clinical trial with the new processes, and the product may not be as
efficacious in the new clinical trials. Cellular products are not considered to be well characterized products because there
are hundreds of markers present on T cells, and even small changes in manufacturing processes could alter the cell subtypes.
It is unclear at this time which of those markers are critical for success of T cells to combat cancer, so our ability to
predict the outcomes with newer manufacturing processes is limited. The changes that we may make to the existing
manufacturing process may require additional testing, which may increase costs and timelines associated with these
developments. In addition to developing a multi-antigen T cell-based therapy on existing adoptive T cell therapy technology,
we are currently evaluating the desirability of conducting clinical trials of our products in combination with other existing
drugs. These combination therapies will require additional testing, and clinical trials will require additional FDA
regulatory approval and will increase our future cost of development.
We may enter into one or more transactions
with entities controlled by one of our directors, which could pose a conflict of interest.
John Wilson, a director
of the Company, is also CEO and co-founder of Wilson Wolf, which is the sole source vendor that provides us with the G-Rex®
cell culture device for the large-scale production of T cells used in our manufacturing process. We do not currently have a supply
contract with Wilson Wolf for the G-Rex®. We plan to negotiate a supply contract with Wilson Wolf for the purchase of G-Rex®
devices. There can be no assurance that Wilson Wolf will agree to enter into any contract with us, or that the terms of any such
agreements will be in the best interests of us or will have terms no less favorable to us than could have been obtained from unaffiliated
third parties.
We may not be able to develop products
successfully or develop them on a timely basis.
Our immunotherapy
product candidates are at various stages of research and development. Further development and extensive testing will be required
to determine their technical feasibility and commercial viability. We will need to complete significant additional clinical trials
demonstrating that our product candidates are safe and effective to the satisfaction of the FDA and other non-U.S. regulatory authorities.
The drug approval process is time-consuming, which involves substantial expenditures of resources, and depends upon a number of
factors, including the severity of the disease indication in question, the availability of alternative treatments, and the risks
and benefits demonstrated in the clinical trials. Our success depends on our ability to achieve scientific and technological advances
and to translate such advances into licensable, FDA-approvable, commercially-competitive products on a timely basis. Failure can
occur at any stage of the process. If such programs are not successful, we may be unable to develop revenue-producing products.
As we enter a more extensive clinical program for our product candidates, the data generated in these studies may not be as compelling
as the earlier results.
Immunotherapies that
we may develop are not likely to be commercially available for at least five years. Any delay in obtaining FDA and/or other necessary
regulatory approvals in the United States and in countries outside the United States for any investigational new drug and
failure to receive such approvals would have an adverse effect on the investigational new drug’s potential commercial success
and on our business, prospects, financial condition and results of operations. The time required to obtain approval by the FDA
and non-U.S. regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials
and depends upon numerous factors, including the substantial discretion of the regulatory authorities. For example, the FDA or
non-U.S. regulatory authorities may disagree with the design or implementation of our clinical trials or study endpoints; or we
may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks. In addition,
the FDA or non-U.S. regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials
or the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a BLA or
other submission or to obtain regulatory approval in the United States or elsewhere. The FDA or non-U.S. regulatory authorities
may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical
and commercial supplies; and the approval policies or regulations of the FDA or non-U.S. regulatory authorities may significantly
change in a manner rendering our clinical data insufficient for approval. In addition, approval policies, regulations, or the type
and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development
and may vary among jurisdictions. The proposed development schedules for our immunotherapy product candidates may be affected by
a variety of other factors, including technological difficulties, clinical trial failures, regulatory hurdles, competitive products,
intellectual property challenges and/or changes in governmental regulation, many of which will not be within our control.
Any delay in the development,
approval, introduction or marketing of our products could result either in such products being marketed at a time when their cost
and performance characteristics would not be competitive in the marketplace or in the shortening of their commercial lives. In
light of the long-term nature of our projects, the unproven technology involved and the other factors described elsewhere in this
section, we might not be able to successfully complete the development or marketing of any new products, and as a result, our business,
prospects, financial condition and results of operations could be materially and adversely affected. We may be required to reduce
our staff, discontinue certain research or development programs of our future products and cease to operate.
Our commercial success depends upon
attaining significant market acceptance of our product candidates, if approved, among physicians, patients, healthcare payors and
the medical community.
Even if we obtain
regulatory approval for our product candidates, they may not gain market acceptance among physicians, healthcare payors, patients
or the medical community. Market acceptance of our product candidates, if we receive approval, depends on a number of factors,
including the:
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efficacy and safety of our product candidates as demonstrated in clinical trials and post-marketing
experience;
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clinical indications for which our product candidates may be approved;
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acceptance by physicians and patients of our product candidates as safe and effective;
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potential and perceived advantages of our product candidates over alternative treatments;
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safety of our product candidates seen in a broader patient group, including our use outside the
approved indications should physicians choose to prescribe for such uses;
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prevalence and severity of any side effects;
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product labeling, or product insert requirements of the FDA or other regulatory authorities;
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timing of market introduction of our product candidates as well as competitive products;
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cost in relation to alternative treatments;
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availability of coverage and adequate reimbursement and pricing by third-party payors and government
authorities;
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relative convenience and ease of administration; and
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effectiveness of any sales and marketing efforts.
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Moreover, if our product
candidates are approved but fail to achieve market acceptance among physicians, patients, healthcare payors and the medical community,
we may not be able to generate significant revenues, which would compromise our ability to become profitable.
We may not be able to establish or
maintain the third-party relationships that are necessary to develop or potentially commercialize some or all of our product candidates.
We expect to depend
on collaborators, partners, licensees, clinical research organizations and other third parties to support our discovery efforts,
to formulate product candidates, to manufacture our product candidates, and to conduct clinical trials for some or all of our product
candidates. We cannot guarantee that we will be able to successfully negotiate agreements for or maintain relationships with collaborators,
partners, licensees, clinical investigators, vendors and other third parties on favorable terms, if at all. Our ability to successfully
negotiate such agreements will depend on, among other things, potential partners’ evaluation of the superiority of our technology
over competing technologies and the quality of the preclinical and clinical data that it has generated, and the perceived risks
specific to developing our product candidates. If we are unable to obtain or maintain these agreements, we may not be able to clinically
develop, formulate, manufacture, obtain regulatory approvals for or commercialize our product candidates.
Issued patents covering our product
candidates could be found invalid or unenforceable if challenged in court or with the USPTO.
If we, our
licensing partners, or any potential future collaborator initiates legal proceedings against a third party to enforce a
patent directed to one of our product candidates, the defendant could counterclaim that the patent is invalid and/or
unenforceable in whole or in part. In patent litigation in the United States, defendant counterclaims alleging invalidity
and/or unenforceability are commonplace. Grounds for a validity challenge include an alleged failure to meet any of several
statutory requirements, including lack of novelty, non-obviousness or enablement. Grounds for an unenforceability assertion
could include an allegation that someone connected with prosecution of the patent withheld relevant information from the
USPTO or made a misleading statement during prosecution. Third parties may also raise similar claims before administrative
bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post
grant review, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could
result in revocation or amendment to our patents in such a way that they are no longer directed to our product candidates.
The outcome following legal assertions of invalidity and unenforceability is unpredictable, and prior art could render our
patents or those of our licensors invalid or could prevent a patent from issuing from one or more of our pending patent
applications. There is no assurance that all potentially relevant prior art relating to our patents and patent applications
has been found. There is also no assurance that there is not prior art of which we are aware, but which we do not believe
affects the validity or enforceability of a claim in our patents and patent applications, which may, nonetheless, ultimately
be found to affect the validity or enforceability of a claim. Furthermore, even if our patents are unchallenged, they may not
adequately protect our intellectual property, provide exclusivity for our product candidates, prevent others from
designing around our claims or provide us with a competitive advantage. If a defendant were to prevail on a legal assertion
of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product
candidates. In addition, if the breadth or strength of protection provided by our patents and patent applications is
threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future
product candidates. Such a loss of patent protection could have a material adverse impact on our business development.
If we are unable to protect our proprietary
rights, we may not be able to compete effectively or operate profitably.
Our commercial success
is dependent in part on our ability to obtain, maintain, and enforce the patents and other proprietary rights that we have licensed
and may develop, and on our ability to avoid infringing the proprietary rights of others. We generally seek to protect our proprietary
position by filing patent applications in the United States and abroad related to our product candidates, proprietary technologies
and their uses that are important to our business. Our patent applications cannot be enforced against third parties practicing
the technology claimed in such applications unless, and until, patents issue from such applications, and then only to the extent
the issued claims are directed to the technology. There can be no assurance that our patent applications or those of our licensor
will result in additional patents being issued or that issued patents will afford sufficient protection against competitors with
similar technology, nor can there be any assurance that the patents issued will not be infringed, designed around or invalidated
by third parties. Even issued patents may later be found invalid or unenforceable or may be modified or revoked in proceedings
instituted by third parties before various patent offices or in courts. The degree of future protection for our proprietary rights
is uncertain. Only limited protection may be available and may not adequately protect our rights or permit us to gain or keep any
competitive advantage. This failure to properly protect the intellectual property rights relating to our product candidates could
have a material adverse effect on our financial condition and results of operations.
We seek to protect
our proprietary technology and processes, in part, by entering into confidentiality agreements with relevant employees, consultants,
scientific advisors, and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets
by maintaining physical security of the premises and physical and electronic security of the information technology systems. While
we have confidence in these individuals, organizations, and systems, agreements or security measures may be breached, and we may
not have adequate remedies for any breach. In addition, trade secrets may otherwise become known or be independently discovered
by competitors. To the extent that the consultants, contractors or collaborators 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.
Although we have patents
and patent applications in other countries, we cannot be certain that the claims in other pending U.S. or European patent applications,
international patent applications, and patent applications in certain other foreign territories directed to methods of generating
multi-antigen specific T cell products, or our other product candidates, will be considered patentable by the USPTO, courts in
the United States or by the patent offices and courts in foreign countries, nor can we be certain that the claims in our issued
European patent will not be found invalid or unenforceable if challenged.
Most of our intellectual
property rights are currently licensed from BCM and the Mayo Foundation, so that the preparation and prosecution of these patents
and patent applications was not performed by us or under our control. Furthermore, patent law relating to the scope of claims in
the biotechnology field in which we operate is still evolving and, consequently, patent positions in our industry may not be as
strong as in other more well-established fields. The patent positions of biotechnology companies can be highly uncertain and involve
complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the
breadth of claims allowed in biotechnology patents has emerged to date. The patent application process is subject to numerous risks
and uncertainties, and there can be no assurance that we or any of our potential future collaborators will be successful in protecting
our product candidates by obtaining and defending patents. These risks and uncertainties include the following:
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the USPTO and various foreign governmental patent agencies require compliance with a number of
procedural, documentary, fee payment and other provisions during the patent process, the noncompliance with which can result in
abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction;
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patent applications may not result in any patents being issued;
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patents that may be issued or in-licensed may be challenged, invalidated, modified, revoked, circumvented,
found to be unenforceable or otherwise may not provide any competitive advantage;
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our competitors, many of whom have substantially greater resources than us, and many of whom have
made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere
with or eliminate our ability to make, use and sell our potential product candidates;
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there may be significant pressure on the U.S. government and international governmental bodies
to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful,
as a matter of public policy regarding worldwide health concerns; and
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countries other than the United States may have patent laws less favorable to patentees than those
upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop and market competing product candidates.
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The patent prosecution
process is also expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications
at a reasonable cost or in a timely manner or in all jurisdictions where protection may be commercially advantageous. It is also
possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain
patent protection. Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution
of patent applications, or to maintain the patents, directed to technology that we license from third parties. We may also require
the cooperation of one of our licensors in order to enforce the licensed patent rights, and such cooperation may not be provided.
Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of
our business. We cannot be certain that patent prosecution and maintenance activities by our licensor have been or will be conducted
in compliance with applicable laws and regulations, which may affect the validity and enforceability of such patents or any patents
that may issue from such applications. If they fail to do so, this could cause us to lose rights in any applicable intellectual
property that we in-license, and as a result our ability to develop and commercialize products or product candidates may be adversely
affected and we may be unable to prevent competitors from making, using and selling competing products.
In addition, identification
of third-party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences
in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. The issuance of
a patent is not conclusive as to its inventorship, scope, validity or enforceability and it is uncertain how much protection, if
any, will be given to the patents we have licensed from a licensor if either the licensor or we attempt to enforce the patents
and/or if they are challenged in court or in other proceedings, such as oppositions, which may be brought in foreign jurisdictions
to challenge the validity of a patent. A third party may challenge our patents, if issued, or the patent rights that we license
from others in the courts or patent offices in the United States and abroad. It is possible that a competitor may successfully
challenge our patents or that a challenge will result in loss of exclusivity or in patent claims being narrowed, invalidated or
held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical products, or
limit the duration of the patent protection of our products and product candidates. Moreover, the cost of litigation to uphold
the validity of patents and to prevent infringement can be substantial. If the outcome of litigation is adverse to us, third parties
may be able to use our patented invention without payment to us. Moreover, it is possible that competitors may infringe our patents
or successfully avoid them through design innovation. To stop these activities, we may need to file a lawsuit. These lawsuits are
expensive and would consume time and other resources, even if we were successful in stopping the violation of our patent rights.
In addition, there is a risk that a court would decide that our patents are not valid and that we do not have the right to stop
the other party from using the inventions. There is also the risk that, even if the validity of our patents were upheld, a court
would refuse to stop the other party on the ground that its activities are not covered by, that is, do not infringe, our patents.
Should third parties
file patent applications, or be issued patents claiming technology also used or claimed by our licensor(s) or by us in any
future patent application, we may be required to participate in interference proceedings in the USPTO to determine priority of
invention for those patents or patent applications that are subject to the first-to-invent law in the United States, or may be
required to participate in derivation proceedings in the USPTO for those patents or patent applications that are subject to the
“first-inventor-to-file” law in the United States. We may be required to participate in such interference or derivation
proceedings involving our issued patents and pending applications. We may be required to cease using the technology or to license
rights from prevailing third parties as a result of an unfavorable outcome in an interference proceeding or derivation proceeding.
A prevailing party in that case may not offer us a license on commercially acceptable terms or on any terms.
The use of our technologies could
potentially conflict with the rights of others.
Our potential competitors
or other entities may have or acquire patent or proprietary rights that they could enforce against our licensors. There is a substantial
amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the
biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, reexaminations, inter
partes review proceedings and post-grant review, or PGR, proceedings before the USPTO and/or corresponding foreign patent
offices. Numerous third-party U.S. and foreign issued patents and pending patent applications exist in the fields in which we are
developing product candidates. There may be third-party patents or patent applications with claims to materials, formulations,
methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. If they do so, then
they could limit our ability to make, use, sell, offer for sale or import our product candidates and products that may be approved
in the future, or impair our competitive position by requiring us to alter our products, pay licensing fees or cease activities.
As the biotechnology
industry expands and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement
of the patent rights of third parties. Because patent applications are maintained as confidential for a certain period of time,
until the relevant application is published us may be unaware of third-party patents that may be infringed by commercialization
of any of our product candidates, and we cannot be certain that we were the first to file a patent application related to a product
candidate or technology. Moreover, because patent applications can take many years to issue, there may be currently-pending patent
applications that later issue as patents that our product candidates may infringe. If our products conflict with patent rights
of others, third parties could bring legal actions against us or our collaborators, licensees, suppliers or customers, claiming
damages and seeking to enjoin manufacturing and marketing of the affected products. If these legal actions are successful, in
addition to any potential liability for damages, we could be required to obtain a license in order to continue to manufacture
or market the affected products. We may not prevail in any legal action and a required license under the patent may not be available
on acceptable terms or at all.
Changes in U.S. patent law could
diminish the value of patents in general, thereby impairing our ability to protect our products.
As is the case with
other biopharmaceutical companies, our success is dependent on intellectual property, particularly patents. Obtaining and enforcing
patents in the biopharmaceutical industry involve both technological and legal complexity, and is therefore costly, time-consuming
and inherently uncertain. Changes in either the patent laws or in the interpretations of patent laws in the United States and other
countries may diminish the value of our intellectual property. We cannot predict the breadth of claims that may be allowed or enforced
in our patents or in third-party patents. For example, on September 16, 2011, the Leahy-Smith America Invents Act, or Leahy-Smith
Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions
that affect the way patent applications will be prosecuted and may also affect patent litigation. In particular, under the Leahy-Smith
Act, the United States transitioned in March 2013 to a “first inventor to file” system in which the first inventor
to file a patent application will be entitled to the patent. Third parties are allowed to submit prior art before the issuance
of a patent by the USPTO and may become involved in post-grant proceedings including post grant review, derivation, reexamination, inter-partes review
or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such
submission, proceeding or litigation could reduce the scope or enforceability of, or invalidate, our patent rights, which could
adversely affect our competitive position. In addition, recent U.S. Supreme Court rulings on several patent cases have narrowed
the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations.
In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has
created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal
courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability
to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. While we do not believe
that any of the patents owned or licensed by us will be found invalid based on these decisions, we cannot predict how future decisions
by the courts, the U.S. Congress or the USPTO may impact the value of our patents.
We have limited foreign intellectual
property rights and may not be able to protect our intellectual property rights throughout the world.
We have limited intellectual
property rights outside the United States. Filing, prosecuting and defending patents on product candidates in all countries throughout
the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can
be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual
property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent
third parties from practicing its inventions in all countries outside the United States, or from selling or importing products
made using its inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions
where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products
to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may
compete with our products and patents or other intellectual property rights may not be effective or sufficient to prevent them
from competing.
Many companies have
encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems
of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other
intellectual property protection, particularly those relating to biopharmaceutical products, which could make it difficult for
us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and
attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our
patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any
lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly,
our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage
from the intellectual property that we develop or license.
We may be subject to claims that
our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.
As is common in
the biotechnology and pharmaceutical industries, in addition to our employees, we engage the services of consultants to
assist us in the development of our product candidates. We have received confidential and proprietary information from third
parties. We employ individuals or engage consultants who were previously employed at other biotechnology or pharmaceutical
companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or
otherwise used or disclosed confidential information of these third parties or our employees’ former employers.
Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims,
litigation could result in substantial cost and be a distraction to our management and employees.
If we fail to comply with any obligations
under our existing license agreements or any future license agreements, or disputes arise with respect to those agreements, it
could have a negative impact on our business and our intellectual property rights.
We are a party to
license agreements with BCM and the Mayo Foundation that impose, and we may enter into additional licensing arrangements with third
parties that may impose, diligence, development and commercialization timelines, milestone payment, royalty, insurance and other
obligations on us. Our rights to use the licensed intellectual property are subject to the continuation of and our compliance with
the terms of these agreements. Disputes may arise regarding our rights to intellectual property licensed to us from a third party,
including but not limited to:
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the scope of rights granted under the license agreement and other interpretation-related issues;
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the extent to which our technology and processes infringe on intellectual property of the licensor
that is not subject to the licensing agreement;
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the sublicensing of patent and other rights;
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our diligence obligations under the license agreement and what activities satisfy those diligence
obligations;
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the ownership of inventions and know-how resulting from the creation or use of intellectual property
by us, alone or with our licensors and collaborators;
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the scope and duration of our payment obligations;
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our rights upon termination of such agreement; and
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the scope and duration of exclusivity obligations of each party to the agreement.
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If disputes over intellectual
property and other rights that we have licensed or acquired from third parties prevent or impair our ability to maintain our current
licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.
If we fail to comply with our obligations under current or future licensing agreements, these agreements may be terminated or the
scope of our rights under them may be reduced and we might be unable to develop, manufacture or market any product that is licensed
under these agreements.
We may be subject to claims challenging
the inventorship or ownership of our patents and other intellectual property.
We may be subject
to claims that former employees, collaborators or other third parties have an ownership interest in our patents or other intellectual
property. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail
in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights. Such an
outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation
could result in substantial costs and distraction to management and other employees.
Patent terms may be inadequate to
protect our competitive position on our product candidates for an adequate amount of time.
Patents have a limited
lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years
from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection
it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired, we may
be subject to competition from competitive products, including biosimilars. Given the amount of time required for the development,
testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after
such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide sufficient rights to exclude
others from commercializing products similar or identical to our products.
Certain of our technologies are in-licensed
from third parties, and the protection of those technologies is not entirely within our control.
We have world-wide
exclusive licenses from the Mayo Foundation on (i) a novel set of Class II HER2/neu peptide antigens, (ii) a novel Class I HER2/neu
antigen, and (iii) a novel set of Class II Folate Receptor Alpha peptide antigens. We have a world-wide exclusive license from
BCM of the rights in and to three patent families to develop and commercialize MultiTAA product candidates in the field of oncology.
As a result of these in-licenses, we could lose the right to develop each of the technologies if:
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the owners of the patent rights underlying the technologies that we license do not properly maintain
or enforce the patents and intellectual property underlying those properties,
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the Mayo Foundation or BCM seeks to terminate our license in contravention of the license agreements;
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we fail to make all payments due and owing under any of the licenses; or
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we fail to obtain on commercially reasonable terms, if at all, in-licenses from the Mayo Foundation
or BCM or others for other rights that are necessary to develop the technology that we have already in-licensed.
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If any of the above
occurs, we could lose the right to use the in-licensed intellectual property, which would adversely affect our ability to commercialize
our technologies, products or services. The loss of any current or future licenses from Mayo Foundation or BCM, or the exclusivity
rights provided by such license agreements, could materially harm our financial condition and operating results.
We rely upon patents and licensed
technologies to protect our technology. We may be unable to protect our intellectual property rights, and we may be liable for
infringing the intellectual property rights of others.
Our ability to compete
effectively depends on our ability to maintain the proprietary nature of our technologies and the proprietary technology of others
with whom we have entered into collaboration and licensing agreements. We own or hold licenses to a number of issued patents and
U.S. pending patent applications, as well as foreign patents and foreign counterparts. Our success depends in part on our ability
to obtain patent protection both in the United States and abroad for our product candidates, as well as the methods for treating
patients in the product indications using these product candidates. Such patent protection is costly to obtain and maintain, and
sufficient funds might not be available. Our ability to protect our product candidates from unauthorized or infringing use by third
parties depends in substantial part on our ability to obtain and maintain valid and enforceable patents. Due to evolving legal
standards relating to the patentability, validity and enforceability of patents covering pharmaceutical inventions and the scope
of claims made under these patents, our ability to obtain, maintain and enforce patents is uncertain and involves complex legal
and factual questions. Even if our product candidates, as well as methods for treating patients for prescribed indications using
these product candidates are covered by valid and enforceable patents and have claims with sufficient scope, disclosure and support
in the specification, the patents will provide protection only for a limited amount of time. Accordingly, rights under any issued
patents may not provide us with sufficient protection for our product candidates or provide sufficient protection to afford us
a commercial advantage against competitive products or processes.
In addition, we cannot
guarantee that any patents will be issued from any pending or future patent applications owned by or licensed to us. Even if patents
have been issued or will be issued, we cannot guarantee that the claims of these patents are or will be valid or enforceable or
will provide us with any significant protection against competitive products or otherwise be commercially valuable to us. The laws
of some foreign jurisdictions do not protect intellectual property rights to the same extent as in the United States and many companies
have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions. Furthermore, different
countries have different procedures for obtaining patents, and patents issued in different countries offer different degrees of
protection against use of the patented invention by others. If we encounter such difficulties in protecting or are otherwise precluded
from effectively protecting our intellectual property rights in foreign jurisdictions, our business prospects could be substantially
harmed.
The patent positions
of biotechnology and pharmaceutical companies, including our patent positions, involve complex legal and factual questions, and,
therefore, validity and enforceability cannot be predicted with certainty. Patents may be challenged, deemed unenforceable, invalidated,
or circumvented. Our patents can be challenged by our competitors who can argue that our patents are invalid, unenforceable, lack
sufficient written description or enablement, or that the claims of the issued patents should be limited or narrowly construed.
Patents also will not protect our product candidates if competitors devise ways of making or using these product candidates without
infringing our patents.
We will be able to
protect our proprietary rights from unauthorized use by third parties only to the extent that our technologies, methods of treatment,
product candidates, and any future products are covered by valid and enforceable patents or are effectively maintained as trade
secrets and we have the funds to enforce our rights, if necessary.
The expiration of
our owned or licensed patents before completing the research and development of our product candidates and receiving all required
approvals in order to sell and distribute the products on a commercial scale can adversely affect our business and results of operations.
We may be involved in lawsuits to
protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.
Competitors may infringe
our intellectual property rights or those of our licensors. To counter infringement or unauthorized use, we may be required to
file infringement claims, which can be expensive and time-consuming. In addition, in a patent infringement proceeding, a court
may decide that one or more of the patents which we own or in-license is not valid or is unenforceable, and/or is not infringed.
An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held
unenforceable, or interpreted narrowly and could put our patent applications at risk of not issuing. Defense of these claims, regardless
of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our
business. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially
meaningful. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble
damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign
our infringing products, which may be impossible or require substantial time and monetary expenditure.
Periodic maintenance
fees, renewal fees, annuity fees and various other governmental fees on any issued patent and/or pending patent applications will
be due to the USPTO and foreign patent agencies in several stages over the lifetime of our patents and/or applications. The USPTO
and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other
similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply,
and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable
to the particular jurisdiction. However, there are situations in which noncompliance can result in abandonment or lapse of the
patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance
events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to
respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal
documents. In such an event, our competitors might be able to enter the market, which would have a material adverse effect on our
business development.
Interference or derivation
proceedings provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions
with respect to our patents or patent applications or those of our licensors. Should third parties file patent applications or
be issued patents claiming technology also used or claimed by us, we may be required to participate in interference or derivation
proceedings in the USPTO to determine priority of invention. We may be required to participate in interference or derivation proceedings
involving our issued patents and pending applications. An unfavorable outcome could require us to cease using the related technology
or to attempt to license rights from the prevailing party. Our business could be harmed if the prevailing party does not offer
us a license on commercially acceptable terms.
We may be unable to adequately prevent
disclosure of trade secrets and other proprietary information.
We also rely on trade
secrets to protect our proprietary technologies, especially where we do not believe patent protection is appropriate or obtainable.
However, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants,
outside scientific collaborators, sponsored researchers, and other advisors to protect our trade secrets and other proprietary
information. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate
remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover our
trade secrets and proprietary information. Costly and time-consuming litigation could be necessary to enforce and determine the
scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive
business position.
If we are unable to obtain licenses
needed for the development of our product candidates, or if we breach any of the agreements under which we license rights to patents
or other intellectual property from third parties, we could lose license rights that are important to our business.
If we are unable to
maintain and/or obtain licenses needed for the development of our product candidates in the future, we may have to develop alternatives
to avoid infringing on the patents of others, potentially causing increased costs and delays in drug development and introduction
or precluding the development, manufacture, or sale of planned products. Some of our licenses provide for limited periods of exclusivity
that require minimum license fees and payments and/or may be extended only with the consent of the licensor. We might not meet
these minimum license fees in the future or these third parties might not grant extensions on any or all such licenses. This same
restriction may be contained in licenses obtained in the future.
Additionally, the
patents underlying the licenses might not be valid and enforceable. To the extent any products developed by us are based on licensed
technology, royalty payments on the licenses will reduce our gross profit from such product sales and may render the sales of such
products uneconomical. In addition, the loss of any current or future licenses or the exclusivity rights provided therein could
materially harm our business financial condition and our operations.
We may face legal claims; litigation
is expensive and we may not be able to afford the costs.
We may face legal
claims involving stockholders, consumers, competitors, entities from whom we license technology, entities with whom we collaborate,
persons claiming that we are infringing on their intellectual property and others. The biotechnology and pharmaceutical industries have been characterized by
extensive litigation regarding patents and other intellectual property rights, and companies have employed intellectual property
litigation to gain a competitive advantage. We may initiate or become subject to infringement claims or litigation arising out
of patents and pending applications of our competitors, or we may become subject to proceedings initiated by our competitors or
other third parties or the USPTO or applicable foreign bodies to reexamine the patentability of our licensed or owned patents.
In addition, litigation may be necessary to enforce our issued patents, to protect our trade secrets and know-how, or to determine
the enforceability, scope, and validity of the proprietary rights of others.
The costs of litigation
or any proceeding relating to our intellectual property or contractual rights could be substantial even if resolved in our favor.
Some of our competitors or financial funding sources have far greater resources than we do and may be better able to afford the
costs of complex legal procedures. Also, in a law suit for infringement or contractual breaches, even if frivolous, we will require
considerable time commitments on the part of management, our attorneys and consultants. Defending these types of proceedings or
legal actions involve considerable expense and could negatively affect our financial results.
Our research and development programs
are subject to uncertainty.
Factors affecting
our research and development programs include, but are not limited to:
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limited financial resources from which to budget and allocate among our product candidates;
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competition from companies that are substantially and financially stronger than us;
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the need for acceptance of our immunotherapies;
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our ability to anticipate and adapt to a competitive market and rapid technological developments;
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the amount and timing of operating costs and capital expenditures relating to expansion of our
business, operations and infrastructure;
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the need to rely on multiple levels of outside funding due to the length of drug development cycles
and governmental approved protocols associated with the pharmaceutical industry; and
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the dependence upon key personnel including key independent consultants and advisors.
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Our research and development
expenses may not be consistent from time to time. We may be required to accelerate or delay incurring certain expenses depending
on the results of our studies and the availability of adequate funding.
If we are unable to establish sales
and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable
to generate any revenue.
We do not currently
have an organization for the sale, marketing and distribution of products and the cost of establishing and maintaining such an
organization may exceed the cost-effectiveness of doing so. In order to market any products approved by the FDA or comparable foreign
regulatory authorities, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements
with third parties to perform these services. If we are unable to establish adequate sales, marketing and distribution capabilities,
whether independently or with third parties, we may not be able to generate product revenue and may not become profitable. We will
be competing with many companies that currently have extensive and well-funded sales and marketing operations. Without an internal
commercial organization or the support of a third party to perform sales and marketing functions, we may be unable to compete successfully
against these more established companies.
If we are unable to establish or
manage strategic collaborations in the future, our revenue and drug development may be limited.
Our strategy includes
eventual substantial reliance upon strategic collaborations for marketing and commercialization of our product candidates, and
we may rely even more on strategic collaborations for research, development, marketing and commercialization of our other immunotherapies.
If we are unsuccessful in securing such strategic collaborations, we may be unable to commercialize our products as we have not
yet licensed, marketed or sold any of our immunotherapies or entered into successful collaborations for these services in order
to ultimately commercialize our immunotherapies. Establishing strategic collaborations is difficult and time-consuming. Our discussions
with potential collaborators may not lead to the establishment of collaborations on favorable terms, if at all. Potential collaborators
may reject collaborations based upon their assessment of our financial, clinical, regulatory or intellectual property position.
If we successfully establish new collaborations, these relationships may never result in the successful development or commercialization
of our immunotherapies or the generation of sales revenue. To the extent that we enter into co-promotion or other collaborative
arrangements, our product revenues are likely to be lower than if it directly marketed and sold any products that we may develop.
Management of our
relationships with our collaborators will require:
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significant time and effort from our management team;
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coordination of our research and development programs with the research and development priorities
of our collaborators; and
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effective allocation of our resources to multiple projects.
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If we continue to
enter into research and development collaborations at the early phases of drug development, our success will in part depend on
the performance of our corporate collaborators. We will not directly control the amount or timing of resources devoted by our corporate
collaborators to activities related to our immunotherapies. Our corporate collaborators may not commit sufficient resources to
its research and development programs or the commercialization, marketing or distribution of its immunotherapies. If any corporate
collaborator fails to commit sufficient resources, our preclinical or clinical development programs related to this collaboration
could be delayed or terminated. Also, our collaborators may pursue existing or other development-stage products or alternative
technologies in preference to those being developed in collaboration with us. Finally, if we fail to make required milestones or
royalty payments to our collaborators or to observe other obligations in our agreements with them, our collaborators may have the
right to terminate those agreements.
We may not be able to license newly
developed MultiTAA T cell technology from BCM and others.
An important element
of our intellectual property portfolio is to license additional rights and technologies from BCM. Our inability to license the
rights and technologies that we have identified, or newly developed MultiTAA T cell technology that we may in the future identify,
could have a material adverse impact on our ability to complete the development of our products or to develop additional products.
No assurance can be given that we will be successful in licensing any additional rights or technologies from BCM and others. Failure
to obtain additional rights and licenses may detrimentally affect our planned development of additional product candidates and
could increase the cost, and extend the timelines associated with our development of such other products.
The market opportunities for our
product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small.
The FDA often approves
new oncology therapies initially only for use in patients with relapsed or refractory metastatic disease. We expect to initially
seek approval of our product candidates in this setting. Subsequently, for those products that prove to be sufficiently beneficial,
if any, we would expect to seek approval in earlier lines of treatment and potentially as a first line therapy. There is no guarantee,
however, that our product candidates, even if approved, would be approved for earlier lines of therapy, and, prior to any such
approvals, we may have to conduct additional clinical trials.
Our projections of
both the number of people who have the cancers we are targeting, as well as the subset of people with these cancers in a position
to receive second or third-line therapy, and who have the potential to benefit from treatment with our product candidates, are
based on our research and estimates. These estimates have been derived from a variety of sources, including scientific literature,
surveys of clinics, patient foundations, or market research by third parties, and may prove to be incorrect. Further, new studies
may change the estimated incidence or prevalence of these cancers. The number of treatable patients may turn out to be lower than
expected. Additionally, the potentially addressable patient population for our product candidates may be limited or may not be
amenable to treatment with our product candidates and may also be limited by the cost of our treatments and the reimbursement of
those treatment costs by third-party payors. For instance, we expect our lead product candidate, LAPP, to initially target a small
patient population that suffers from AML. Even if we obtain significant market share for our product candidates, because the potential
target populations are small, we may never achieve profitability without obtaining regulatory approval for additional indications.
We are required to pay substantial
royalties and lump sum milestone payments under our license agreements with BCM and the Mayo Foundation, and we must meet certain
milestones to maintain our license rights.
Under our license
agreement with BCM for our MultiTAA T cell therapy technologies, we are currently required to pay both substantial milestone payments
and royalties to BCM based on our revenues from sales of our products utilizing the licensed technologies, and these payments could
adversely affect the overall profitability for us of any products that we may seek to commercialize. In order to maintain our license
rights under the BCM license agreement, we will need to meet certain specified milestones, subject to certain cure provisions,
in the development of our product candidates. Similarly, we are also required to pay both substantial milestone payments and royalties
to the Mayo Foundation based on our revenues from sales of our products utilizing those licensed technologies. There is no assurance
that we will be successful in meeting all of the milestones in our licenses in the future on a timely basis or at all.
In addition, upon
a liquidity event (as defined in our BCM license agreement with BCM, but shall not include the “Merger”) of the licensee
under the BCM license agreement (which, the licensee shall be the Company), BCM will receive a liquidity incentive payment of 0.5%
of the liquidity event proceeds (as defined in the BCM license agreement) received by such licensee or its stockholders in the
liquidity event, thereby diluting the amount of proceeds available to the licensee or its stockholders in a liquidity event.
Because our current products represent,
and our other potential product candidates will represent novel approaches to the treatment of disease, there are many uncertainties
regarding the development, the market acceptance, third-party reimbursement coverage and the commercial potential of our product
candidates.
There is no assurance
that the approaches offered by our products will gain broad acceptance among doctors or patients or that governmental agencies
or third-party medical insurers will be willing to provide reimbursement coverage for proposed product candidates. Moreover, we
do not have verifiable internal marketing data regarding the potential size of the commercial market for our product candidates,
nor have we obtained independent marketing surveys to verify the potential size of the commercial markets for our current product
candidates or any future product candidates. Since our current product candidates and any future product candidates will represent
new approaches to treating various conditions, it may be difficult, in any event, to accurately estimate the potential revenues
from these product candidates. Accordingly, we may spend large amounts of money trying to obtain approval for product candidates
that have an uncertain commercial market. The market for any products that we successfully develop will also depend on the cost
of the product. We do not yet have sufficient information to reliably estimate what it will cost to commercially manufacture our
current product candidates, and the actual cost to manufacture these products could materially and adversely affect the commercial
viability of these products. Our goal is to reduce the cost of manufacturing our therapies. However, unless we are able to reduce
those costs to an acceptable amount, we may never be able to develop a commercially viable product. If we do not successfully develop
and commercialize products based upon our approach or find suitable and economical sources for materials used in the production
of our products, we will not become profitable.
Our MultiTAA T cell
therapy may be provided to patients in combination with other agents provided by third parties. The cost of such combination therapy
may increase the overall cost of MultiTAA T cell therapy and may result in issues regarding the allocation of reimbursements between
our therapy and the other agents, all of which may adversely affect our ability to obtain reimbursement coverage for the combination
therapy from third-party medical insurers.
If product liability lawsuits are
brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.
We face an inherent
risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk if we
commercialize any products. For example, we may be sued if our product candidates cause or are perceived to cause injury or are
found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may
include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent to the product, negligence,
strict liability or a breach of warranties. Claims could also be asserted under state consumer protection laws. If we cannot successfully
defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization
of our product candidates. Even successful defense would require significant financial and management resources. Regardless of
the merits or eventual outcome, liability claims may result in:
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decreased demand for our product candidates;
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injury to our reputation;
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withdrawal of clinical trial participants;
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initiation of investigations by regulators;
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costs to defend the related litigation;
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a diversion of management’s time and our resources;
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substantial monetary awards to trial participants or patients;
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product recalls, withdrawals or labeling, marketing or promotional restrictions;
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exhaustion of any available insurance and our capital resources; and
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the inability to commercialize any product candidate.
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Our inability to obtain
sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could inhibit
or prevent the commercialization of products we develop, alone or with collaborators. Our insurance policies may also have various
exclusions, and we may be subject to a product liability claim for which we have no insurance coverage. While we obtained clinical
trial insurance for our Phase II clinical trials, we may have to pay amounts awarded by a court or negotiated in a settlement that
exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient
capital to pay such amounts. Even if our agreements with any future collaborators entitle us to indemnification against losses,
such indemnification may not be available or adequate should any claim arise.
We face significant competition from
other biotechnology and pharmaceutical companies and from non-profit institutions.
Competition in the
field of cancer therapy is intense and is accentuated by the rapid pace of technological development. Research and discoveries
by others may result in breakthroughs that may render our products obsolete even before they generate any revenue. There are products
currently under development by others that could compete with the products that we are developing. Many of our potential competitors
have substantially greater research and development capabilities and manufacturing, marketing, financial and managerial resources
than we have. Our competitors may:
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develop safer or more effective immunotherapies and other therapeutic products;
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reach the market more rapidly, reducing the potential sales of our products; or
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establish superior proprietary positions.
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Potential competitors
in the market for treating hematological malignancies are companies such as Juno Therapeutics/Celgene/Bristol-Myers Squibb, Roche/Genentech,
Merck, Novartis, Kite Pharma/Gilead, Amgen, Pfizer, and GlaxoSmithKline, which already have products on the market or in development.
Other companies, such as Cellectis and AdaptImmune, which are focused on genetically engineered T cell technologies to treat cancer,
may also be competitors. Furthermore, companies such as Iovance, Immatics, WindMIL Therapeutics, Mana Therapeutics and Torque
Therapeutics are developing non-genetically modified T cell therapies such as Tumor Infiltrating Lymphocytes (“TIL”)
and Marrow Infiltrating Lymphocytes (“MIL”) therapies that may compete with our products. All of these companies, and
most of our other current and potential competitors have substantially greater research and development capabilities and financial,
scientific, regulatory, manufacturing, marketing, sales, human resources, and experience than we do. Many of our competitors have
several therapeutic products that have already been developed, approved and successfully commercialized, or are in the process
of obtaining regulatory approval for their therapeutic products in the United States and internationally.
Universities and public
and private research institutions in the U.S. and around the world are also potential competitors. While these universities and
public and private research institutions primarily have educational objectives, they may develop proprietary technologies that
lead to other FDA approved therapies or that secure patent protection that we may need for the development of our technologies
and products.
Our lead product candidate,
LAPP, is a therapy for the treatment of refractory AML. Currently, there are numerous companies that are developing various alternate
treatments for AML. Accordingly, LAPP faces significant competition in the AML treatment space from multiple companies. Even if
we obtain regulatory approval for LAPP, the availability and price of competitors’ products could limit the demand and the
price we will be able to charge for our therapy. We may not be able to implement our business plan if the acceptance of our products
is inhibited by price competition or the reluctance of physicians to switch from other methods of treatment to our product, or
if physicians switch to other new therapies, drugs or biologic products or choose to reserve our products for use in limited circumstances.
Our business and operations would
suffer in the event of cybersecurity/information systems risk.
Despite the
implementation of security measures, our internal computer systems, and those of our manufacturers and other third parties on
which we rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism,
successful breaches, employee malfeasance, or human or technological error, war and telecommunication and electrical
failures. In addition, our systems safeguard important confidential personal data regarding our subjects. If a disruption
event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug
development programs. For example, the loss of clinical trial data from completed, ongoing or planned clinical trials could
result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To
the extent that any disruption or security breach results in a loss of or damage to our data or applications, or
inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of
our product candidates could be delayed.
We maintain cybersecurity insurance,
however, an incident may exceed our coverage premiums.
We have cybersecurity
insurance for a breach event covering expenses for notification, credit monitoring, investigation, crisis management, public relations
and legal advice. We also maintain property and casualty insurance that may cover restoration of data, certain physical damage
or third-party injuries caused by potential cybersecurity incidents. However, damage and claims arising from such incidents may
not be covered or may exceed the amount of any insurance available.
We may incur costs of addressing
a cybersecurity incident.
Cybersecurity incidents
have increased in number and severity recently and it is expected that these trends will continue. Should we be affected by such
an incident, we may incur substantial costs and suffer other negative consequences, which may include:
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investigation costs and costs to engage specialized consultants;
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remediation costs, such as liability for stolen assets or information, repairs of system damage,
and incentives to customers or business partners in an effort to maintain relationships after an attack; and
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litigation and legal risks, including regulatory actions by state and federal regulators.
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Our
ability to use net operating losses and certain other tax attributes to offset future taxable income may be subject to limitation.
Our net operating
loss, or NOL, carryforwards could expire unused and be unavailable to offset future income tax liabilities because of their limited
duration or because of restrictions under U.S. tax law. Our NOLs generated in tax years ending on or prior to December 31,
2017 are only permitted to be carried forward for 20 years under applicable U.S. tax law. Under H.R. 1, “An Act to
provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018”,
informally titled the Tax Cuts and Jobs Act, or, the Tax Act, our federal NOLs generated in tax years ending after December 31,
2017 may be carried forward indefinitely, but the deductibility of federal NOLs generated in tax years beginning after December 31,
2017 is limited. It is uncertain if and to what extent various states will conform to the Tax Act.
In addition, under
Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, (or, the Code) and corresponding provisions
of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change,
by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating
loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income or taxes
may be limited. We may have experienced ownership changes in the past and may experience ownership changes in the future as a result
of shifts in our stock ownership (some of which shifts are outside our control). As a result, if we earn net taxable income, our
ability to use our pre-change NOLs to offset such taxable income will be subject to limitations. Similar provisions of state tax
law may also apply to limit our use of accumulated state tax attributes. In addition, at the state level, there may be periods
during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
Consequently, even
if we achieve profitability, we may not be able to utilize a material portion of our net operating loss carryforwards and certain
other tax attributes, which could have a material adverse effect on cash flow and results of operations.
U.S.
federal income tax reform could materially adversely affect our company.
On December 22,
2017, President Trump signed into law the Tax Act, which significantly revises the Code. The Tax Act, among other things, reduces
the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, repeals the alternative minimum tax for corporations,
limits the tax deduction for interest expense to 30% of adjusted taxable income (except for certain small businesses), limits the
deduction for net operating losses carried forward from taxable years beginning after December 31, 2017 to 80% of current
year taxable income, eliminates net operating loss carrybacks, imposes a one-time tax on offshore earnings at reduced rates regardless
of whether they are repatriated, eliminates U.S. tax on foreign earnings (subject to certain important exceptions), allows immediate
deductions for certain new investments instead of deductions for depreciation expense over time, and modifies or repeals many business
deductions and credits. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the Tax Act is uncertain
and our business and financial condition could be adversely affected. In addition, it is uncertain if and to what extent various
states will conform to the Tax Act. The impact of the Tax Act on holders of our common stock is also uncertain and could be adverse.
We urge our stockholders to consult with their legal and tax advisors with respect to this legislation and the potential tax consequences
of investing in or holding our common stock.
Risks Related to Government Regulation
We are subject to extensive regulation,
which can be costly, time consuming and can subject us to unanticipated delays; even if we obtain regulatory approval for some
of our products, those products may still face regulatory difficulties.
All of our potential
products, cell processing and manufacturing activities, are subject to comprehensive regulation by the FDA in the United States
and by comparable authorities in other countries. The process of obtaining FDA and other required regulatory approvals, including
foreign approvals, is expensive and often takes many years and can vary substantially based upon the type, complexity and novelty
of the products involved. In addition, regulatory agencies may lack experience with our technologies and products, which may lengthen
the regulatory review process, increase our development costs and delay or prevent their commercialization.
No adoptive T cell
therapy using MultiTAA T cells has been approved for marketing in the U.S. by the FDA. Consequently, there is no precedent for
the successful commercialization of products based on our technologies. In addition, we have had only limited experience in filing
and pursuing applications necessary to gain regulatory approvals, which may impede our ability to obtain timely FDA approvals,
if at all. We have not yet sought FDA approval for any adoptive T cell therapy product. We will not be able to commercialize any
of our potential products until we obtain FDA approval, and so any delay in obtaining, or inability to obtain, FDA approval would
harm our proposed business.
If we violate regulatory
requirements at any stage, whether before or after marketing approval is obtained, we may be fined, forced to remove a product
from the market and experience other adverse consequences including delay, which could materially harm our business development.
Additionally, we may not be able to obtain the labeling claims necessary or desirable for the promotion of our products. We may
also be required to undertake post-marketing trials. In addition, if we or others identify side effects after any of our adoptive
T cell therapy products are on the market, or if manufacturing problems occur, regulatory approval may be withdrawn, and reformulation
of our products may be required.
The FDA regulatory approval process
is lengthy and time-consuming, and we may experience significant delays in the clinical development and regulatory approval of
our product candidates.
We have not previously
submitted a BLA to the FDA, or similar approval filings to comparable foreign authorities. A BLA must include extensive preclinical
and clinical data and supporting information to establish the product candidate’s safety and effectiveness for each desired
indication. The BLA must also include significant information regarding the CMC for the product. We expect the novel nature of
our product candidates to create further challenges in obtaining regulatory approval. For example, the FDA has limited experience
with commercial development of cell therapies for cancer. Accordingly, the regulatory approval pathway for our product candidates
may be uncertain, complex, expensive and lengthy, and approval may not be obtained. We may also experience delays in completing
planned clinical trials for a variety of reasons, including delays related to:
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the availability of financial resources to commence and complete the planned trials;
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reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms
of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
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obtaining approval by an independent IRB at each clinical trial site;
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recruiting suitable patients to participate in a trial;
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having patients complete a trial or return for post-treatment follow-up;
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clinical trial sites deviating from trial protocol or dropping out of a trial;
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adding new clinical trial sites; or
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manufacturing sufficient quantities of qualified materials under cGMPs and applying them on a subject
by subject basis for use in clinical trials.
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We could also
encounter delays if physicians face unresolved ethical issues associated with enrolling patients in clinical trials of our
product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles. Further, a
clinical trial may be suspended or terminated by us, the IRB for the institutions in which such trials are being conducted,
the Data and Safety Monitoring Board or Committee for such trial, or by the FDA or other regulatory authorities due to a
number of factors. Those factors could include failure to conduct the clinical trial in accordance with regulatory
requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other
regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects,
failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative
actions or lack of adequate funding to continue the clinical trial. If we experience termination of, or delays in the
completion of, any clinical trial of our product candidates, the commercial prospects for our product candidates will be
harmed, and our ability to generate product revenue will be delayed. In addition, any delays in completing our clinical
trials will increase our costs, slow down our product development and approval process and jeopardize our ability to commence
product sales and generate revenue.
Obtaining and maintaining regulatory
approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval
of our product candidates in other jurisdictions.
Obtaining and maintaining
regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain
regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may
have a negative effect on the regulatory approval process in others. For example, even if the FDA grants marketing approval of
a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing
and promotion of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements
and administrative review periods different from, and greater than, those in the United States, including additional preclinical
studies or clinical trials as clinical studies conducted in one jurisdiction may not be accepted by regulatory authorities in other
jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it
can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our products is also subject
to approval.
We may also submit
marketing applications in other countries. Regulatory authorities in jurisdictions outside of the United States have requirements
for approval of product candidates with which we must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory
approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us
and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the regulatory requirements
in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize
the full market potential of our product candidates will be harmed.
Even if we receive regulatory approval
of our product candidates, we will be subject to ongoing quality and regulatory obligations and continued regulatory review, which
may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements
or experience unanticipated problems with our product candidates.
Any regulatory approvals
that we receive for our product candidates will require surveillance to monitor the safety and efficacy of the product candidate.
The FDA may also require a risk evaluation and mitigation strategy in order to approve our product candidates, which could entail
requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted
distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory
authority approves our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting,
storage, advertising, promotion, import, export and recordkeeping for our product candidates will be subject to extensive and ongoing
regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration,
as well as continued compliance with cGMPs and cGCPs for any clinical trials that we conduct post-approval. Later discovery of
previously unknown problems with our product candidates, including adverse events of unanticipated severity or frequency, or with
our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among
other things:
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restrictions on the marketing or manufacturing of our product candidates, withdrawal of the product
from the market, or voluntary or mandatory product recalls;
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fines, warning letters or holds on clinical trials;
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refusal by the FDA to approve pending applications or supplements to approved applications filed
by us or suspension or revocation of license approvals;
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product seizure or detention, or refusal to permit the import or export of our product candidates;
and
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injunctions or the imposition of civil or criminal penalties.
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The FDA’s and
other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent,
limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government
regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow
or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to
maintain regulatory compliance, we may lose any marketing approval that we may have obtained, and we may not achieve or sustain
profitability.
Any relationships with healthcare
professionals, principal investigators, consultants, customers (actual and potential) and third-party payors in connection with
our current and future business activities are and will continue to be subject, directly or indirectly, to federal and state healthcare
laws. If we are unable to comply, or have not fully complied, with such laws, we could face penalties, contractual damages,
reputational harm, diminished profits and future earnings and curtailment or restructuring of our operations.
Our business operations
and activities may be directly, or indirectly, subject to various federal and state healthcare laws, including without limitation,
fraud and abuse laws, false claims laws, data privacy and security laws, as well as transparency laws regarding payments or other
items of value provided to healthcare providers. These laws may restrict or prohibit a wide range of business activities, including,
but not limited to, research, manufacturing, distribution, pricing, discounting, marketing and promotion, sales commission, customer
incentive programs and other business arrangements. These laws may impact, among other things, our current activities with principal
investigators and research subjects, as well as current and future sales, marketing, patient co-payment assistance and education
programs.
Such laws include:
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the federal Anti-Kickback Statute which prohibits, among other things, persons and entities from
knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind,
to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any
good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;
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the federal civil and criminal false claims laws, including the federal civil False Claims Act,
and civil monetary penalties laws, which impose criminal and civil penalties against individuals or entities for, among other things,
knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or
making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes
criminal and civil liability for, among other things, executing a scheme to defraud any healthcare benefit program or making false
statements relating to healthcare matters;
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and
its implementing regulations, which also imposes obligations, including mandatory contractual terms, on certain types of individuals
and entities, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
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the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices,
biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance
Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information
related to payments or other transfers of value made to physicians and teaching hospitals, and applicable manufacturers and applicable
group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate
family members; and
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analogous state, local, and foreign laws and regulations, such as state anti-kickback and false
claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by
non-governmental third party payors, including private insurers; state laws that require pharmaceutical companies to comply with
the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal
government; state laws that require drug manufacturers to report information related to payments and other transfers of value to
physicians and other healthcare providers or marketing expenditures or drug pricing; state and local laws that require the registration
of pharmaceutical sales representatives; state and local “drug takeback” laws and regulations; and state and foreign
laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant
ways and often are not preempted by HIPAA, thus complicating compliance efforts.
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Efforts to ensure that our business arrangements
will comply with applicable healthcare laws may involve substantial costs. While our interactions with healthcare professionals
have been structured to comply with these laws and related guidance, it is possible that governmental and enforcement authorities
will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting
applicable fraud and abuse or other healthcare laws. If our operations or activities are found to be in violation of any of the
laws described above or any other governmental regulations that apply to us, we may be subject to, without limitation, significant
civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare,
Medicaid and other federal healthcare programs, additional reporting requirements and oversight if we become subject to a corporate
integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational
harm, diminished profits and future earnings and curtailment or restructuring of our operations, any of which could adversely affect
our ability to operate.
In addition, any sales of our product once
commercialized outside the U.S. will also likely subject us to foreign equivalents of the healthcare laws mentioned above, among
other foreign laws.
Recently enacted and future legislation
in the United States and other countries may affect the prices we may obtain for our product candidates and increase the difficulty
and cost to commercialize our product candidates.
In the United States
and many other countries, rising healthcare costs have been a concern for governments, patients and the health insurance sector,
which has resulted in a number of changes to laws and regulations, and may result in further legislative and regulatory action
regarding the healthcare and health insurance systems that could affect our ability to profitably sell any product candidates for
which we have obtained marketing approval.
For example, the Patient
Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (“ACA”) was enacted
in the United States in March 2010, with the stated goals of containing healthcare costs, improving quality and expanding
access to healthcare, and includes measures to change health care delivery, increase the number of individuals with insurance,
ensure access to certain basic health care services, and contain the rising cost of care. Since January 2017, President Trump
has signed two executive orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by
the ACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA. While
Congress has not passed repeal legislation, two bills affecting the implementation of certain taxes under the ACA have been signed
into law. The Tax Cuts and Jobs Act of 2017 includes a provision that repealed, effective January 1, 2019, the tax-based shared
responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part
of a year that is commonly referred to as the “individual mandate”. Additionally, on January 22, 2018, President
Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain ACA-mandated
fees, including the so-called “Cadillac” tax on certain high cost employer-sponsored insurance plans, the annual fee
imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices.
Further, the Bipartisan Budget Act of 2018, among other things, amended the ACA, effective January 1, 2019, to increase from
50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and
to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” On December 14,
2018, a Texas U.S. District Court Judge ruled that the ACA is unconstitutional in its entirety because the “individual mandate”
was repealed by Congress as part of the Tax Cuts and Jobs Act. While the Texas U.S. District Court Judge, as well as the Trump
administration and the Centers for Medicare & Medicaid Services, or CMS, have stated that the ruling will have no immediate
effect pending appeal of the decision, it is unclear how this decision, subsequent appeals, and other efforts to repeal and replace
the ACA will impact the ACA and our business. Congress may consider other legislation to repeal or replace elements of the ACA.
These actions may result in increased health insurance premiums and reduce the number of people with health insurance in the United
States and have other effects that could adversely affect U.S. health insurance markets and the ability of patients to have access
to therapies that our product candidates can provide.
In addition, other
federal health reform measures have been proposed and adopted in the United States. For example, as a result of the Budget Control
Act of 2011, providers are subject to Medicare payment reductions of 2% per fiscal year through 2027 unless additional Congressional
action is taken. Further, the American Taxpayer Relief Act of 2012 reduced Medicare payments to several providers and increased
the statute of limitations period for the government to recover overpayments to providers from three to five years. The Medicare
Access and CHIP Reauthorization Act of 2015 also introduced a quality payment program under which certain individual Medicare providers
will be subject to certain incentives or penalties based on new program quality standards. Payment adjustments for the Medicare
quality payment program will begin in 2019. At this time, it is unclear how the introduction of the quality payment program will
impact overall physician reimbursement under the Medicare program. Any reduction in reimbursement from Medicare or other government
programs may result in a similar reduction in payments from private payors.
Also, there has been
heightened governmental scrutiny recently over pharmaceutical pricing practices in light of the rising cost of prescription drugs
and biologics. Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federal and state
legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing
and manufacturer patient programs, and reform government program reimbursement methodologies for products. At the federal level,
the Trump administration’s budget proposal for fiscal years 2019 and 2020 contain further drug price control measures that
could be enacted during the 2019 budget process or in other future legislation, including, for example, measures to permit Medicare
Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under
Medicaid, and to eliminate cost sharing for generic drugs for low-income patients. Further, the Trump administration released a
“Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase
manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower
the list price of their products and reduce the out of pocket costs of drug products paid by consumers. For example, in May 2019,
CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1,
2020. Although a number of these, and other potential, proposals will require additional authorization to become effective, Congress
and the executive branch have each indicated that it will continue to seek new legislative and/or administrative measures to control
drug costs. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control
pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on
certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation
from other countries and bulk purchasing.
The combination of
healthcare cost containment measures, increased health insurance costs, reduction of the number of people with health insurance
coverage, as well as future legislation and regulations focused on reducing healthcare costs by reducing the cost of, or reimbursement
and access to, pharmaceutical products, may limit or delay our ability to commercialize our products, generate revenue or attain
profitability.
Our employees, independent contractors,
consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with
regulatory standards and requirements.
We are exposed to
the risk of employee fraud or other illegal activity by our employees, independent contractors, consultants, commercial partners
and vendors. Misconduct by these parties could include intentional, reckless and/or negligent conduct that fails to: comply with
the laws of the FDA and other similar foreign regulatory bodies, provide true, complete and accurate information to the FDA and
other similar foreign regulatory bodies, comply with manufacturing standards we have established, comply with healthcare fraud
and abuse laws in the United States and similar foreign fraudulent misconduct laws, or report financial information or data accurately
or to disclose unauthorized activities to us. If we obtain FDA approval of any of our product candidates and begin commercializing
those products in the United States, our potential exposure under such laws will increase significantly, and our costs associated
with compliance with such laws are also likely to increase. These laws may impact, among other things, our current activities with
principal investigators and research patients, as well as proposed and future sales, marketing and education programs. In particular,
the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare
industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws
and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s),
certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the
improper use of information obtained in the course of patient recruitment for clinical trials.
Efforts to ensure
that our business arrangements comply with applicable healthcare laws may involve substantial costs. It is possible that governmental
and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations
or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted
against us, and we are not successful in defending ourselves or in asserting our rights, those actions could have a significant
impact on our business, including the imposition of civil, criminal and administrative penalties, damages, disgorgement, monetary
fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages,
reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect
our ability to develop our business. In addition, the approval and commercialization of any of our product candidates outside the
United States will also likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.
We may not obtain or maintain the
benefits associated with orphan drug designation, including market exclusivity.
We have received Orphan
Drug Designation from the FDA for TPIV200 in the treatment of ovarian cancer. The TPIV200 ovarian cancer clinical program is eligible
to receive benefits including tax credits on clinical research and seven-year market exclusivity upon receiving marketing approval.
Even though we were granted orphan drug designation, we may not receive the benefits associated with orphan drug designation. This
may result from a failure to maintain orphan drug status or result from a competing product reaching the market that has an orphan
designation for the same disease indication. Under U.S. regulations for orphan drugs, if such a competing product reaches the market
before ours does, the competing product could potentially obtain a scope of market exclusivity that limits or precludes our product
from being sold in the United States for seven years. Even if we obtain exclusivity, the FDA could subsequently approve a drug
for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective
or makes a major contribution to patient care. A competitor also may receive approval of different products for the same indication
for which our orphan product has exclusivity or obtain approval for the same product but for a different indication for which the
orphan product has exclusivity.
In addition, if and when we request orphan drug designation in Europe, the European exclusivity period
is ten years but can be reduced to six years if the drug no longer meets the criteria for orphan drug designation or if the drug
is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA or
European Medicines Agency (“EMA”) determines that the request for designation was materially defective or if the manufacturer
is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.
New regulatory pathways for biosimilar
competition could reduce the duration of market exclusivity for our products.
Under the
federal Patient Protection and Affordable Care Act (“PPACA”) enacted in 2010, there is an abbreviated path in the
United States for regulatory approval of products that are demonstrated to be “biosimilar” or
“interchangeable” with an FDA-approved biological product. The PPACA provides a regulatory mechanism that allows
for FDA approval of biologic drugs that are similar to (but not generic copies of) innovative drugs on the basis of less
extensive data than is required by a full BLA. Under this regulation, an application for approval of a biosimilar may be
filed four years after approval of the innovator product. However, qualified innovative biological products will receive 12
years of regulatory exclusivity, meaning that the FDA may not approve a biosimilar version until 12 years after the
innovative biological product was first approved by the FDA. However, the term of regulatory exclusivity may not remain at 12
years in the United States and could be shortened. A number of jurisdictions outside of the United States have also
established abbreviated pathways for regulatory approval of biological products that are biosimilar to earlier versions of
biological products. For example, the European Union has had an established regulatory pathway for biosimilars since
2005.
The increased likelihood
of biosimilar competition has increased the risk of loss of innovators’ market exclusivity. Due to this risk, and uncertainties
regarding patent protection, if one of our late-stage product candidates or other clinical candidates are approved for marketing,
it is not possible to predict the length of market exclusivity for any particular product with certainty based solely on the expiration
of the relevant patent(s) or the current forms of regulatory exclusivity. It is also not possible to predict changes in United States
regulatory law that might reduce biological product regulatory exclusivity. The loss of market exclusivity for a product would
likely materially and negatively affect revenues from product sales of that product and thus our financial results and condition.
Changes in laws and regulations affecting
the healthcare industry could adversely affect our business.
As described above,
the PPACA and potential regulations thereunder easing the entry of competing follow-on biologics into the marketplace, other new
legislation or implementation of existing statutory provisions on importation of lower-cost competing drugs from other jurisdictions,
and legislation on comparative effectiveness research are examples of previously enacted and possible future changes in laws that
could adversely affect our business.
The current U.S. administration
and Congress could carry out significant changes in legislation, regulation, and government policy (including with respect to the
possible repeal of all or portions of the PPACA, possible changes in the existing treaty and trade relationships with other countries,
and tax reform). While it is not possible to predict whether and when any such changes will occur, changes in the laws, regulations,
and policies governing the development and approval of our product candidates and the commercialization, importation, and reimbursement
of our product candidates could adversely affect our business.
Risks Related to our Securities
We identified a material weakness
in our internal control over financial reporting.
During the first quarter
of fiscal year 2019, we, together with our independent registered public accounting firm, identified a material weakness in our
internal control over financial reporting resulting from ineffective controls related to the timing of recording non-cash stock-based
compensation expenses on select stock option grants. As a result, our management concluded that we had a material weakness in our
internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim
financial statements will not be prevented or detected on a timely basis. A control deficiency exists when the design or operation
of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or
detect misstatements on a timely basis. As described in Part I, Item 4 of this report, this material weakness has
not yet been remediated and, as a result of this material weakness, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of September 30, 2019, our disclosure controls and procedures were not effective.
Maintaining effective
disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable
financial statements. While we have designed a remediation plan to address the material weakness and enhance our internal control
environment and are committed to remediating this as promptly as possible, if not remediated, our failure to establish and maintain
effective disclosure controls and procedures and internal control over financial reporting could have a material adverse effect
on our financial condition and the trading price of our common stock. There can be no assurance as to when the material weakness
will be remediated or that other material weaknesses will not arise in the future. Any failure to remediate the material weakness,
or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements
in our consolidated financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could
have a material adverse effect on our financial condition and the trading price of our common stock, and/or result in litigation
against us. In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures
may not be adequate to prevent or identify irregularities or facilitate the fair presentation of our consolidated financial statements
or our periodic reports filed with the SEC.
The price of our stock may be volatile.
The trading
price of our common stock may fluctuate substantially. The price of our common stock that will prevail in the market may be
higher or lower than the price at which our shares of common stock, depending on many factors, some of which are beyond our
control and may not be related to our operating performance. These fluctuations could cause you to lose part or all of your
investment in our common stock. Those factors that could cause fluctuations include, but are not limited to, the
following:
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price and volume of fluctuations in the overall stock market from time to time;
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fluctuations in stock market prices and trading volumes of similar companies;
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actual or anticipated changes in our net loss or fluctuations in our operating results or in the
expectations of securities analysts;
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results of our preclinical studies and clinical trials or delays in anticipated timing;
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the issuance of new equity securities pursuant to a future offering, including issuances of preferred
stock;
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announcements of new collaboration agreements with strategic partners or developments by our existing
collaboration partners;
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announcements of acquisitions, mergers or business combinations;
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announcements of technological innovations, new commercial products, failures of products, or progress
toward commercialization by our competitors or peers;
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general economic conditions and trends;
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positive and negative events relating to healthcare and the overall pharmaceutical and biotechnology
sectors;
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major catastrophic events;
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sales of large blocks of our stock and sales by insiders and our institutional investors;
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departures of key personnel;
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changes in the regulatory status of our immunotherapies, including results of our clinical trials;
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events affecting BCM, Mayo Clinic, Mayo Foundation for Medical Education and Research or any future
collaborators;
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announcements of new products or technologies, commercial relationships or other events by us or
our competitors;
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regulatory developments in the United States and other countries;
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failure of our common stock to maintain listing requirements on the Nasdaq Capital Market;
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the outcome of any litigation to which we are a party;
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changes in accounting principles; and
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discussion of the Company or our stock price by the financial and scientific press and in online
investor communities.
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In the past, following
periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought
against that company. Due to the potential volatility of our stock price, we may therefore be the target of securities litigation
in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from
our business.
A limited public trading market may
cause volatility in the price of our common stock.
The listing of
our common stock on the Nasdaq Capital Market does not assure that a meaningful, consistent and liquid trading market
currently exists or will exist in the future. In recent years, the stock market has experienced extreme price and volume
fluctuations that have particularly affected the market prices of many smaller companies like us. Our common stock is thus
subject to this volatility. Sales of substantial amounts of common stock, or the perception that such sales might occur,
could adversely affect prevailing market prices of our common stock and our stock price may decline substantially in a short
time and our stockholders could suffer losses or be unable to liquidate their holdings. Our stock is thinly traded due to the
limited number of shares available for trading thus causing large swings in price. There is no established trading market for
our warrants.
The market prices for our common
stock may be adversely impacted by future events.
Market prices for
our common stock will be influenced by a number of factors, including:
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the issuance of new equity securities pursuant to a future offering, including issuances of shares
upon the exercise of outstanding warrants or the issuance of preferred stock;
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changes in interest rates;
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competitive developments, including announcements by competitors of new products or services or
significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;
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variations in quarterly operating results;
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change in financial estimates by securities analysts;
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the depth and liquidity of the market for our common stock and warrants;
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investor perceptions of us and the pharmaceutical and biotech industries generally; and
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general economic and other national conditions.
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If we fail to remain current with
our listing requirements, we could be removed from the Nasdaq Capital Market which would limit the ability of broker-dealers to
sell its securities and the ability of stockholders to sell its securities in the secondary market.
Companies listed for
trading on the Nasdaq Capital Market must be reporting issuers under Section 12 of the Exchange Act. If we fail to file such
reports in a timely manner, or if we fail to meet any other listing requirements, the shares of our common stock would eventually
cease to be listed on the Nasdaq Capital Market, and the market liquidity for our securities could be severely adversely affected
by limiting the ability of broker-dealers to sell its securities and the ability of stockholders to sell their securities in the
secondary market.
Sales of additional equity securities
may adversely affect the market price of our common stock and your rights may be reduced.
We expect to continue
to incur drug development and sale, general and administrative costs, and to satisfy our funding requirements, we will need to
sell additional equity securities, which may be subject to registration rights and warrants with anti-dilutive protective provisions.
The sale or the proposed sale of substantial amounts of our common stock or other equity securities in the public markets may adversely
affect the market price of our common stock and our stock price may decline substantially. Our stockholders may experience substantial
dilution and a reduction in the price that they are able to obtain upon sale of their shares. Also, new equity securities issued
may have greater rights, preferences or privileges than our existing common stock.
Because we have a significant number
of additional authorized shares of common stock available for issuance and outstanding warrants to purchase our common stock, our
stockholders may experience dilution in the future and it may adversely affect the market price of our securities.
We are currently authorized
to issue 150 million shares of our common stock. As of September 30, 2019, we had 45.7 million shares of our common stock
issued and outstanding. Those outstanding shares represent a minority of our authorized shares, meaning that the ownership position
of the current stockholders could be diluted significantly were we to issue a large number of additional shares. In addition, as
of September 30, 2019, there were outstanding warrants to purchase up to approximately 22.7 million shares of our common stock
at a weighted average exercise price of $4.71 per share, and options exercisable for an aggregate of approximately 4.7 million
shares of common stock at a weighted average exercise price of $8.23 per share. We have registered the resale of the shares
issuable upon exercise of our outstanding warrants, and as a result the shares issued upon exercise will be tradable by the exercising
party. Upon such registration, the holders may sell these shares in the public markets from time to time, without limitations on
the timing, amount, or method of sale. If our stock price rises, the holders may exercise their warrants and options and sell a
large number of shares. This could cause the market price of our common stock to decline and cause existing stockholders to experience
significant further dilution.
The accounting treatment for certain
of our warrants is complex and subject to judgments concerning the valuation of embedded derivative rights within the applicable
securities. Fluctuations in the valuation of these rights could cause us to take charges to our statement of operations and make
our financial results unpredictable.
Certain of our outstanding
warrants contain or contained prior to being amended, or may be deemed to contain from time to time, embedded derivative rights
in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). There is a risk that questions could arise
from investors or regulatory authorities concerning the appropriate accounting treatment of these instruments, which could require
us to restate previous financial statements, which in turn could adversely affect our reputation, as well as our results of operations.
These derivative rights, or similar rights in securities we may issue in the future, need to be, or may need to be, separately
valued as of the end of each accounting period in accordance with GAAP. We record these embedded derivatives as liabilities at
issuance, valued using the Black Scholes Option Pricing Model and are subject to revaluation at each reporting date. Any change
in fair value between reporting periods is reported on our statement of operations. At September 30, 2019, the fair value
of the derivative liability-warrants was $129,000. Changes in the valuations of these rights, the valuation methodology or the
assumptions on which the valuations are based could cause us to take charges to our earnings, which would adversely impact our
results of operations. Moreover, the methodologies, assumptions and related interpretations of accounting or regulatory authorities
associated with these embedded derivatives are complex and, in some cases uncertain, which could cause our accounting for these
derivatives, and as a result, our financial results, to fluctuate.
We do not intend to pay cash dividends.
We have not declared
or paid any cash dividends on our common stock, and we do not anticipate declaring or paying cash dividends for the foreseeable
future. Any future determination as to the payment of cash dividends on our common stock will be at our board of directors’
discretion and depends on our financial condition, operating results, capital requirements and other factors that our board of
directors considers to be relevant.