ITEM 1. BUSINESS
Overview
We are a clinical-stage immuno-oncology
company specializing in the development and commercialization of novel T cell-based immunotherapies and innovative peptide-based
vaccines for the treatment of hematological malignancies and solid tumor indications. We developed our lead product candidates
from our MultiTAA-specific T cell technology, which is based on the selective expansion of non-engineered, tumor-specific T cells
that recognize tumor associated antigens, or TAAs, which are tumor targets, and then kill tumor cells expressing those targets.
These T cells are designed to recognize multiple tumor targets to produce broad spectrum anti-tumor activity. We are advancing
two pipelines of product candidates as part of our MultiTAA-specific T cell program: the autologous T cells for the treatment of
lymphoma, multiple myeloma, or MM, and selected solid tumors and the allogeneic T cells for the treatment of acute myeloid leukemia,
or AML, and acute lymphoblastic leukemia, or ALL. Because we do not genetically engineer the MultiTAA-specific T cell therapies,
we believe that our product candidates are easier and less expensive to manufacture, with reduced toxicities, than current engineered
chimeric antigen receptor, or CAR-T, and T cell receptor-based therapies and may provide patients with meaningful clinical benefit.
We are also developing innovative peptide-based immunotherapeutic vaccines for the treatment of metastatic solid tumors.
We are pursuing post-transplant AML as
the lead indication for our first company-sponsored MultiTAA-specific T cell program. The MultiTAA-specific T cell therapy has
been well tolerated in an ongoing Phase 1/2 clinical trial conducted by our strategic partner Baylor College of Medicine, or BCM.
As reported in March 2019, eleven of the thirteen patients in the adjuvant disease setting dosed with the MultiTAA-specific T cell
therapy after receiving an allogeneic stem cell transplant survived, ranging from 6 weeks to 2.5 years post-infusion, with nine
of these remaining patients in continuing complete remission, or CCR. Survival of the six patients with active disease ranged from
4 to 21 months, as compared to a historical survival rate of approximately 4.5 months for patients who receive the standard of
care post-transplant.
We submitted an investigational new drug,
or IND, application to the United States Food and Drug Administration, or the FDA to initiate a Phase 2 clinical trial of MultiTAA-specific
T cell therapy, which we refer to as MT-401, in post-allogeneic hematopoietic stem cell transplant patients with AML in both the adjuvant and active disease setting, which may become pivotal pending the results
of the interim analysis. The dose administered in this multicenter trial is the current maximum tolerated dose from the ongoing
Phase 1/2 trial. In the adjuvant setting, patients will be randomized to either MultiTAA-specific T cell therapy at approximately
90 days post-transplant versus standard of care observation, while the active disease patients will receive MT-401 following relapse
post-transplant as part of a single-arm group. In February 2020, we announced that the FDA has permitted us to initiate our Phase
2 clinical trial beginning with a safety lead-in portion of the trial.
We recently reported interim data for
an ongoing Phase 1/2 clinical trial of the MultiTAA-specific T cell therapy for the treatment of pancreatic adenocarcinoma being
conducted by BCM. In this trial, we have observed a clinical benefit correlated with the post-infusion detection of tumor-reactive
T cells in patient peripheral blood and within tumor biopsy samples in patients in the tumor-resection arm of the trial. These
T cells exhibited activity against both targeted antigens and non-targeted TAAs, indicating induction of antigen spreading. To
date, we have not observed any cytokine release syndrome or neurotoxicity in this trial.
We are also evaluating the MultiTAA-specific
T cell therapies in a Phase 2 clinical trial for the treatment of breast cancer and in Phase 1 clinical trials for the treatment
of ALL, lymphoma, MM and sarcoma, all of which are being conducted by BCM. As of December 2019, the MultiTAA-specific T cell therapies
have been generally well tolerated by all of the patients enrolled in clinical trials in hematological and solid tumor indications
with no incidents of cytokine release syndrome or neurotoxicity, which are frequently associated with CD19 CAR-T therapies. Based
on our observations in clinical trials in AML, pancreatic cancer, lymphoma, ALL and MM, we believe that the MultiTAA-specific
T cell therapies have the potential to mediate a meaningful anti-tumor effect, as well as significant in vivo expansion
of T cells. We may initiate additional Phase 2 clinical trials investigating other indications in 2020 in addition to our planned
Phase 2 trial in post-transplant AML patients.
We believe that our therapies present promising
innovations in immuno-oncology. We developed the MultiTAA-specific T cell therapy in collaboration with the Cell and Gene Therapy
Center at BCM, which was founded by Dr. Malcolm K. Brenner, M.D., Ph.D., a recognized pioneer in immuno-oncology. BCM remains an
important strategic partner and conducts early-stage clinical trials of the MultiTAA-specific T cell therapies pursuant to a sponsored
research agreement. Our cell therapy founders include Drs. Brenner, 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. Drs.
Brenner, Heslop, Rooney, James P. Allison and Padmanee Sharma serve on our Scientific Advisory Board.
Pipeline
Our clinical-stage pipeline, including
clinical trials being conducted by BCM and other partners, is set forth below.
Recent Developments
AML Clinical Program Update
In February 2020, we announced that the
FDA lifted the clinical hold on the Phase 2 clinical trial investigating the safety and efficacy of MT-401 for the treatment of
patients with AML post-transplant permitting us to initiate the trial with the safety lead-in portion that is expected to enroll
approximately six patients. Three patients will be dosed with MT-401 manufactured using the legacy reagent used in the Phase 1
trial, and three patients will be dosed with MT-401 manufactured using a reagent from an alternative supplier. We anticipate using
this supplier for clinical and commercial supply of MT-401. The FDA placed a partial clinical hold on the trial for the use of
the MT-401 product manufactured using one of the reagents supplied by the alternative supplier until the final data and certificate
of analysis for the reagent are reviewed and accepted by the FDA. We currently estimate that the alternative supplier will deliver
the final reagent, along with the final data and certificate of analysis required by the FDA, by the end of the second quarter
of 2020. During the second half of 2020, we anticipate completing enrollment of the first three patients and submission of both
the final technical specifications and comparability data of the new reagents to the FDA, the latter of which would satisfy the
requirements for lifting the partial hold on the clinical trial. Given this expected timing, we do not currently expect the partial
clinical hold to significantly impact site and patient enrollment of the Phase 2 trial.
The safety lead-in will be followed by
the 160-patient randomized portion of the trial at approximately 20 transplant centers. Group 1 will comprise 120 adjuvant (disease-free)
patients, with the primary endpoint of relapse-free survival of patients receiving MT-401 versus a control group. Group 2 will
comprise 40 active disease patients in a single arm, with primary endpoints of complete remission and duration of complete remission.
Our Strategy
Our goal is to be the leader in the development
and commercialization of transformative immunotherapies for the treatment of hematological malignancies and solid tumors. We are
developing a portfolio of highly differentiated T cell therapies utilizing the MultiTAA-specific T cell platform that we believe
have the potential to significantly disrupt the current cell therapy landscape, while substantially improving survival and quality
of life for patients with cancers.
The key elements of our strategy include:
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Expedite clinical development, regulatory approval, and commercialization of our lead product
candidates.
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Based on the results of the Phase 1 clinical
trials of the MultiTAA-specific T cell therapies conducted at BCM, we plan to advance our lead product candidates into Phase 2
clinical trials and facilitate the initiation of company-sponsored clinical trials. We are pursuing post-transplant AML as the
lead indication for the MultiTAA-specific T cell program. During the second half of 2020, we expect to complete the safety lead-in
portion of our Phase 2 trial in post-transplant AML and satisfy the FDA’s other requirements for lifting the partial hold
on the clinical trial.
We plan to initiate in the future additional
clinical trials in other tumor types based on emerging data. We anticipate that product manufacturing in support of those clinical
trials will be conducted at BCM’s Good Manufacturing Practices, or GMP, cell manufacturing facility.
In 2020, we expect to begin the technology
transfer process and begin the planning and implementation of an additional GMP manufacturing capacity capable of supporting our
manufacturing needs with respect to potentially pivotal trials. If the results of our Phase 2 clinical trials are positive, we
intend to explore potential avenues to achieve regulatory approval for the use of our products in these indications, including
any potential avenues for obtaining accelerated approval.
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Continue to collaborate with our partners and increase our internal research and development
activities to improve and develop adoptive cell therapy technologies.
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We are party to a strategic alliance with
BCM, pursuant to which we will sponsor selected research at BCM in support of our technology. In conjunction with this strategic
alliance, BCM will conduct selected Phase 1 and Phase 2 clinical trials of our product candidates. If data from these early clinical
trials are positive, we will consider the therapeutic and commercial potential for such therapies to be advanced as new product
candidates for us.
In addition, we plan to use BCM facilities
and our company laboratories to enable the process development required to support the Phase 2 clinical trials of our product candidates.
We plan to invest in our own research and development and chemistry, manufacturing and controls, or CMC, capabilities to enhance
our ability to conduct process development to optimize our manufacturing process, product quality and commercial scalability.
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Invest in our platform to maximize the beneficial outcomes for cancer patients.
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We plan to explore new product opportunities
by increasing and/or customizing the antigens we target to expand the indications in which the MultiTAA-specific T cell products
will be efficacious, including solid tumors or other hematologic malignancies. Additionally, our research and development efforts
may include the exploration of different doses and/or frequency of dosing and the relationship of these factors with potential
therapeutic benefit.
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Leverage our relationships with our founding institutions, scientific founders and other
scientific advisors.
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Our world-renowned scientific founders
and scientific advisors have made seminal contributions to major discoveries in the field of immuno-oncology, and have significant
experience in oncology, immunology and cell therapy. We intend to significantly leverage the knowledge, experience and advice of
our scientific founders and advisors, as well as the institutional expertise of BCM, the Mayo Foundation and our other major institutional
partners, to advance our therapies through the clinic and into commercialization.
We are in the process of evaluating the
peptide vaccine therapeutic products and programs to determine the future strategy and the proper allocation of our resources to
best maximize stockholder value. In conjunction with this evaluation process we may de-emphasize or terminate certain vaccine therapeutic
products or programs. Such strategic review and evaluations are a priority and an important part of our ongoing operations.
Background and History of Cancer Immunotherapies
Despite advances in options for treatment,
cancer continues to be one of the main causes of death in developed countries. Historically, cancer therapy has been constrained
to surgery, radiation, and chemotherapy. More recently, advances in the understanding of the immune system’s role in cancer
surveillance have led to immunotherapy becoming an important treatment approach. Cancer immunotherapy began with treatments that
nonspecifically activated the immune system and had limited efficacy and/or significant toxicity. In contrast, newer immunotherapy
treatments activate specific, potent immune cells, leading to improved safety and efficacy. Within the immunotherapy category,
treatments have included vaccines, cytokine therapies, antibody therapies, and adoptive cell therapies.
In 1996, Dr. Dana Leach, Dr. Matthew Krummel
and Dr. James Allison reported that monoclonal antibodies, or mAbs, blocking CTLA-4 could treat tumors in animal models. Subsequently,
mAbs that targeted CTLA-4 and PD-1 became known as immune checkpoint inhibitors, or ICIs. Immune checkpoints are a means by which
cancer cells inhibit or turn down the body’s immune response to cancer. By interfering with these cloaking mechanisms, ICIs
have shown an ability to activate T cells, shrink tumors, and improve patient survival. Recent clinical data from checkpoint inhibitors
such as ipilimumab, nivolumab and pembrolizumab have confirmed both the validity of this approach and the importance of T cells
as promising tools for the treatment of cancer.
Despite these many advances, there persists
a significant unmet need in cancer therapeutics. We believe that the use of human cells as a therapeutic modality to re-engage
the immune system will be the next significant advancement in the treatment of cancer. These cellular therapies may avoid the long-term
side effects associated with current treatments and have the potential to be effective regardless of the type of previous treatments
patients have experienced.
T Cell Therapy Overview
The field of adoptive cell transfer is
currently comprised primarily of CAR and TCR engineered T cells and has emerged from principles of basic immunology to become a
paradigm-shifting clinical immunotherapy. T cell therapy has evolved as one of the most promising branches of immunotherapy. T
cell immunotherapy involves the infusion of T cells into a patient. Immune cells used for immunotherapy treatments can either be
collected from the patient (autologous) or harvested from a donor (allogeneic). The cells are retrieved and either genetically
modified to express tumor-specific CARs or TCRs or mixed with specific antigens. The cells are then cultured to proliferate, and
the proliferated cells are infused into the patient. Upon infusion, the cells can target and eliminate cancerous cells. Unlike
chemotherapy, which is unable to distinguish between healthy and malignant cells, T cells produced for immunotherapy can selectively
attack cancer cells that express the target antigen(s). This leads to a more effective treatment platform with fewer side effects.
Some of these infused T cells may remain in the body for long periods, providing immunological memory, thus leading to longer and
more durable responses.
TCRs and CARs have distinct signaling properties
and antigen sensitivities. TCRs recognize peptide fragments from proteins expressed either inside the cell or on the cell surface,
which are presented to T cells via major histocompatibility complex molecules. CARs are programmed to recognize a specific cell
surface protein. Because CARs are specific for a single antigen, or more precisely a single epitope within the single antigen,
they are very narrowly focused and have limitations. When a CAR-T cell product is applied to a specific antigen of a heterogeneous
disease, CAR-T cells may leave behind tumor cells that do not express the target antigen, which can lead to tumor relapse due to
immune escape.
Our approach is to avoid genetic engineering
by relying upon the native T cell receptor, which has evolved over millions of years to provide T cells with an exquisite capacity
to recognize and kill cancer cells. Use of the native T cell receptor is the bedrock of our versatile immunotherapy, which is intended
to provide a cost-effective and non-toxic strategy to target multiple tumor antigens and lead to durable responses. The process
entails expanding tumor-specific T cells from patients (autologous), or a patient’s hematopoietic stem cell donor (allogeneic).
This is achieved by in vitro manipulation consisting of co-culturing a patient’s or donor’s antigen
presenting cells with patient (or donor) peripheral blood mononuclear cells, or PBMCs, respectively. As a source of antigen, we
use overlapping peptide libraries spanning each of several immunogenic target antigens that are typically associated with certain
types of cancer. These peptides are 15 amino acids in length, overlapping by 11 amino acids and span the entire length of each
of the target antigens. This typical footprint of peptides allows us to induce both CD4+ (helper) and CD8+ (cytotoxic)
T cells. Following manufacture, these cells are frozen and stored for later infusion. Once infused, the natural characteristics
of T cells take over and the T cells multiply in quantity, forming an army of T cells that kill the targeted cancer cells.
We have observed evidence of “epitope
spreading” in our clinical trials, suggesting that the MultiTAA-specific T cell therapy is inducing an enhanced response
by the patient’s own T cells (specific for an expanded set of tumor-associated antigens beyond those targeted by the infused
product). Correlative analyses show expansion of endogenous T cells, other than those present in the infused product, in the months
following infusion. This phenomenon, also known as “antigen spreading,” is potentially important in generating a deep
and durable response for a patient because it enables the killing of tumors that do not express any of the antigens initially targeted
by our therapy and could be due to the lack of lymphodepletion that allows recruitment of the endogenous immune system for anti-tumor
activity.
The MultiTAA-Specific T Cell Therapies
In collaboration with BCM, we are advancing
two MultiTAA-specific T cell therapies through clinical development:
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Autologous MultiTAA-specific T cell therapies target the NY-ESO-1, PRAME, MAGE-A4, Survivin
and SSX2 antigens. We recently reported updated clinical data from BCM’s Phase 1/2 clinical trial of the autologous MultiTAA
therapy for the treatment of patients with pancreatic cancer, and we are currently evaluating these therapies for the treatment
of patients with lymphoma, MM and other selected solid tumors in Phase 1 trials.
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Allogeneic MultiTAA-specific T cell therapies target the WT1, NY-ESO-1, PRAME, and Survivin
antigens. The stem cell transplant donor is used as the source of the cells manufactured for our allogeneic therapies. We are pursuing
post-transplant AML as the lead indication for the MultiTAA-specific T cell program using our allogeneic therapies.
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While the blood source and the antigens
for stimulation differ between the autologous and allogeneic therapies, the manufacturing process for each product is identical.
Cancers are heterogeneous in their expression
of antigens. Tumors generally consist of individual cancer cells expressing different antigens, and each of those antigens can
be present at a different level that can change over time. Therapies targeting only a single antigen are vulnerable to evolutionary
escape mechanisms.
While single-antigen specific therapy can
eliminate all the tumor cells expressing the targeted antigen, the residual tumor cells that do not express that antigen may survive
and expand. In addition, tumor cells may also downregulate or mutate the targeted antigen, thus becoming invisible to the T cell
therapy. Both phenomena create a transformed tumor that is impervious to that therapy. This process is referred to as antigen-negative
tumor escape.
Our solution to the problem of tumor heterogeneity
is the development of T cell products that simultaneously attack multiple tumor-expressed antigens and thereby enable more complete
initial tumor targeting, thus minimizing the subsequent opportunity for the cancer to engage escape mechanisms. Of note, data suggest
that this strategy may be responsible for recruitment and activation of unique cancer-killing
cells from the patient’s own immune repertoire to participate in cancer eradication, further minimizing the possibility
for tumor cell escape.
We believe our proprietary MultiTAA-specific
T cell platform may have meaningful advantages over current CAR and TCR-engineered cell therapy approaches. Compared to current
gene-modified T cell therapies, the MultiTAA-specific T cell product candidates are characterized by the following:
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Clinical benefits observed in early-stage clinical trials in multiple cancer indications.
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Based on our observations in clinical trials
in AML, pancreatic cancer, lymphoma, ALL and MM, we believe that the MultiTAA-specific T cell therapies have the potential to mediate
a meaningful anti-tumor effect, as well as significant in vivo expansion of T cells. For example, in BCM’s Phase
1 clinical trial in lymphoma, there were complete responses, or CRs, in six of the fifteen evaluable patients with active disease.
Significantly, no patient with a CR has subsequently relapsed with disease, whereas typically 30% or more of patients with CR in
reported CAR-T studies relapse within one year. In patient results to date in this trial, observed therapeutic responses appear
to be highly durable, with some patients being relapse-free beyond five years.
Unlike CAR and TCR-based approaches, our
MultiTAA-specific T cell therapy does not require genetic modification of T cells, a costly and complex process that significantly
complicates the manufacturing of a patient product. We believe our MultiTAA-specific T cell therapy can be manufactured at a fraction
of the cost of a gene-modified T cell product, with substantially reduced complexity of manufacturing.
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No need for lymphodepletion before infusion.
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Unlike CAR-T therapies, which require lymphodepletion
of a patient’s existing T cells so that they will not compete with the infused therapy, the MultiTAA-specific T cell therapies
work with the natural capabilities of T cells to target cancer and do not require lymphodepletion prior to infusion.
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Low incidence rate of adverse events.
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As of December 2019, the
MultiTAA-specific T cell therapy has been generally well tolerated by all of the patients enrolled in clinical trials in
hematological and solid tumor indications with no incidences of cytokine release syndrome or neurotoxicity. In these trials,
there has been only one Grade 3 adverse reaction considered possibly related to the therapy. This appears to compare
favorably with published CD19 CAR-T studies that have been associated with substantial tolerability concerns, including one
Phase 1 trial in which 95% of patients had Grade 3 or higher adverse events during treatment.
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Appears to drive endogenous immune responses.
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In our clinical trials, we have observed
evidence of “epitope spreading” in the treated patients, meaning that the MultiTAA-specific T cell therapy is potentially
inducing an enhanced response by the patient’s own T cells (specific for an expanded set of tumor-associated antigens beyond
those targeted by the infused product). Correlative analyses show expansion of endogenous T cells, other than those present in
the infused product, in the months following infusion. This phenomenon, also known as “antigen spreading,” is potentially
important in generating a deep and durable response for a patient, because it enables the killing of tumors that do not express
any of the antigens initially targeted by our therapy and could be due to the lack of lymphodepletion that allows recruitment of
the endogenous immune system for anti-tumor activity.
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Capable of addressing a broad repertoire of cancer cells.
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While CAR-T and TCR therapies generally
target a single epitope, our manufacturing process selects for T cells that are specific for multiple peptides derived from several
targeted antigens. Deep gene sequencing of our products shows that a typical patient dose usually consists of approximately 4,000
unique T cell clonotypes, some of which target up to five different tumor-associated antigens. The five antigen targets can be
recognized by a very wide range of T cells, which we believe facilitates robust killing of targeted cancer cells.
MT-401 for the Treatment of Post-Transplant
AML
We have submitted an IND to the FDA to
initiate a Phase 2 clinical trial in post-allogeneic hematopoietic stem cell transplant patients with AML in both the adjuvant
and active disease setting, which may become pivotal pending the results of the interim analysis. The dose administered in this
multicenter trial is the current maximum tolerated dose from the Phase 1/2 trial. In the adjuvant setting, patients will be randomized
to either MT-401 at approximately 90 days post-transplant versus standard of care observation, while the active disease patients
will receive MT-401 following relapse post-transplant as part of a single-arm group.
In February 2020, we announced that the
FDA lifted the clinical hold on the Phase 2 trial and has permitted us to initiate the trial, beginning with a safety lead-in portion
that is expected to enroll approximately six patients. Three patients will be dosed with MT-401 manufactured using the legacy reagent
used in the Phase 1 trial, and three patients will be dosed with MT-401 manufactured using a reagent from an alternative supplier.
We anticipate using this supplier for clinical and commercial supply of MT-401. The FDA placed a partial clinical hold on the trial
for the use of the MT-401 product manufactured using one of the reagents supplied by the alternative supplier until the final data
and certificate of analysis for the reagent are reviewed and accepted by the FDA. We currently estimate that the alternative supplier
will deliver the final reagent, along with the final data and certificate of analysis required by the FDA, by the end of the second
quarter of 2020. We anticipate to complete enrollment of the first three patients and submission of the final technical specifications
and comparability data of the new reagents to the FDA during the second half of 2020, thereby satisfying the requirements for lifting
the partial hold on the clinical trial. Given this expected timing, we do not currently expect the partial clinical hold to significantly
impact site and patient enrollment of the Phase 2 trial.
The safety lead-in will be followed by
the 160-patient randomized portion of the trial at approximately 20 transplant centers. Group 1 will comprise 120 adjuvant (disease-free)
patients, with the primary endpoint of relapse-free survival of patients receiving MT-401 versus a control group. Group 2 will
comprise 40 active disease patients in a single arm, with primary endpoints of complete remission and duration of complete remission.
Clinical Development of Our MultiTAA-Specific
T Cell Therapies by BCM
The following clinical trials are
being conducted by BCM pursuant to our strategic alliance. If data from these early clinical trials are positive, we will
consider the therapeutic and commercial potential for such therapies to be advanced as new product candidates for us. In each
trial, correlative studies showed significant expansion of MultiTAA-specific T cells, as well as significant evidence of
epitope spreading with expansion of endogenous T cells specific for tumor-associated antigens that were not targeted by the
MultiTAA-specific T cell therapy.
Acute Myeloid Leukemia
We are pursuing post-transplant AML as
the lead indication for the MultiTAA-specific T cell program. Currently, available treatments for post-transplant AML patients
are limited and include donor lymphocyte infusion, which has an approximately 15% overall response rate but a 30% to 50% risk of
severe and debilitating graft-versus-host disease. The five-year mortality rate for patients who receive an allogeneic hematopoietic
stem cell transplant exceeds 50%, and patients who relapse after a transplant have a survival expectation of approximately 4.5
months.
BCM recently completed a Phase 1 clinical
trial of the MultiTAA-specific T cell therapy for the treatment of patients with post-transplant AML. In this trial, we treated
patients in remission and with active disease post-transplant. As illustrated below, eleven of the thirteen patients in the adjuvant
disease setting dosed with the MultiTAA-specific T cell therapy after receiving an allogeneic stem cell transplant survived, ranging
from 6 weeks to 2.5 years post-infusion, with nine of these patients in CCR, as reported in March 2019. Two patients saw local
relapse in the central nervous system, but in both cases these patients were successfully treated with local therapy alone. One
patient saw extramedullary relapse and was subsequently treated in the active disease arm of the trial, generating a CR that was
durable for 13 months. One patient relapsed 8 months after receiving MultiTAA-specific T cells but following a second allogeneic
stem cell transplant this patient remains alive in relapse 1.5 years following his initial T cell infusion.
As illustrated below, and reported in March
2019, survival of the six evaluable patients with active disease ranged from 4 to 21 months, as compared to a historical survival
rate of 4 months for patients who receive the standard of care post-transplant. Of these patients, one patient demonstrated a complete
response that was durable for 13 months, one patient demonstrated a partial response that enabled that patient to receive a second
allogeneic stem cell transplant and two patients, who did not meet partial response criteria, experienced disease stabilization
enabling a two-month delay to next-line therapy.
In this trial, the MultiTAA-specific T
cell therapy was well tolerated, with no drug-related serious adverse events and no instances of graft-versus-host disease. One
patient in the adjuvant disease group had a possibly drug-related Grade 3 elevation of liver enzymes, which was treated with prednisone.
After discontinuing treatment and receiving decitabine, the patient relapsed and later re-enrolled in the trial in the active disease
group and entered CR for 13 months and survived for 2.5 years.
Pancreatic Cancer
In July 2019, we reported interim data
from an ongoing Phase 1/2 clinical trial of the MultiTAA-specific T cell therapy for the treatment of pancreatic adenocarcinoma
being conducted by BCM. In this trial, BCM plans to enroll approximately 45 patients with advanced or borderline resectable pancreatic
adenocarcinoma in three arms: Arm A, which includes patients with unresectable/metastatic disease who are responding to standard
first-line chemotherapy; Arm B, which includes patients with progressive disease or therapy intolerance; and Arm C, which includes
patients with surgically resectable disease. As of July 5, 2019, a total of 19 patients were administered the MultiTAA-specific
T cell therapy: 10 patients in Arm A, 6 patients in Arm B and 3 patients in Arm C.
Overall, we have observed a clinical benefit
correlated with the detection of tumor-reactive T cells in patient peripheral blood (Arms A, B and C) and within tumor biopsy samples
(Arm C) post-infusion. T cells exhibited activity against both targeted antigens as well as non-targeted TAAs, including MAGE-A2B
and AFP, indicating induction of antigen/epitope spreading. No cytokine release syndrome or neurotoxicity had been observed as
of July 5, 2019.
Arm A
Arm A is designed to evaluate the safety
and potential efficacy of using MultiTAA-specific T cell therapy as part of first-line treatment for patients with pancreatic cancer.
These patients in the chemo-responsive arm have completed or will complete at least three months of standard-of-care chemotherapy
(gemcitabine/nab-paclitaxel or FOLFIRINOX), which is the period during which a response to chemotherapy would typically occur,
before receiving up to six administrations of MultiTAA-specific T cell therapy in conjunction with chemotherapy. Of the nine evaluable
patients in Arm A as of July 5, 2019 (one patient was too early to be evaluated):
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Three
patients experienced objective responses after administration of MultiTAA-specific T cell therapy:
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One patient experienced a complete response; and
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Two patients experienced partial responses.
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Four
patients experienced disease stabilization. Two patients within stable disease boundaries (+20%/-30%) saw reversal of tumor growth
in which tumors previously growing after chemotherapy alone showed shrinkage after administration of MultiTAA-specific T cell
therapy.
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One
patient experienced a mixed response, in which some lesions increased in size and others decreased in size for a net zero change
in the size of tumor lesions.
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One
patient experienced disease progression.
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In addition, overall tumor shrinkage volume
was observed in six out of the eight patients with a measurable tumor after administration of MultiTAA-specific T cell therapy.
One evaluable patient did not have tumor measurements for analysis.
In patients responding to therapy, significant
expansion of the infused MultiTAA-specific T cell therapy was observed, along with broad-based epitope spreading, with significant
expansion of endogenous T cells specific for other tumor specific antigens.
Arm B
Arm B is designed to evaluate the use of
MultiTAA-specific T cell therapy as a second-line therapy for patients who have failed first-line chemotherapy. The patients in
this chemo-refractory arm are either ineligible for chemotherapy or have progressed on chemotherapy and have received or are receiving
up to six doses of MultiTAA-specific T cell therapy as a monotherapy. Of the six evaluable patients in Arm B as of July 5, 2019:
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Three
patients experienced stable disease or clinical disease stabilization:
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Two patients who previously had progressive disease experienced clinical disease stabilization for up to two months.
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One patient has maintained stable disease for seven months (ongoing).
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Three
patients experienced clinical decline.
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Among the patients who saw clinical disease
stabilization, significant expansion of the infused MultiTAA-specific T cell therapy was observed, along with broad-based epitope
spreading, with significant expansion of endogenous T cells specific for other tumor-specific antigens.
Arm C
Arm C is designed to assess T cell infiltration
and expansion. These patients with borderline surgically resectable disease received or will receive a dose of MultiTAA-specific
T cell therapy following chemotherapy, radiotherapy or combination and prior to surgical resection and up to five additional doses
of T cells after surgery. In the patients evaluable in Arm C as of July 5, 2019, MultiTAA-specific T cells were measurable in meaningful
numbers as detected by correlative analysis of resected tumor, and significant expansion of the infused MultiTAA-specific T cells
was observed, along with broad-based epitope spreading, with significant expansion of endogenous T cells specific for other tumor
specific antigens.
Lymphoma
BCM is currently evaluating the MultiTAA-specific
T cell therapy in a Phase 1 clinical trial for the treatment of patients with lymphoma.
As of January 2019, we had treated 15
patients with active disease, which we refer to as the active lymphoma group, all of whom had completed a follow-up period
beyond three months post-infusion. These patients were heavily pre-treated and, on average, had failed between four and seven
prior therapies, with two patients having failed nine prior therapies. As illustrated below, in the active lymphoma group,
six patients entered CR and nine patients had experienced stable disease, with three of those patients experiencing durable
stable disease and six of those patients experiencing transient stable disease ranging from three months to ten months. None
of the patients in CR had relapsed, and the range for the duration of CR in these patients were between one and over five
years after being infused with the MultiTAA-specific T cell therapy. Responses in all six patients who entered CR were
associated with an expansion of infused T cells, as well as induction of antigen spreading. Of the nine patients with stable
disease, three had not relapsed, with two of those patients in stable disease for nine months and over 24 months,
respectively, which we believe shows potential durable disease stabilization.
We also had treated 18 patients, including
one patient who was treated a second time after a relapse, in remission, which we refer to as the adjuvant lymphoma group. Like
the active lymphoma group, these patients were heavily pre-treated. As illustrated below, in the adjuvant lymphoma group as reported
in January 2019, all 18 patients had entered CR, with 14 patients in CCR. The duration of response ranged from nine months to over
48 months.
In both treatment groups, the MultiTAA-specific
T cell therapy was well tolerated, with no drug-related serious adverse events, suggesting that the MultiTAA-specific T cell therapy
might serve as a standard-of-care maintenance therapy for lymphoma patients in remission.
Further, data from this trial show “epitope
spreading,” or expansion of patients’ endogenous T cells (specific for an expanded set of tumor-associated antigens
beyond those targeted by the infused therapy) in the months following infusion. Significantly, we have observed this effect even
though some patients in this trial received doses that had not yet been antigen-escalated to the full antigen dose.
Acute Lymphoblastic Leukemia
BCM is currently evaluating the MultiTAA-specific
T cell therapy in a Phase 1 clinical trial for the treatment of patients with ALL. Leukemic relapse is one of the primary causes
of treatment failure in hematopoietic stem cell transplant recipients. Like post-transplant AML patients, post-transplant ALL patients
have limited treatment options, with donor lymphocyte infusions similarly associated with the risk of life-threatening graft-versus-host
disease. While CAR-T therapies have shown potent anti-leukemia activity in post-transplant ALL patients, CD19-CAR-T cell therapies
target a single antigen, carrying the inherent risk of immune escape, and are most effective in malignancies of B-cell lineage.
In contrast, the MultiTAA-specific T cell therapy targets multiple antigens expressed in both B- and T-cell ALL.
In this trial, as reported in February
2019 we had treated 18 patients. Of the seven evaluable patients:
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All evaluable patients were up to 28 months in CCR;
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One patient experienced relapse displayed mixed donor/recipient chimerism after transplant, but
remained in CCR for 6 months; and
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Patients who remained in CCR had been durable for between four to 28 months, with a median of 16
months.
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Multiple Myeloma
BCM is currently evaluating the MultiTAA-specific
T cell therapy in a Phase 1b/2a clinical trial for the treatment of patients with MM. In this trial, we are treating both active
and adjuvant post-autologous stem cell transplant MM patients both within 90 days and more than 90 days post-transplant. We have
not seen a meaningful difference in response rates or durability between the two arms and intend to standardize future trials based
upon a protocol wherein patients will receive MultiTAA-specific T cell therapy immediately post-transplant.
As reported in January 2019, of the 12
patients that had been treated in the active MM group:
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Three patients achieved partial responses; and
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All eight remaining patients experienced stabilization of disease following initial MultiTAA-specific
T cell infusion.
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As reported in January 2019, of the eight
patients that had been treated in the adjuvant MM group, all eight patients had experienced a partial response or CR, with a median
follow-up of 21 months. Only one patient had relapsed as of such date.
Process Development and Manufacturing
of The MultiTAA-Specific T Cell Therapies
In the manufacturing process, blood is
drawn from either the individual patient (in the case of the autologous T cells) or from the allogeneic stem cell transplant donor
(in the case of the allogeneic T cells). Although the T cells that are selected and expanded by our process exist in a patient’s
circulating blood, these T cells are often present at very low frequencies. Researchers at BCM believe that these T cells are adversely
affected by the suppressive tumor microenvironment. It is a well-accepted concept that cancers not only evade immune detection
but often actively suppress the function of the human immune system. Our manufacturing and culturing process is intended to (1) identify
the T cells specific for the antigens that we intend to target, (2) restore these T cells to functionality with respect to their
anti-tumor capability and (3) expand the population of those T cells specific for our targets to achieve the required patient dose.
After blood is drawn, PBMCs are isolated
and used to manufacture a patient-specific product. These cells are placed inside a G-Rex manufacturing device or standard plasticware
and combined with an experimentally optimized mix of GMP-grade cytokines that is used to restore and enhance the functional capability
of the cultured T cells.
In addition, libraries of overlapping peptides,
which we refer to as peptide pools, spanning the target antigens are combined with antigen presenting cells and added to the cell
culture. Each peptide within a peptide pool represents a small segment of a target antigen, which a T cell might recognize. Each
library represents the entire protein sequence of a target antigen, with each peptide overlapping significantly with the peptides
adjacent to it within the antigen’s protein sequence. This overlapping structure allows us to isolate, activate and expand
any T cell that is specific for any segment of the antigens that we target in the unique genetic background of every patient.
The G-Rex is a cell culture device manufactured
by Wilson Wolf used by many cell therapy developers, both in commercial and academic settings. The device allows a user to introduce
cells, media and other reagents into a cell culture chamber, which has a gas-permeable membrane at its bottom. The cells settle
on this gas-permeable membrane through which oxygen and carbon dioxide are exchanged (i.e. the cells can breathe at the base
of the device), while nutrients required for cell expansion are obtained from the medium above the cells. This system allows for
the highly robust growth of cells in culture, by providing them with superior access to oxygen and nutrients. Cells manufactured
in the device grow efficiently without need for agitation by a technician, scientist or automated system.
Inside the G-Rex or the regular plasticware,
PBMCs are co-cultured with antigen-presenting cells that have been exposed to the stimulating peptide pools. This results in the
selective expansion of T cells that specifically recognize the target antigens. At the end of the manufacturing process, the resulting
product is a mix of helper (CD4+) and cytotoxic (CD8+) T cells that recognize the antigens we are targeting.
Once cell manufacturing is complete, the
product is tested for identity, sterility, phenotype and functionality before it is released for infusion into a patient. Sampling
of product indicates that, on average, approximately 4,000 different T cell clonotypes are present in a typical 5-antigen-specific
patient product.
Upon release of the final patient product,
the cells are frozen and transported to the site where the cells will be administered. The standard dose for patients with
lymphoma, AML or myeloma ranges from 5 to 20 million cells per meter squared (corresponding to typical doses of 10 to
40 million cells per adult patient). These cell doses represent a significantly smaller dose of cells, when compared to CAR-T or
TCR therapies. As a result, our therapy requires only a very small infusion volume that can be administered to patients within
minutes at an outpatient center. Due to the low incidence of adverse events with our therapies, patients do not need to be hospitalized
and monitored overnight. Instead, the patients are evaluated for any immediate infusion-related reactions and can then usually
be discharged within two hours.
Our manufacturing process is illustrated
below:
Our Peptide-Based Immunotherapeutic
Vaccines: TPIV200 and TPIV100/110
In addition to our MultiTAA-specific T
cell therapies, we are developing peptide-based immunotherapeutic vaccines that are designed to precisely target breast and ovarian
cancer cells, in contrast to standard therapies for the treatment of cancer that target both cancer cells and normal cells. Our
peptide vaccines are derived from naturally processed T cell-targeted antigens. We believe that our peptide vaccines are potentially
effective standalone therapies but may also enhance the efficacy of other immunotherapy approaches, including our own MultiTAA-specific
T cell therapies. Our multipeptide approach is fundamentally different from traditional vaccine therapies that have generally targeted
a major histocompatibility complex, or MHC, class I-restricted epitope and have historically performed poorly as stand-alone treatments.
We are currently evaluating TPIV200 for the treatment of breast and ovarian cancers that overexpress FRa in multiple Phase 2 clinical
trials and TPIV100/110 for the treatment of breast cancers that overexpress HER2/neu in Phase 1b and Phase 2 clinical trials.
We are in the process of evaluating the
peptide vaccine therapeutic products and programs to determine the future strategy and the proper allocation of our resources to
best maximize stockholder value. In conjunction with this evaluation process we may de-emphasize or terminate certain vaccine therapeutic
products or programs. Such strategic review and evaluations are a priority and an important part of our ongoing operations.
TPIV200 for the Treatment of FRa-Overexpressed
Breast and Ovarian Cancers
FRa is overexpressed in over 80% of breast
cancers and over 90% of ovarian cancers. The only treatment options for these cancers are surgery, radiation therapy and chemotherapy,
creating a very important and urgent clinical need for a new therapeutic strategy. Time to recurrence is relatively short for ovarian
cancer and survival prognosis is extremely poor after recurrence. In the United States alone, every year there are 22,350 new ovarian
cancer diagnoses and 268,600 new breast cancer diagnoses, of which 10% are diagnoses of triple-negative breast cancer.
TPIV200 is composed of a mixture of five
FRa-derived immunogenic peptides adjuvanted with low-dose granulocyte-macrophage colony-stimulating factor, or GM-CSF, and is designed
to activate both the CD4+ and CD8+ T cell compartments in order to activate a patient’s T cells against
the targets. Recent developments in immunology suggest that both CD4+ and CD8+ activation support a robust
immune response.
Clinical Development
Phase 1 Clinical Trial in Advanced Breast
and Ovarian Cancer
In this Phase 1 clinical trial, completed
by Mayo Clinic in 2015, 21 patients with advanced breast or ovarian cancer who had undergone standard surgery and adjuvant treatment
were treated with one cycle of cyclophosphamide, followed by intradermal vaccination of TPIV200 on day one of a 28-day cycle for
a maximum of six vaccination cycles. In the trial, 20 of 21 patients generated T cell responses. These responses developed slowly
over the course of the vaccination cycles, with a median time to maximal immunity of five months. Over 90% of patients developed
robust and durable antigen-specific immune responses against FRa without regard for HLA type, which aligns with the intended mechanism
of action of the vaccine, and 89% of the patients responded to multiple epitopes included in the TPIV200 vaccine, with most patients
demonstrating T cell immunity to three or more epitopes. Further, all 16 patients in the observation stage generated T cell responses
that lasted over six months.
TPIV200 was well-tolerated, with only one
Grade 3 drug-related adverse event. In a two-year patient follow-up analysis, the 10 enrolled ovarian cancer patients had longer
median progression-free survival time of 528 days than the 313 days historically reported for the standard-of-care chemotherapy
treatment. All patients were alive at the final follow-up. None of the 7 breast cancer patients had experienced a recurrence.
Phase 2 Clinical Trials in Triple-Negative
Breast Cancer
Triple-negative breast cancer is one of
the most difficult cancers to treat and represents a clear unmet medical need. With the support of a $13.3 million grant from the
Department of Defense, the Mayo Foundation is conducting a 280-patient Phase 2 clinical trial of TPIV200 in patients with triple-negative
breast cancer, which began enrolling patients in late 2017 and is still recruiting patients.
On June 21, 2016, we announced the initiation
of a randomized four-arm Phase 2 trial of TPIV200 for the treatment of patients with Stage 1 to Stage 3 triple-negative breast
cancer who have completed initial surgery and chemo/radiation therapy. This open-label, 80-patient clinical trial is designed to
evaluate dosing regimens, pre-treatment, efficacy and immune responses. In the trial, we are evaluating a high dose and a low dose
of TPIV200, each of which will be tested both with and without cyclophosphamide prior to vaccination. To date, there have been
no drug-related serious adverse events reported. Based on a preliminary analysis of 34 patients enrolled in the triple negative
breast cancer trial as of September 30, 2019, 31 patients showed meaningful immune response to vaccine treatment. These data are
subject to final review by independent biostatistical analysis. As of September 30, 2019, 16 of the 80 patients treated have shown
disease progression following treatment with TPIV200.
Phase 2 Clinical Trial in Platinum-Sensitive
Ovarian Cancer
A Phase 2 trial, which we sponsored, of
TPIV200 in platinum-sensitive ovarian cancer patients (FRV-004) was initiated in January 2017. The trial is a multi-center double-blind
efficacy study designed to evaluate TPIV200 compared to GM-CSF alone in a randomized, placebo-controlled fashion during the first
maintenance period after primary surgery and chemotherapy. Multiple clinical sites enrolled approximately 120 patients. Safety
and interim efficacy has been reviewed by independent data and safety monitoring board, or DSMB.
In November 2019 we announced the discontinuation
of this trial of TPIV200 based on an unblinded review of interim results from the trial conducted by the DSMB. Although the DSMB
did not express any safety concerns with respect to TPIV200, we elected to suspend the trial because it did not meet the threshold
for probability of clinical benefit based upon our pre-specified criteria.
Phase 2 Clinical Trial in Combination
With Durvalumab for Patients with Ovarian Cancer
On April 21, 2016, we announced our participation
in an ovarian cancer trial sponsored by Memorial Sloan Kettering Cancer Center, or MSKCC, in collaboration with AstraZeneca Pharmaceuticals
in ovarian cancer patients who are not responsive to platinum, a commonly used chemotherapy for ovarian cancer. This open-label
Phase 2 trial of TPIV200 in 40 patients is designed to evaluate the effects of combination therapy with AstraZeneca’s checkpoint
inhibitor durvalumab (anti-PD-L1). Interim results from the first 27 patients were presented at the AACR-Rivkin Symposium in September
2018; safety of the combination was shown in these heavily pretreated patients and a subset of patients exhibited durable disease
stabilization. Objective response rate and progression-free survival with combination treatment was not superior from the expected
efficacy of durvalumab as a monotherapy. However, post-immunotherapy follow-up was suggestive of improved clinical benefit from
standard therapies, as the majority of patients’ post-progression went on to receive subsequent standard therapy with durable
clinical benefit, creating a rationale for exploration of these agents in combination with chemotherapy. Although we have no business
relationship with AstraZeneca, we paid for half of the costs of this trial, in addition to providing TPIV200.
TPIV 100/110 for the Treatment of HER2/neu-Overexpressed
Breast Cancers
HER2/neu amplification/overexpression results
in an effective therapeutic target in breast and gastric cancer. Over-expressed HER2 is detected predominantly in malignancies
of epithelial origin, such as breast, gastric, esophageal, colorectal, salivary gland, pancreatic, epithelial ovarian, endometrial,
and bladder carcinomas, as well as gallbladder and extrahepatic cholangiocarcinomas. HER2 is over-expressed in approximately 25%
of breast cancers and its expression is associated with unfavorable pathologic features and aggressive disease if not treated with
targeted therapies, relative to other forms of breast cancer. While the outcome of patients with HER2 positive breast cancer has
significantly improved in the past few decades with an advent of anti-HER2 therapies, a substantial number of resected patients
with all types of breast cancer subsequently develop metastatic disease. The continued prevalence of these cancers represents a
high unmet medical need, justifying the targeted development of immunotherapeutic strategies.
We have added a MHC class I-restricted
peptide, which we licensed from the Mayo Foundation on April 16, 2012, to the four MHC class II-restricted peptides present in
TPIV100, resulting in TPIV 110 after the five peptides are mixed with GM-CSF. We have amended the existing IND to incorporate the
fifth peptide and will use TPIV110 in future trials with the goal of producing an even more robust vaccine activating both CD4+
(helper) and CD8+ (killer) T cells.
On June 7, 2016, we announced that we had
exercised our option agreement with Mayo Foundation and signed a worldwide license agreement to TPIV100. The license gives us the
right to develop and commercialize the technology in any cancer indication in which the HER2/neu antigen is overexpressed. As part
of this agreement, the IND for the HER2/neu Phase 1 trial was transferred from Mayo Foundation to us for Phase 2 clinical trials
of TPIV100. See “—Mayo Foundation for Medical Education and Research Relationships—Mayo HER2/neu License.”
Clinical Development
Phase 1 Clinical Trials in HER2/neu+
Breast Cancer
In the Phase 1 trial of 20 patients conducted
at the Mayo Clinic, TPIV100 was well tolerated. Nineteen of the twenty evaluable patients showed robust T-cell immune responses
to the antigens in the vaccine. An additional secondary endpoint incorporated into this trial was a two-year follow-on recording
the time to disease recurrence in the participating breast cancer patients.
On March 14, 2017, we announced that
our partners at the Mayo Clinic received a $3.8 million grant from the Department of Defense to conduct a Phase 1b trial of
TPIV100 in ductal carcinoma in situ, or DCIS, an early form of breast cancer. We are working closely with the Mayo Foundation
on this clinical trial by providing clinical and manufacturing expertise, as well as providing GMP vaccine formulations under
contract. The trial is expected to enroll 40 – 45 women with DCIS and commenced such enrollment during the first
quarter of 2019. If the trial is successful and subject to receiving marketing approval from the FDA, we believe that TPIV100
may eventually augment or even replace standard surgery and chemotherapy, and potentially could become part of a routine
immunization schedule for preventing breast cancer in healthy women.
Phase 2 Clinical Trials in HER2/neu+
Breast Cancer
On October 10, 2018, we announced that
the Mayo Clinic had been awarded a grant of $11 million from the Department of Defense intended to cover the costs of a large randomized,
double-blind Phase 2 trial of TPIV100. We are working closely with the Mayo Foundation on this clinical trial by providing clinical
and manufacturing expertise, as well as providing GMP vaccine formulations under contract. In this trial, 190 patients will be
randomized, in a 2:1 fashion, to receive TPIV100 plus maintenance ado-trastuzumab emtansine, or T-DM1, or maintenance T-DM1with
placebo plus GM-CSF. The trial will evaluate whether the administration of vaccine during T-DM1 maintenance therapy in patients
with residual disease post-neoadjuvant chemotherapy effectively blocks disease recurrence and the development of metastatic breast
cancer. By prevention of recurrence and metastasis, the expectation is that mortality associated with breast cancer will be decreased.
Manufacturing
Our current manufacturing strategy is to
contract with BCM and other third parties to manufacture our MultiTAA-specific T cell therapies, as well as the raw materials,
our active pharmaceutical ingredients, or APIs, and finished solid dose products for our peptide vaccines for clinical and ultimately
commercial uses. We currently do not operate any manufacturing facilities for clinical or commercial production of our drug candidates.
In addition, we expect to continue to rely on third parties for the manufacture of our clinical and commercial supply of MultiTAA-specific
T cells, and of the raw materials, API and finished drug product for our peptide vaccines. Of note, we anticipate that product
manufacturing of MultiTAA-specific T cell therapies in support of Phase 1 and early Phase 2 clinical trials will be conducted at
BCM within its GMP cell manufacturing facility. However, in 2020 we will initiate a technology transfer process to a manufacturing
facility capable of supplying commercial grade clinical products.
In this manner, we expect to continue to
build and maintain our supply chain and quality assurance resources.
Our supply chain for manufacturing raw
materials, API, peptide vaccines and MultiTAA-specific T cell therapies ready for distribution and commercialization is a multi-step
process. Establishing and managing the supply chain requires a significant financial commitment and the creation and maintenance
of numerous third-party contractual relationships.
We contract with third parties to manufacture
our peptide vaccines and MultiTAA-specific T cell therapies for clinical purposes. Third-party manufacturers supply us with raw
materials for the peptide vaccines, and other third-party manufacturers convert these raw materials into API or convert the API
into final dosage form. For most of our peptide vaccine candidates, once our raw materials are produced, we rely on different third
parties to manufacture the API, to make finished drug product and to lyophilize, package and label the finished product. While
we currently have focused on single vendors for manufacturing of peptide, formulation development, and lyophilization and vialing,
we have access to numerous other vendors, if required. Similarly, BCM is currently the sole manufacturer of our MultiTAA-specific
T cell therapies.
In November 2019, we announced that the
FDA placed our planned Phase 2 clinical trial of our MultiTAA-specific T cell therapies for the treatment of post-transplant AML
on clinical hold. The FDA requested additional information and technical specifications for two legacy reagents supplied by third
parties used in the MultiTAA-specific T cell manufacturing process. The technical specifications and data requested by the FDA
could not be produced by the original suppliers. We identified alternative suppliers, and the FDA permitted us to initiate
a safety lead-in portion of the trial but placed a partial hold on the trial for the use of the MultiTAA-specific T cell product
manufactured using one of the reagents supplied by the alternative supplier until the final data and certificate of analysis for
the reagent are reviewed and accepted by the FDA. We currently estimate that the alternative supplier will deliver the final reagent,
along with the final data and certificate of analysis required by the FDA, by the end of the second quarter of 2020.
Competition
Our drug discovery, development and ultimate
commercialization activities face, and will continue to face, intense competition from organizations such as pharmaceutical and
biotechnology companies, as well as academic and research institutions and government agencies. We face significant competition
from organizations, particularly fully integrated pharmaceutical companies that are pursuing pharmaceuticals which are competitive
with our drug candidates. Our product candidates may compete with product candidates from a number of companies, which are developing
various types of similar in vivo T-cell immunotherapies and therapeutic cancer vaccines to treat cancer, including: Advaxis
Inc., Genzyme Molecular Oncology, Immune Design, Oncothyreon, Celldex, BN Immunotherapeutics, Immunocellular, SELLAS Life Sciences
Group, Inc. (formerly) Galena BioPharma, Antigen Express, Transgene S. A., and Bavarian Nordic. In addition, other adoptive T-cell
therapies, monoclonal antibodies and checkpoint inhibitors also provide competition in the oncology space. In these areas, competitors
include Iovance, Immatics, Torque Therapeutics, Tessa Therapeutics, AdaptImmune, Mana Therapeutics, Bluebird Bio, Cellectis, Cell
Medica, Juno Therapeutics/Celgene/Bristol Myers Squibb, Kite Pharma/Gilead, Novartis, Roche Pharmaceuticals, Merck & Co, AstraZeneca
plc and Medimmune, LLC. We believe that our non-engineered T cells therapy and our in vivo T-cell therapy approaches will be synergistic
and may improve therapies being developed by these competitors.
Many companies and institutions, either
alone or together with their collaborative partners, have substantially greater financial, technical and human resources, and significantly
greater experience than we do in the following:
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undertaking preclinical testing and clinical trials;
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obtaining FDA and other regulatory approvals of products; and
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manufacturing, marketing, distributing and selling products.
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Accordingly, our competitors may succeed
in obtaining patent protection, receiving FDA and other regulatory approval or commercializing products that compete with our drug
candidates.
In addition, any drug candidate that we
successfully develop may compete with existing therapies that have long histories of safe and effective use. Competition may also
arise from:
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other drug development technologies and methods of preventing or reducing the incidence of disease;
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new small molecules; or
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other classes of therapeutic agents.
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We face, and will continue to face, intense
competition from other companies for collaborative arrangements with pharmaceutical and biotechnology companies, for establishing
relationships with academic and research institutions and for licenses to drug candidates or proprietary technology. These competitors,
either alone or with their collaborative partners, may succeed in developing products that are more effective than ours.
Our ability to compete successfully will
depend, in part, on our ability to:
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develop proprietary products;
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develop and maintain products that reach the market first, are technologically superior to and/or
are of lower cost than other products in the market;
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attract and retain scientific, product development and sales and marketing personnel;
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obtain patent or other proprietary protection for our products and technologies;
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obtain required regulatory approvals; and
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manufacture, market, distribute and sell any products that we develop.
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In a number of countries, including in
particular, developing countries, government officials and other groups have suggested that pharmaceutical companies should make
drugs available at a low cost. In some cases, governmental authorities have indicated that where pharmaceutical companies do not
do so, their patents might not be enforceable to prevent generic competition. Some major pharmaceutical companies have greatly
reduced prices for their drugs in certain developing countries. If certain countries do not permit enforcement of any of our patents,
sales of our products in those countries, and in other countries could be reduced by generic competition or by parallel importation
of our product. Alternatively, governments in those countries could require that we grant compulsory licenses to allow competitors
to manufacture and sell their own versions of our products in those countries, thereby reducing our product sales, or we could
respond to governmental concerns by reducing prices for our products. In all these situations, our results of operations could
be adversely affected.
BCM Exclusive License Agreement
On March 16, 2018, we entered into an exclusive
license agreement, or the BCM License Agreement, with BCM, under which we received a worldwide, exclusive license to BCM’s
rights in and to certain intellectual property rights, including European patent EP 2470644 (estimated expiration date August 24,
2030), to develop and commercialize MultiTAA-specific T cell product candidates.
Exclusive License to BCM’s Subject
Technology:
1. “Generation of CTL Lines with
Specificity Against Multiple Tumor Antigens or Multiple Viruses”
2. “Pepmixes to Generate Multiviral
CTLs with Broad Specificity”
3. “Immunogenic Antigen Identification
from a Pathogen and Correlation to Clinical Efficacy”
In partial consideration for the exclusive
rights granted under the BCM License Agreement, Marker Cell Therapy, Inc., an entity that is now our wholly owned subsidiary, issued
shares of its common stock to BCM valued at approximately $5.0 million at the time of issuance. Such initial equity issuance was
exchanged into merger consideration of 1,490,813 shares of our common stock and warrants to acquire 540,643 shares of our common
stock in connection with the merger we completed in October 2018. Additional consideration includes a royalty paid on net sales
by us to BCM according to the royalty schedule in the BCM License Agreement. The royalty fee schedule is based on aggregate net
sales in four different ranges: (1) less than $500 million, (2) $500 million to $1.0 billion, (3) $1.0 billion and over, and (4)
$2.0 billion and over. The corresponding royalty percentages range from 0.65% to 5.0% - increasing in proportion to
the aggregate net sales. The royalty fee may be reduced in the event that we must pay additional royalties with respect to third-party
owned patent rights or technology necessary for the use, manufacture or sale of a licensed product. We also agreed to pay BCM up
to an aggregate of $64.85 million in milestone payments upon the occurrence of nine particular milestones relating to completion
of the first dosing in clinical trials for a first and second distinct product, receipt of approval from the FDA and the achievement
of certain net sales goals. We are also responsible for sublicensing fees. In addition, under the BCM License Agreement, we are
responsible for reimbursing BCM for patent-related expenses. BCM is responsible for filing, prosecuting and maintaining all patent
applications and patents included in the licensed patent rights, and we have agreed to reimburse BCM for all such related legal
costs incurred after the date of the BCM License Agreement, except such legal costs shall be reduced on a pro-rata basis on a patent
or patent application basis should BCM license such patent or patent application in additional fields of use to any third party.
In addition, upon a liquidity event (as
defined in the BCM License Agreement) of the Company, BCM will receive a liquidity incentive payment of 0.5% of the liquidity event
proceeds (as defined in the BCM License Agreement).
We have agreed to indemnify BCM and certain
persons affiliated with BCM against claims and liabilities directly or indirectly related to or arising out of the design, process,
manufacture or use by any third party of the licensed products, even though such claims and liabilities result in whole or in part
from the negligence of the BCM indemnified parties or are based upon doctrines of strict liability or product liability, but not
claims or liabilities arising from the gross negligence or intentional misconduct of any such BCM indemnified parties.
Unless terminated sooner, the license will
expire on a licensed product-by-product basis and country-by-country basis, on the later of (1) the date of expiration
of the last valid claim of patent rights to expire that covers the sale of such licensed product in such country, or (2) the
first date following the tenth anniversary of the first commercial sale of first licensed product by us in such country. After
such expiration, but not termination, the licenses granted to us shall survive and become a perpetual, paid-in-full license in
such country with respect to such licensed product.
We have the right in our sole discretion
to terminate the BCM License Agreement upon 60 days’ written notice to BCM. BCM has the right to terminate the agreement
upon material default or failure of us of our overall obligation to perform any of the terms, covenants or provisions of the license
agreement, including failure to make timely payment, taken as a whole, and which default or failure remains uncured thirty days
after written notice from BCM of such material default or failure to correct such default or failure. Notwithstanding the foregoing,
if a material default or failure is not susceptible to cure within the 30-day cure period, BCM’s right to terminate shall
be suspended if, and for so long as, (1) we have provided BCM with a written plan that is reasonably calculated to effect
a cure, (2) such plan is reasonably acceptable to BCM, in its sole but reasonable discretion, and (3) we commit to and
do carry out such plan; provided, however, that, unless mutually agreed to by the parties in such plan, such suspension of BCM’s
right to terminate shall not extend beyond 60 days after the original cure period. In addition, either party’s right
to terminate the license agreement shall be tolled for so long as dispute resolution procedures are being pursued by the allegedly
breaching party in good faith, and if it is finally and conclusively determined that the allegedly breaching party is in material
breach, then the breaching party shall have the right to cure within 30 days after such determination. BCM also has the right to
terminate the agreement if we shall (1) become involved in insolvency, dissolution, bankruptcy or receivership proceedings
affecting the operation of our business, (2) make an assignment of all or substantially all of our assets for the benefit
of creditors, or (3) if a receiver or trustee is appointed for us and we, after the expiration of 30 days following any of
the enumerated events, are unable to secure a dismissal, stay or other suspension of such proceedings.
In the event of termination of the BCM
License Agreement, but not expiration, all rights to the subject technology and patent rights thereunder shall revert to BCM, except
to the extent necessary to exercise any surviving right or license thereunder. We may sell any licensed products actually in our
possession at the effective date of termination, provided that we continue to pay to BCM royalties on all such sales in accordance
with the license agreement, otherwise comply with the terms of the license agreement and sell all such licensed products within
six months after the effective date of the termination.
In furtherance of the BCM License Agreement
and as contemplated by the terms thereof, we have entered into a Sponsored Research Agreement, or the SRA, with BCM, which provides
for the conduct of research for us by credentialed personnel at BCM’s Center for Cell and Gene Therapy. The SRA, as amended,
terminates on January 31, 2021. Pursuant to the amended SRA, we have agreed to pay BCM $54,000 in each of 2020 and 2021. We previously
paid a total of $250,000 to BCM during the first two years of the SRA.
We will need to enter into additional agreements
with BCM with respect to a strategic alliance to advance pre-clinical research, early stage clinical trials, and Phase 2 clinical
trials with respect to our product candidates, as well as continued access to our clinical data, and product manufacturing and
support, including personnel and space at the institution for the foreseeable future.
Mayo Foundation for Medical Education
and Research Relationships
We have exclusively licensed the intellectual
property for our TPIV100/110 HER2/neu breast cancer vaccine and TPIV200 folate receptor alpha vaccine product candidates from the
Mayo Foundation for Medical Education and Research, or the Mayo Foundation.
As part of our business strategy, we establish
business relationships, including collaborative arrangements, with other companies and medical research institutions to assist
in the clinical development of certain of our drugs and drug candidates and to provide support for our research programs.
Below is a brief description of our significant
business relationships and collaborations and related license agreements with Mayo Foundation that expand our pipeline and provide
us with certain rights to existing and potential new products and technologies.
Following approval of the IND by the FDA
in July 2011, we executed a Sponsored Research Agreement with the Mayo Foundation for the clinical trial.
Mayo Patent & Know-How License
On March 25, 2012, we entered into a
Patent & Know-How License Agreement with the Mayo Foundation pursuant to which we licensed certain intellectual property
rights from the Mayo Foundation for the development and commercialization of certain products, methods and processes property
relating to a proprietary HER2/neu technology.
The Mayo Foundation granted us a license
(with a right to sublicense) on a worldwide basis to make, sell and use products for prophylactic and therapeutic use. This license
is an exclusive license for products that are based on the licensed intellectual property and non-exclusive for products that are
based on Mayo Foundation know–how and materials. The intellectual property licensed includes U.S. patents 9,814,767 (estimated
expiration date February 15, 2033) and 10,117,919 (estimated expiration date February 15, 2033) and European patent 2814836 (estimated
expiration date February 15, 2033).
Under this agreement, and subject to certain
exceptions, we are responsible for, among other things, developing the technology under the Patent Rights to bring Licensed Products
(as defined in the agreement) to market and costs of filing, prosecution and maintenance of the Patent Rights. Mayo Foundation
controls the prosecution and maintenance of the Patent Rights in consultation with us.
The Mayo Foundation granted this license
in exchange for an upfront payment of $250,000 that we paid in three installments. In addition to the upfront payment, we are to
pay an annual license maintenance fee, milestone fees, royalty fees (which will be subject to a minimum annual royalty fee once
royalty fees are due), a percentage of sublicense income (if applicable), and a $2,000,000 diligence fee if we fail to initiate
a Phase 2 clinical trial for a Licensed Product prior to the eighth anniversary of the agreement.
We have agreed to indemnify and hold Mayo
Foundation harmless from any damages caused as a result of (1) the practice or exercise of any rights and assignments granted pursuant
to the agreement by or on behalf of us, any affiliate, or any sub-licensee; (2) research, development, design, manufacture, distribution,
use, sale, importation, exportation or other disposition of Licensed Products; (3) our, any affiliates, or any sub-licensee’s
act or omission; and (4) third party suits for patent infringement involving a Licensed Product.
The term of this agreement runs from March
25, 2012 until the date of the last to expire of the Valid Claims (as defined in the agreement), provided that Mayo Foundation
may terminate the agreement if, among other matters, (1) 45 days after providing us with notice of a material breach of this agreement,
we fail to cure such breach, (2) we fail to initiate a Phase 3 clinical trial for a Licensed Product prior to the tenth anniversary
of the agreement, and (3) we cease to conduct business in the normal event of operations or become insolvent or bankrupt. We may
voluntarily terminate the agreement at any time upon written notice to Mayo Foundation.
Mayo HER2/neu License
On May 4, 2016, we entered into a License
and Assignment Agreement with Mayo Foundation, or the Mayo Foundation HER2/neu License, pursuant to which we licensed certain intellectual
property rights from the Mayo Foundation for the development and commercialization of certain products, methods and processes property
relating to any cancer indication in which the HER2/neu antigen is overexpressed. The Mayo Foundation HER2/neu License resulted
from our exercise of an option that was issued pursuant to a Technology Option Agreement that we entered into with the Mayo Foundation
on May 25, 2010.
The Mayo Foundation granted us a
license (with a right to sublicense) on a worldwide basis to make, sell and use products for therapeutic use against breast,
ovarian, lung and any other cancers that overexpress HER2/neu antigens. This license is an exclusive license for products
that are based on the licensed intellectual property and non-exclusive for products that are based on Mayo Foundation
know–how and materials. The intellectual property licensed includes European patent 2215111 (estimated expiration date
October 30, 2028).
Under the Mayo Foundation HER2/neu License,
and subject to certain exceptions, we are responsible for, among other things, developing the technology under the Patent Rights
to bring Licensed Products (both as defined in the Mayo Foundation HER2/neu License) to market and costs of filing, prosecution
and maintenance of the Patent Rights. Mayo Foundation has sole control over the protection, defense, enforcement, maintenance abandonment
and other handling of the Know-How (as defined in the Mayo Foundation HER2/neu License) and Materials (as defined in the Mayo Foundation
HER2/neu License).
The Mayo Foundation granted this license
in exchange for an initial payment of $300,000. The Mayo Foundation assigned to us IND #14749, and we assumed all responsibility
and liability for this investigational new drug application. In addition to the initial payment, we are to pay an annual license
maintenance fee, milestone fees, royalty fees (which will be subject to a minimum annual royalty fee once royalty fees are due)
and, if applicable, a percentage of sublicense income.
We have agreed to indemnify and hold Mayo
Foundation harmless from any damages caused as a result of (1) the practice or exercise of any rights and assignments granted pursuant
to the agreement by or on behalf of us or any sub-licensee; (2) research, development, design, manufacture, distribution, use,
sale, importation, exportation or other disposition of Licensed Products; (3) our or any sub-licensee’s act or omission,
including negligence or willful misconduct; and (4) third party suits for patent infringement involving a Licensed Product.
The term of this agreement runs from May
4, 2016 until the date of our last obligation to make payments under the agreement, provided that Mayo Foundation may terminate
the agreement if, among other matters, (1) 30 days after providing us with notice of a material breach of this agreement, we fail
to cure such breach, (2) 90 days after providing us with written notice, we fail to meet either of the following diligence events
(a) initiate a Phase 2 clinical trial for a Licensed Product prior to the second anniversary of the agreement and, once initiated,
keep current on all of our Phase 2 funding obligations and (b) initiate a Phase 2b or 3 clinical trial for a Licensed Product prior
to the fifth anniversary of the agreement, (3) we fail to make a sale of a Licensed Product by May 4, 2026, and (4) we cease to
conduct business in the normal event of operations or become insolvent or bankrupt. We may voluntarily terminate the agreement
at any time upon written notice to Mayo Foundation.
Mayo Folate Receptor Alpha License
On July 21, 2015, we entered into a License
and Assignment Agreement with Mayo Foundation, or the Mayo Foundation FRa License, pursuant to which we licensed certain intellectual
property rights from the Mayo Foundation for the development and commercialization of certain products, methods and processes property
relating to a Folate Receptor Alpha immunotherapeutic vaccine comprised of a set of unique peptide epitopes targeting breast, lung
and ovarian cancer. The Mayo Foundation FRa License resulted from our exercise of an option that we acquired from Ayer Special
Situations Fund I, LP, or Ayer, that was issued pursuant to a Technology Option Agreement that Ayer entered into with the Mayo
Foundation on March 19, 2014.
The Mayo Foundation granted us a license
(with a right to sublicense) on a worldwide basis to make, sell and use products for therapeutic use against breast, ovarian, lung
and other cancers that overexpress Folate Receptor Alpha. This license is an exclusive license for products that are based on the
licensed intellectual property and non-exclusive for products that are based on Mayo Foundation know–how and materials. The
intellectual property that is licensed includes US patents 8,486,412 (estimated expiration date April 3, 2029), 8,858,952 (estimated
expiration date March 10, 2031), 9,243,033 (July 10, 2027) and 9,915,646 (estimated expiration date June 1, 2027).
Under the Mayo Foundation FRa License,
and subject to certain exceptions, we are responsible for, among other things, developing the technology under the Patent Rights
to bring Licensed Products (both as defined in the Mayo Foundation FRa License) to market and costs of filing, prosecution and
maintenance of the Patent Rights. Mayo Foundation has sole control over the protection, defense, enforcement, maintenance abandonment
and other handling of the Know-How (as defined in the Mayo Foundation FRa License) and Materials (as defined in the Mayo Foundation
FRa License).
The Mayo Foundation granted this
license in exchange for an initial upfront payment of $350,000. The Mayo Foundation assigned to us IND # 14546, and we
assumed all responsibility and liability for this investigational new drug application. In addition to the initial upfront
payment, we are to pay additional upfront payments, an annual license maintenance fee, milestone fees, royalty fees (which
will be subject to a minimum annual royalty fee once royalty fees are due), and, if applicable, a percentage of sublicense
income.
We have agreed to indemnify and hold Mayo
Foundation harmless from any damages caused as a result of (1) the practice or exercise of any rights and assignments granted by
the Mayo Foundation FRa License by or on behalf of us or any sub-licensee; (2) research, development, design, manufacture, distribution,
use, sale, importation, exportation or other disposition of Licensed Products; (3) our or any sub-licensee’s act or omission,
including negligence or willful misconduct; and (4) third party suits for patent infringement involving a Licensed Product.
The term of this agreement runs from July
21, 2015 until the date of our last obligation to make payments under this agreement, provided that the Mayo Foundation may terminate
this agreement if, among other matters, (1) 30 days after providing us with notice of a material breach of this agreement, we fail
to cure such breach, (2) 90 days after providing us with written notice, we fail to meet either of the following diligence events
(a) initiate a Phase 2 clinical trial for a Licensed Product prior to the 2nd anniversary of the Mayo Foundation FRa License and,
once initiated, keep current on all of our Phase 2 funding obligations and (b) initiate a Phase 2b or 3 clinical trial for a Licensed
Product prior to the 5th anniversary of the Mayo Foundation FRa License, (3) we fail to make a sale of a Licensed Product by July
21, 2025 and (4) we cease to conduct business in the normal event of operations or become insolvent or bankrupt. We may voluntarily
terminate the Mayo Foundation FRa License at any time upon written notice to Mayo Foundation.
Intellectual Property
Our commercial success will depend in part
on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions, improvements, and
know-how related to the business; to defend and enforce proprietary rights, including any patents that we may own in the future;
to preserve the confidentiality of our trade secrets and other intellectual property; to obtain and maintain licenses to use intellectual
property owned by third parties; and to operate without infringing the valid and enforceable patents and other proprietary rights
of third parties. Our ability to stop third parties from making, using, selling, offering to sell, or importing our products may
depend on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities — in
other words, the rights obtained under exclusive license arrangements such as those pursuant to our BCM License Agreement and our
Mayo Foundation licenses. With respect to both licensed and company-owned intellectual property, we cannot be sure that patents
will be granted with respect to any of our pending patent applications or with respect to any patent applications filed in the
future, nor can we be sure that any of our existing patents or any patents that may be granted in the future will be commercially
useful in protecting our commercial products and methods of manufacturing the same.
To achieve this objective, a strategic
focus for us has been to identify and license key patents and patent applications that serve to enhance our intellectual property
and technology position. Currently, all of our MultiTAA-specific T cell intellectual property rights are licensed from BCM. Our
intellectual property portfolio currently includes patent applications having: (1) claims directed to methods of generating multi-antigen
specific T cell products; and (2) claims directed to therapeutic uses of such multi-antigen specific T cell products. We believe
our patent portfolio, together with our efforts to develop and patent next-generation technologies, provides us with a substantial
intellectual property position. However, the area of patent and other intellectual property rights in biotechnology is an evolving
one with many risks and uncertainties.
Patents
Patents and other proprietary rights are
vital to our business operations. We protect our technology through various United States and foreign patent filings and maintain
trade secrets that we own. Our policy is to seek appropriate patent protection both in the United States and abroad for our proprietary
technologies and product candidates. An enforceable patent with appropriate claim coverage can provide an advantage over competitors
who may seek to employ similar approaches to develop therapeutics, and so the future commercial success of products, and therefore
our future success, will be in part dependent on our intellectual property strategy. We reassess the value of each patent at the
time maintenance fees are due, and in cases where maintaining the patent is judged to be of no significant strategic value, we
decline to pay the maintenance fee.
There can be no assurance that our
patents, and any patents that may be issued or licensed to us in the future, will afford protection against competitors with
similar technology. In addition, no assurances can be given that the patents issued or licensed to us will not be infringed
upon or designed around by others or that others will not obtain patents that we would need to license or design around. If
the courts uphold existing or future patents containing broad claims over technology used by us, the holders of such patents
could require us to obtain licenses to use such technology. Patent coverage may also vary from country to country based on
the scope of available patent protection. There are also opportunities to obtain an extension of patent coverage for a
product in certain countries, which adds further complexity to the determination of patent life.
We currently have a number of issued and
pending patents covering composition of matter of our PolyStart technology including: U.S. 9,364,523 (estimated expiration date
March 17, 2035); U.S. 9,655,956 (estimated expiration date March 17, 2035); U.S. 9,988,643 (estimated expiration date March 17,
2035); and U.S. 10,030,252 (estimated expiration date March 17, 2035)
The effect of the issued United States
patents is that they provide us with patent protection for the claims covered by the patents. While the expiration of a product
patent normally results in a loss of market exclusivity for the covered product or product candidate, commercial benefits may continue
to be derived from: (1) later-granted patents on processes and intermediates related to the most economical method of manufacture
of the active ingredient of such product; (2) patents relating to the use of such product; (3) patents relating to novel compositions
and formulations; and (4) in the United States and certain other countries, market exclusivity that may be available under relevant
law. The effect of patent expiration on our product candidates also depends upon many other factors such as the nature of the market
and the position of the product in it, the growth of the market, the complexities and economics of the process for manufacture
of the active ingredient of the product and the requirements of new drug provisions of the Federal Food, Drug and Cosmetic Act
or similar laws and regulations in other countries.
Our pending patent applications cover a
range of technologies, including specific embodiments and applications for treatment of various medical indications, improved application
methods and adjunctive utilization with other therapeutic modalities. The coverage claimed in a patent application can be significantly
reduced before the patent is issued. Accordingly, we do not know whether any of the applications we will acquire, or license will
result in the issuance of patents, or, if any patents are issued, whether they will provide significant proprietary protection
or will be challenged, circumvented or invalidated. Because unissued U.S. patent applications are maintained in secrecy for a period
of eighteen months and U.S. patent applications filed prior to November 29, 2000 are not disclosed until such patents are issued,
and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be
certain of the priority of inventions covered by pending patent applications. Moreover, we may have to participate in opposition
proceedings in a foreign patent office, or for United States patent applications filed before March 16, 2013, in interference proceedings
declared by the United States Patent and Trademark Office, or the USPTO, to determine priority of invention, or in United States inter
partes review or post-grant review procedures, any of which could result in substantial cost to us, even if the eventual
outcome is favorable to us. There can be no assurance that the patents, if issued, would be held valid by a court of competent
jurisdiction. An adverse outcome could subject us to significant liabilities to third parties, require disputed rights to be licensed
from third parties or require us to cease using such technology.
We have patents and patent applications
in other countries, as well as in the European Patent Office that we believe provide equivalent or comparable protection for our
product candidates in jurisdictions internationally that we consider to be key markets. Because of the differences in patent laws
and laws concerning proprietary rights, the extent of protection provided by U.S. patents or proprietary rights owned by us may
differ from that of their foreign counterparts.
Trade Secrets
We also rely on trade secrets and know-how
relating to our proprietary technology and product candidates, continuing innovation, and in-licensing opportunities to develop,
strengthen and maintain our proprietary position in the field of immuno-oncology. However, trade secrets can be difficult to protect.
We also plan to rely on regulatory protection afforded through orphan drug designations, data exclusivity, market exclusivity and
patent term extensions when available, as well as contractual agreements with our academic and commercial partners.
We require each of our employees, consultants
and advisors to execute a confidentiality agreement upon the commencement of any employment, consulting or advisory relationship
with us. Each agreement provides that all confidential information developed or made known to the individual during the course
of the relationship will be kept confidential and not be disclosed to third parties except in specified circumstances. In the case
of employees, the agreements provide that all inventions conceived by an employee shall be our exclusive property.
Trademarks
We currently have pending with the USPTO
applications for registration of the trademarks POLYSTART and “Marker Therapeutics.” We currently have the trademark
“TapImmune” registered with the USPTO. We also have rights to use other names essential to our business. Federally
registered trademarks have a perpetual life if they are maintained and renewed on a timely basis and used properly as trademarks,
subject to the rights of third parties to seek cancellation of the trademarks if they claim priority or confusion of usage. We
regard our trademarks and other proprietary rights as valuable assets and believe they have significant value to us.
We believe that our patents, the protection
of discoveries in connection with our development activities, our proprietary products, technologies, processes and know-how and
all our intellectual property are important to our business. There can be no assurance that any of our patents, licenses or other
intellectual property rights will afford us any protection from competition.
Government Regulation
The FDA and other regulatory authorities
at federal, state, and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development,
testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record
keeping, approval, advertising, promotion, marketing, post-approval monitoring, and post-approval reporting of biologics such as
those we are developing. We, along with third-party contractors, will be required to navigate the various preclinical, clinical
and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies
or seek approval or licensure of our product candidates.
The process required by the FDA before
biologic product candidates may be marketed in the United States generally involves the following:
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completion of preclinical laboratory tests and animal studies performed in accordance with the
FDA’s current Good Laboratory Practices, or GLP, regulation;
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submission to the FDA of an IND, which must become effective before clinical trials may begin and
must be updated annually or when significant changes are made;
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approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical
site before the trial is commenced;
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performance of adequate and well-controlled human clinical trials to establish the safety, purity
and potency of the proposed biologic product candidate for its intended purpose;
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preparation of and submission to the FDA of a biologics license application, or BLA, after completion
of all pivotal clinical trials;
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satisfactory completion of an FDA Advisory Committee review, if applicable;
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a determination by the FDA within 60 days of its receipt of a BLA to file the application for review;
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satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities
at which the proposed product is produced to assess compliance with cGMP and to assure that the facilities, methods and controls
are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation
sites to assess compliance with Good Clinical Practices, or GCP; and
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FDA review and approval of the BLA to permit commercial marketing of the product for particular
indications for use in the United States.
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Preclinical and Clinical Development
Prior to beginning the first clinical
trial with a product candidate, we must submit an IND to the FDA. An IND is a request for authorization from the FDA to
administer an investigational new drug product to humans. The central focus of an IND submission is on the general
investigational plan and the protocol(s) for clinical studies. The IND also includes results of animal and in vitro studies
assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product; chemistry,
manufacturing, and controls information; and any available human data or literature to support the use of the investigational
product. An IND must become effective before human clinical trials may begin. The IND automatically becomes effective 30 days
after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the
proposed clinical trial. In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve
any outstanding concerns or questions before the clinical trial can begin. Submission of an IND therefore may or may not
result in FDA authorization to begin a clinical trial. Clinical trials involve the administration of the investigational
product to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the
requirement that all research subjects provide their informed consent for their participation in any clinical study. Clinical
trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in
monitoring safety and the effectiveness criteria to be evaluated. A separate submission to the existing IND must be made for
each successive clinical trial conducted during product development and for any subsequent protocol amendments. Furthermore,
an independent IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical
trial and its informed consent form before the clinical trial begins at that site and must monitor the study until completed.
Regulatory authorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a
finding that the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated
objectives. Some studies also include oversight by an independent group of qualified experts organized by the clinical study
sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at
designated check points based on access to certain data from the study and may halt the clinical trial if it determines that
there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy. There are also
requirements governing the reporting of ongoing clinical studies and clinical study results to public registries.
For purposes of BLA approval, human clinical
trials are typically conducted in three sequential phases that may overlap.
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Phase 1—The investigational product is initially introduced into healthy human subjects or
patients with the target disease or condition. These studies are designed to test the safety, dosage tolerance, absorption, metabolism
and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible,
to gain early evidence on effectiveness.
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Phase 2—The investigational product is administered to a limited patient population with
a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible
adverse side effects and safety risks. Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning
larger and more expensive Phase 3 clinical trials.
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Phase 3—The investigational product is administered to an expanded patient population to
further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally
at multiple geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit
ratio of the investigational product and to provide an adequate basis for product approval.
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In some cases, the FDA may require, or
companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product.
These so- called Phase 4 studies may be made a condition to approval of the BLA. Concurrent with clinical trials, companies may
complete additional animal studies and develop additional information about the biological characteristics of the product candidate
and must finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing
process must be capable of consistently producing quality batches of the product candidate and, among other things, must develop
methods for testing the identity, strength, quality and purity of the final product, or for biologics, the safety, purity and potency.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the
product candidate does not undergo unacceptable deterioration over its shelf life.
BLA Submission and Review
Assuming successful completion of all required
testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and
clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications.
The BLA must include all relevant data available from pertinent preclinical and clinical studies, including negative or ambiguous
results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing,
controls, and proposed labeling, among other things. The submission of a BLA requires payment of a substantial application user
fee to FDA, unless a waiver or exemption applies.
Once a BLA has been submitted, the FDA’s
goal is to review standard applications within ten months after it accepts the application for filing, or, if the application qualifies
for priority review, six months after the FDA accepts the application for filing. In both standard and priority reviews, the review
process is often significantly extended by FDA requests for additional information or clarification. The FDA reviews a BLA to determine,
among other things, whether a product is safe, pure and potent and the facility in which it is manufactured, processed, packed,
or held meets standards designed to assure the product’s continued safety, purity and potency. The FDA may convene an advisory
committee to provide clinical insight on application review questions. Before approving a BLA, the FDA will typically inspect the
facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the
manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of
the product within required specifications. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical
sites to assure compliance with GCP. If the FDA determines that the application, manufacturing process or manufacturing facilities
are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information.
Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does
not satisfy the regulatory criteria for approval.
After the FDA evaluates a BLA and conducts
inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may
issue an approval letter or a Complete Response letter. An approval letter authorizes commercial marketing of the product with
specific prescribing information for specific indications. A Complete Response letter will describe all of the deficiencies that
the FDA has identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate
to support approval, the FDA may issue the Complete Response letter without first conducting required inspections, testing submitted
product lots, and/or reviewing proposed labeling. In issuing the Complete Response letter, the FDA may recommend actions that the
applicant might take to place the BLA in condition for approval, including requests for additional information or clarification.
The FDA may delay or refuse approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or
information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.
If regulatory approval of a product is
granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such
product may be marketed. For example, the FDA may approve the BLA with a Risk Evaluation and Mitigation Strategy, or REMS, to ensure
the benefits of the product outweigh its risks. A REMS is a safety strategy to manage a known or potential serious risk associated
with a product and to enable patients to have continued access to such medicines by managing their safe use, and could include
medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient
registries and other risk minimization tools. The FDA also may condition approval on, among other things, changes to proposed labeling
or the development of adequate controls and specifications. Once approved, the FDA may withdraw the product approval if compliance
with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace. The
FDA may require one or more Phase 4 postmarket studies and surveillance to further assess and monitor the product’s safety
and effectiveness after commercialization and may limit further marketing of the product based on the results of these post-marketing
studies.
Expedited Development and Review
Programs
The FDA offers a number of expedited
development and review programs for qualifying product candidates. The fast track program is intended to expedite or
facilitate the process for reviewing new products that meet certain criteria. Specifically, new products are eligible for
fast track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the
potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of
the product and the specific indication for which it is being studied. The sponsor of a fast track product has opportunities
for frequent interactions with the review team during product development and, once a BLA is submitted, the product may be
eligible for priority review. A fast track product may also be eligible for rolling review, where the FDA may consider for
review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a
schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the
schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.
A product intended to treat a serious or
life-threatening disease or condition may also be eligible for breakthrough therapy designation to expedite its development and
review. A product can receive breakthrough therapy designation if preliminary clinical evidence indicates that the product may
demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial
treatment effects observed early in clinical development. The designation includes all of the fast track program features, as well
as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development
and review of the product, including involvement of senior managers.
Any marketing application for a biologic
submitted to the FDA for approval, including a product with a fast track designation and/or breakthrough therapy designation, may
be eligible for other types of FDA programs intended to expedite the FDA review and approval process, such as priority review and
accelerated approval. A product is eligible for priority review if it has the potential to provide a significant improvement in
the treatment, diagnosis or prevention of a serious disease or condition compared to marketed products. For products containing
new molecular entities, priority review designation means the FDA’s goal is to take action on the marketing application within
six months of the 60-day filing date (compared with ten months under standard review).
Additionally, products studied for their
safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a
determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or
on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict
an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence
of the condition and the availability or lack of alternative treatments. As a condition of accelerated approval, the FDA will generally
require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated
effect on irreversible morbidity or mortality or other clinical benefit. In addition, the FDA currently requires as a condition
for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch
of the product.
The regenerative medicine advanced therapy,
or RMAT, designation is intended to facilitate an efficient development program for, and expedite review of, any drug that meets
the following criteria: (1) it qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product,
human cell and tissue product, or any combination product using such therapies or products, with limited exceptions; (2) it is
intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and (3) preliminary clinical evidence
indicates that the drug has the potential to address unmet medical needs for such a disease or condition. Like breakthrough therapy
designation, RMAT designation provides potential benefits that include more frequent meetings with FDA to discuss the development
plan for the product candidate and eligibility for rolling review and priority review. Products granted RMAT designation may also
be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term
clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites.
Once approved, when appropriate, the FDA can permit fulfillment of post-approval requirements under accelerated approval through
the submission of clinical evidence, clinical studies, patient registries, or other sources of real world evidence such as electronic
health records; through the collection of larger confirmatory datasets; or through post-approval monitoring of all patients treated
with the therapy prior to approval.
Fast track designation, breakthrough therapy
designation, priority review, accelerated approval, and RMAT designation do not change the standards for approval but may expedite
the development or approval process.
Orphan Drug Designation
Under the Orphan Drug Act, the FDA
may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is a disease or
condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United
States for which there is no reasonable expectation that the cost of developing and making available in the United States a
drug or biologic for this type of disease or condition will be recovered from sales in the United States for that drug or
biologic. Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation,
the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. The orphan drug
designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.
If a product that has orphan drug designation
subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan
drug exclusive approval (or exclusivity), which means that the FDA may not approve any other applications, including a full BLA,
to market the same biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical
superiority to the product with orphan drug exclusivity. Orphan drug exclusivity does not prevent FDA from approving a different
drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition. Among the
other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA application fee.
A designated orphan drug may not receive
orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation.
In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation
was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients
with the rare disease or condition.
Post-Approval Requirements
Any products manufactured or distributed
by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements
relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising
and promotion of the product. After approval, most changes to the approved product, such as adding new indications or other labeling
claims, are subject to prior FDA review and approval. There also are continuing user fee requirements, under which FDA assesses
an annual program fee for each product identified in an approved BLA. Biologic manufacturers and their subcontractors are required
to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by
the FDA and certain state agencies for compliance with cGMP, which impose certain procedural and documentation requirements upon
us and our third-party manufacturers. Changes to the manufacturing process are strictly regulated, and, depending on the significance
of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction
of any deviations from cGMP and impose reporting requirements upon us and any third-party manufacturers that we may decide to use.
Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain
compliance with cGMP and other aspects of regulatory compliance.
The FDA may withdraw approval if compliance
with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery
of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing
processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety
information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions
or other restrictions under a REMS program. Other potential consequences include, among other things:
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restrictions on the marketing or manufacturing of a product, complete withdrawal of the product
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fines, warning letters or holds on post-approval clinical studies;
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refusal of the FDA to approve pending applications or supplements to approved applications, or
suspension or revocation of existing product approvals;
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product seizure or detention, or refusal of the FDA to permit the import or export of products;
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injunctions or the imposition of civil or criminal penalties.
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The FDA closely regulates the
marketing, labeling, advertising and promotion of biologics. A company can make only those claims relating to safety and
efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. The
FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. Failure to
comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising
and potential civil and criminal penalties. Physicians may prescribe legally available products for uses that are not
described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such off-label
uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many
patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA
does, however, restrict manufacturer’s communications on the subject of off-label use of their products.
Biosimilars and Reference Product
Exclusivity
The Patient Protection and Affordable Care
Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, signed into law in 2010, includes
a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway
for biological products that are biosimilar to or interchangeable with an FDA-approved reference biological product.
Biosimilarity, which requires that there
be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and
potency, can be shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires
that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same
clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual,
the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing
safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. Complexities associated with
the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured,
pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA.
Under the BPCIA, an application for a biosimilar
product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the
FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which
the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing
version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own
preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its
product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture,
it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies,
which are governed by state pharmacy law.
The BPCIA is complex and continues to be
interpreted and implemented by the FDA. In addition, recent government proposals have sought to reduce the 12-year reference product
exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject
of recent litigation. As a result, the ultimate impact, implementation, and impact of the BPCIA is subject to significant uncertainty.
Other Healthcare Laws and Compliance
Requirements
Pharmaceutical companies are subject
to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign
jurisdictions in which they conduct their business. Such laws include, without limitation: the U.S. federal Anti-Kickback
Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving,
offering or paying remuneration, to induce, or in return for, either the referral of an individual, or the purchase or
recommendation of an item or service for which payment may be made under any federal healthcare program; federal civil and
criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from
knowingly presenting, or causing to be presented, claims for payment to the federal government, including federal healthcare
programs, that are false or fraudulent; HIPAA, which created additional federal criminal statutes which prohibit, among other
things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare
matters, and which, as amended by HITECH, also imposes certain requirements on HIPAA covered entities and their business
associates relating to the privacy, security and transmission of individually identifiable health information; the U.S.
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 annually report to the federal government, information related to payments or other transfers of
value made to physicians, as defined by such law, and teaching hospitals, as well as ownership and investment interests held
by physicians and their immediate family members; and U.S. state and foreign law equivalents of each of the above federal
laws, which, in some cases, differ from each other in significant ways, and may not have the same effect, thus complicating
compliance efforts. In addition, certain states require pharmaceutical companies to comply with the pharmaceutical
industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government
and certain states and local jurisdictions require the registration of pharmaceutical sales representatives. If their
operations are found to be in violation of any of such laws or any other governmental regulations that apply, they may be
subject to penalties, including, without limitation, significant civil, criminal and administrative penalties, damages,
fines, disgorgement, imprisonment, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or
similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of
non-compliance, disgorgement, imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or
restructuring of our operations.
Coverage and Reimbursement
Significant uncertainty exists as to the
coverage and reimbursement status of any pharmaceutical or biological product for which we obtain regulatory approval. Sales of
any product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state,
and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement
for such product by third-party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are
made on a plan-by-plan basis. For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement
may be particularly difficult because of the higher prices often associated with such drugs. Additionally, separate reimbursement
for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician
utilization.
In addition, the U.S. government, state
legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions
on coverage and reimbursement and requirements for substitution of generic products. Third-party payors are increasingly challenging
the prices charged for medical products and services, examining the medical necessity and reviewing the cost effectiveness of pharmaceutical
or biological products, medical devices and medical services, in addition to questioning safety and efficacy. Adoption of price
controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures,
could further limit sales of any product. Decreases in third-party reimbursement for any product or a decision by a third-party
payor not to cover a product could reduce physician usage and patient demand for the product. No regulatory authority has granted
approval for a personalized cancer immunotherapy based on a vaccine approach, and there is no model for reimbursement of this type
of product.
Healthcare Reform
The United States and some foreign jurisdictions
are considering or have enacted a number of reform proposals to change the healthcare system. There is significant interest in
promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access.
In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected
by federal and state legislative initiatives, including those designed to limit the pricing, coverage, and reimbursement of pharmaceutical
and biopharmaceutical products, especially under government-funded health care programs, and increased governmental control of
drug pricing.
In March 2010, the ACA was signed
into law, which substantially changed the way healthcare is financed by both governmental and private insurers in the United
States, and significantly affected the pharmaceutical industry. The ACA contained a number of provisions of particular importance
to the pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment in federal
healthcare programs, a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are
calculated for drugs that are inhaled, infused, instilled, implanted or injected, and annual fees based on pharmaceutical
companies’ share of sales to federal health care programs. There remain judicial and Congressional challenges to
certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future. For
example, the Tax Cuts and Jobs Act was enacted, which, among other things, removed penalties for not complying with
ACA’s individual mandate to carry health insurance. In addition, the 2020 federal spending package permanently
eliminated, effective January 1, 2020, the ACA-mandated “Cadillac” tax on high-cost employer-sponsored health
coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax. 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. Additionally, on December 18, 2019, the U.S. Court of Appeals for
the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back
to the District Court to determine whether the remaining provisions of the ACA are invalid as well. It is unclear how this
decision, future decisions, subsequent appeals, and other efforts to repeal and replace the ACA will impact the ACA and our
business.
Other legislative changes have been
proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers of 2% per
fiscal year and reduced payments to several types of Medicare providers. Moreover, there has recently been heightened
governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in
several 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 drug products. At the federal level, the Trump administration’s
budget proposal for fiscal year 2020 contains further drug price control measures that could be enacted during the 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”,
or plan, to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug
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. The Department
of Health and Human Services, or HHS, has solicited feedback on some of these measures and has implemented others under its
existing authority. While some measures may require additional authorization to become effective, Congress and the Trump
administration 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 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.
Product Liability and Insurance
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.
We have not experienced any product liability claims to date. We currently carry products and clinical trial liability insurance
policies. There can be no assurance that liability claims will not exceed such insurance coverage limits, which could have a materially
adverse effect on our business, financial condition or results of operations or that such insurance will continue to be available
on commercially reasonable terms, if at all.
Human Resources
Employees
As of December 31, 2019, we had 28 full-time
employees. There were 18 in research, development and clinical and 10 were in finance, legal, human resources or administrative
support. None of our employees is subject to a collective bargaining agreement. We consider our relationship with our employees
to be good.
Consultants
We have consulting agreements with a number
of leading academic scientists, clinicians and regulatory experts. They serve as important contacts for us throughout the broader
scientific and clinical communities. They are distinguished individuals with expertise in numerous fields, including cellular biology,
molecular biology, oncology, clinical, manufacturing and regulatory.
We retain each consultant according
to the terms of a consulting agreement. Under such agreements, we pay them a consulting fee and reimburse them for
out-of-pocket expenses incurred in performing their services for us. In addition, some consultants hold options to purchase
our common stock, subject to the vesting requirements contained in separate award agreements. Our consultants may be employed
by other entities and therefore may have commitments to their employer or may have other consulting or advisory agreements
that may limit their availability to us.
Available Information
Our website is located at www.markertherapeutics.com.
We make available free of charge on our website our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically
file or furnish such materials to the Securities and Exchange Commission. Our website and the information contained therein or
connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS
An investment in our common stock involves
a high degree of risk. You should carefully consider the risks described below before making an investment decision in our securities.
These risk factors are effective as of the date of this Form 10-K and shall be deemed to be modified or superseded to the extent
that a statement contained in our future filings modifies or replaces such statement. All of these risks may impair our business
operations. The forward-looking statements in this Form 10-K involve risks and uncertainties and actual results may differ materially
from the results we discuss in the forward-looking statements. If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In that case, the trading price of our stock could decline,
and you may lose all or part of your investment.
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
product candidates. 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 December 31, 2019, we had an accumulated deficit of $327.5 million since inception. We expect
to spend substantial additional sums on the continued administration and research and development of licensed and proprietary product
candidates 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 do 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, Juan Vera, M.D., our Chief Development Officer, and Mythili Koneru, M.D.,
Ph.D. our Chief Medical Officer 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 development of our product candidates, 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-specific 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, Our founders include Juan Vera, M.D., Ann Leen, Ph.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. Vera is our Chief Development Officer. In addition, Dr. Brenner, Dr. Heslop
and Dr. Rooney have joined our 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. Vera, who is also employed
with the Center for Cell and Gene Therapy at BCM. If we lose Dr. Vera, or if he leaves his 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-specific T cell 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 2 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
Dr. Vera, our Chief Development Officer, and John Wilson, our director, could limit their time and availability to us, and create,
or appear to create, conflicts of interest.
Dr. Vera is a co-founder and member of
Allovir Inc., or Allovir. Allovir is owned by the same principal stockholder group as us prior to our merger with TapImmune, Inc.
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 that is investigating and developing virus-specific T cell therapy technology for the
prevention and/or treatment of viral infections. Accordingly, Dr. Vera may have other commitments that would, at times, limit his
availability to us. Other research being conducted by 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 our company. Both 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. 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 any product candidates.
We have no approved products or product
candidates 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 product candidates,
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
2, Phase 3, 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 fourth quarter of 2019, the FDA placed a clinical hold on our
IND with respect to our MultiTAA-specific T cell 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. In February 2020, we announced
that the FDA lifted the clinical hold, permitting us to initiate a Phase 2 clinical trial with a safety lead-in portion but placed
a partial clinical hold on the trial for the use of the MultiTAA-specific T cell product manufactured using one of the reagents
supplied by the alternative supplier until the final data and certificate of analysis for the reagent are reviewed and accepted
by the FDA. We currently estimate that the alternative supplier will deliver the final reagent, along with the final data and certificate
of analysis required by the FDA, by the end of the second quarter of 2020, thereby satisfying the requirements for lifting the
partial hold on the clinical trial. 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 November 2019 we elected to suspend our Phase 2 clinical trial of TPIV200
for the treatment of platinum-sensitive advanced ovarian cancer based on an unblinded review of interim results conducted by an
independent Data and Safety Monitoring Board, or DSMB. Although the DSMB did not express any safety concerns with respect to TPIV200,
we elected to suspend the trial because it did not meet the threshold for probability of clinical benefit 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 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 trials 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 if 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, or cGMPs, and current Good Clinical Practices or 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 product candidates as projected
or may not conduct them successfully.
For example, the FDA placed a partial clinical
hold on our Phase 2 trial in post-transplant AML for the use of the MultiTAA-specific T cell product manufactured using one of
the reagents supplied by the alternative supplier until the final data and certificate of analysis for the reagent are reviewed
and accepted by the FDA. While we currently estimate that the alternative supplier will deliver the final reagent, along with the
final data and certificate of analysis required by the FDA, by the end of the second quarter of 2020, and that we will complete
enrollment of the first three patients and submission of the final technical specifications and comparability data of the new reagents
to the FDA during the second half of 2020, thereby satisfying the requirements for lifting the partial hold on the clinical trial,
we cannot guarantee that we will be timely, or successful, in doing so. If we are unable to satisfy the FDA’s requirements
to lift the partial hold, we will be delayed in commencing our Phase 2 trial.
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 product candidates. 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 MultiTAA-specific T cells under contract, we anticipate that we will have to rely on contract
manufacturing organizations or CMOs or internal facilities yet to be developed for the commercial manufacture of our multi-antigen
specific T cell therapy product candidates 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 product candidates, our planned clinical trials with
respect to such product candidates 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-specific 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 any approved 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-specific 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-specific 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-specific 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. While we are conducting some research and development activities internally, 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 product candidates.
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 seek regulatory
approval of or 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 product candidates 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 product candidates 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-specific T cell therapy. The data collected from our clinical trials may not be sufficient
to support approval by the FDA of our MultiTAA-specific T cell therapy-based product candidates for the treatment of hematological
malignancies. The clinical trials for our product candidates 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 product candidates, 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 product candidates. For 2020, we anticipate that we will initially rely solely on the cGMP
manufacturing facility within BCM for the manufacturing of our MultiTAA-specific 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-specific T cell therapy-based product candidates, 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-specific 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. We intend to begin a process technology transfer to develop in-house
manufacturing capabilities in 2021. 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 the development of our
own manufacturing facility will 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 extensive 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 product candidates 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 any approved 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.
Whether we engage additional CMOs to manufacture
our product candidates or establish our own manufacturing facility, in order to transfer our MultiTAA-specific T cell manufacturing
from or expand our manufacturing capabilities beyond BCM pursuant to our development plans, we will need access to the standard
operating procedures and the specific batch production records that are used to manufacture the product candidates. If BCM does
not support the transfer of our manufacturing processes or impedes our ability to transfer the manufacturing processes of its product
candidates to us, 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 product
candidates 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 product candidates for regulatory approval or the market
introduction and subsequent sales of any approved 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 product candidates 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 product candidates, 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 product candidates.
We will depend on a limited number of
vendors for supply of certain materials and equipment used in the manufacture of our MultiTAA-specific 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 our director John Wilson), 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-specific 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 BCM 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 product candidates 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 product candidates is complex, highly regulated and subject to multiple risks. For example, the
manufacture of our MultiTAA-specific 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 variability 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-specific 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 product candidates 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 product candidates is dependent.
In cooperation with our current 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 product candidates in a cGMP facility is subject to many uncertainties
and difficulties. We have never manufactured our adoptive T cell therapy product candidate on a commercial scale. As a result,
we cannot give any assurance that we will be able to establish a manufacturing process that can produce our product candidates
at a cost or in quantities necessary to make them commercially viable. Moreover, we and our third-party manufacturers will have
to continually adhere to current cGMP regulations enforced by the FDA through its facilities inspection program. If these facilities
cannot pass a pre-approval plant inspection, the FDA premarket approval of our product candidates 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 product candidates 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 product candidates from existing products may require us to perform additional testing, which will increase the
cost, and extend the time for obtaining approval.
Our MultiTAA-specific 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 United States.
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 product candidates. We may have difficulty demonstrating that the product candidates
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 such drug substance 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 product candidates
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 not be able to develop product
candidates successfully or 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 product candidates could result either in such product candidates 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 product candidates, 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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pricing and the availability of coverage and adequate reimbursement 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 product candidates, 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 product candidates, 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 we 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 product candidates 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 product candidates. 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 product candidates. 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 product candidates.
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 product candidates.
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-specific T cell 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 product candidates. 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 product candidates 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 product
candidates 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 lawsuit 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 any approved 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 any
approved 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 we 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 their research and development programs or the commercialization, marketing or distribution of their 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-specific 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-specific 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 product candidates or
to develop additional product candidates. 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 product candidates.
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 product candidates 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 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-specific 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 any approved 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) 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 product candidates
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 product candidates 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-specific 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-specific 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 product candidates obsolete even before they generate any revenue. There are products currently
under development by others that could compete with the product candidates 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 Bluebird Bio, 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,
Tessa Therapeutics and Torque Therapeutics are developing non-genetically modified T cell therapies such as tumor infiltrating
lymphocytes and marrow infiltrating lymphocytes therapies that may compete with our product candidates. All 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 product candidates.
Our lead product candidate is a therapy
for the treatment of refractory AML. Currently, there are numerous companies that are developing various alternate treatments for
AML. Accordingly, we face significant competition in the AML treatment space from multiple companies. Even if we obtain regulatory
approval for our lead product candidate, 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 product
candidates 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 product candidates for use
in limited circumstances.
As a result of being a public company,
we are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain
the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of
our common stock.
We are required, pursuant to Section
404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on, among other things, the effectiveness of
our internal control over financial reporting. This report by management is included in Part II, Item 9A of this Form 10-K.
In addition, our independent registered public accounting firm is required to attest to the effectiveness of our internal
control over financial reporting in this Form 10-K. We are also required to disclose significant changes made in our internal
control procedures on a quarterly basis.
To comply with Section 404, we have engaged
in the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation
needed to comply with Section 404. Our compliance with Section 404 requires that we incur substantial professional fees and expend
significant management efforts, and we may need to hire additional accounting and financial staff with appropriate public company
experience and technical accounting knowledge and compile the system and process documentation necessary to perform the evaluation
needed to comply with Section 404.
During the evaluation and testing process of our internal controls,
if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that
our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or
significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control
over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.
If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered
public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial
reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our
common stock could decline, and we could be subject to sanctions or investigations by the Nasdaq, the SEC or other regulatory authorities.
Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective
control systems required of public companies, could also restrict our future access to the capital markets.
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.
The COVID-19 coronavirus could adversely
impact our business, including our clinical trials and development activities conducted by us or BCM.
In December 2019, a novel strain of coronavirus,
COVID-19, was reported to have surfaced in Wuhan, China. Since then, the COVID-19 coronavirus has spread to multiple countries,
including the United States and several European countries. If the COVID-19 coronavirus continues to spread in the United States,
we may experience disruptions that could severely impact our business and clinical trials conducted by us or BCM, including:
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delays or difficulties in enrolling patients in clinical trials;
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delays or difficulties in clinical site initiation, including difficulties in recruiting clinical
site investigators and clinical site staff;
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diversion of healthcare resources away from the conduct of clinical trials, including the
diversion of hospitals serving as clinical trial sites and hospital staff supporting the conduct of our clinical
trials;
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interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations
on travel imposed or recommended by federal or state governments, employers and others; and
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limitations in employee resources that would otherwise be focused on the conduct of clinical
trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups
of people.
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These limitations and/or interruptions may also affect BCM's ability to conduct research and development activities on our
behalf.
The global outbreak of the COVID-19
coronavirus continues to rapidly evolve. The extent to which the COVID-19 coronavirus may impact our business and clinical
trials and development activities, whether conducted by us or BCM, will depend on future developments, which are highly
uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the
outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business
disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the
disease.
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 product candidates may still face regulatory difficulties.
All of our current and future product
candidates, 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 product candidates, which may lengthen the regulatory review process, increase our development costs and
delay or prevent their commercialization. No adoptive T cell therapy using MultiTAA-specific 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 product
candidates 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. Prescription drugs may be promoted only for the approved indications in accordance with the
approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses,
and a company that is found to have improperly promoted off-label may be subject to significant liability. However, physicians
may, in their independent medical judgment, prescribe legally available products for off-label uses. The FDA does not regulate
the behavior of physicians in their choice of treatments but the FDA does restrict manufacturer’s communications on the subject
of off-label use of their products. 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 fail to receive applicable marketing approvals, our target market
will be reduced and our ability to realize the full market potential of any approved 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 covered entities, including
certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that
create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, 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, as defined by such law, 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, imprisonment, 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, or the 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, the 2020 federal spending package permanently eliminates, effective January
1, 2020, the ACA-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and,
effective January 1, 2021, also eliminates the health insurer tax. 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. Further,
on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate
was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA
are invalid as well. It is unclear how this decision, future decisions, 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 and subsequent
legislative amendments thereto, providers are subject to Medicare payment reductions of 2% per fiscal year through 2029 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 ended the use of the statutory formula, also referred to as
the Sustainable Growth Rate, for clinician payment and 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 also referred to as
the Quality Payment Program. Payment adjustments for the Medicare quality payment program was set to begin in 2019. This program
provides clinicians with two ways to participate, including through the Advanced Alternative Payment Models, or APMs, and the Merit-based
Incentive Payment System, or MIPS. In November 2019, CMS issued a final rule finalizing the changes to the Quality Payment Program.
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 year 2020 contain further drug price control measures that could be enacted during the 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. The Department of Health and Human Resources has solicited feedback on
some of these measures and, at the same, has implemented others under its existing authority. 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. This
final rule codified CMS’s policy change that was effective January 1, 2019. Although a number of these, and other measures
may 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 significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, imprisonment,
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.
Regulatory authorities in some jurisdictions,
including the United States and the European Union, may designate drugs for relatively small patient populations as orphan drugs. Under
the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition,
which is a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals
in the United States for which there is no reasonable expectation that the cost of developing and making available in the United
States a drug or biologic for this type of disease or condition will be recovered from sales in the United States for that drug
or biologic. Generally, a product that has orphan drug designation and subsequently receives the first FDA approval for the disease
for which it has such designation is entitled to orphan drug exclusive approval (or exclusivity), which means that the FDA may
not approve any other applications to market the same drug or biologic for the same indication for seven years, except in limited
circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. A designated orphan drug
may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan
designation.
Even if we were to obtain orphan drug
designation for a product candidate, we may not obtain orphan exclusivity and that exclusivity may not effectively protect the
drug from the competition of different drugs for the same condition, which could be approved during the exclusivity period. Additionally,
after an orphan drug is approved, the FDA could subsequently approve another application for the same drug for the same indication
if the FDA concludes that the later drug is shown to be safer, more effective or makes a major contribution to patient care. Orphan
drug exclusive marketing rights in the United States also may be lost if the FDA or European Medicines Agency (“EMA”)
later 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. The failure to obtain an orphan drug designation
for any product candidates we may develop, the inability to maintain that designation for the duration of the applicable period,
or the inability to obtain or maintain orphan drug exclusivity could reduce our ability to make sufficient sales of the applicable
product candidate to balance our expenses incurred to develop it, which would have a negative impact on our operational results
and financial condition.
New regulatory pathways for biosimilar
competition could reduce the duration of market exclusivity for our products.
Under the federal ACA 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 ACA 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 ACA 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 ACA, 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
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 product
candidates, 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 product candidates 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 Nasdaq;
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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 Nasdaq
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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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. Until such time, if ever, as we can generate substantial product
revenue, we expect to fund our cash requirements through a combination of equity offerings, debt financings and potential
collaboration, license and development agreements. We do not currently have a committed external source of funds. To the
extent that we sell equity securities or convertible debt securities, your ownership interest will be diluted, and the terms
of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder.
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. Debt financing and preferred equity financing, if available, may
involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures or declaring dividends.
If we raise additional funds through collaborations,
strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable
rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that
may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be
required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop
and market product candidates that we would otherwise prefer to develop and market ourselves.
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 December 31, 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 December 31, 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 5.0 million shares of common stock at
a weighted average exercise price of $7.79 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 December 31, 2019, the fair value of the derivative liability-warrants
was $31,000. 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.